JAWAD HASSAN, J. Through this single judgment, I intend to decide this Petition as well as the connected petitions i.e. C.O. Nos. 02 and 03 of 2024 and C.O. Nos. 01, 02 and 03 of 2025, as similar questions of law and facts are involved between the same Parties (family members) i.e. shareholders of the Companies namely (1) M/s. Sadiq Poultry Farms Pvt. Ltd. (2) M/s. Sadiq Oil Extraction Pvt. Ltd. (3) Sadiq Feeds Private Limited , worth billions of rupees in turnover and involving livelihood of thousands of employees. This judgment will deal with settling the dispute through mediation between the parties (mother and son) and other shareholders to protect the Companies, by holding Annual General Meeting (AGM)[1] on 23rd May, 2025.
I. CONTEXT
2. The Petitioner/Muhammad Arsal (the "Petitioner") filed this Petition under Sections 286, 287 and 288 of the Companies Act, 2017 (the "Act"), against the Respondents No.2 to 6 for prevention of operations and mis management of the Respondent No.1/Sadiq Feeds Private Limited, Rawalpindi (the "Respondent/Company"). The Respondent No.2/Mrs. Sadia Sadiq (mother) is the CEO and Director; and the Respondents No.3 and 4 namely Saad Sadiq and Sanan Sadiq (shareholders) are half-brothers/half siblings of the Petitioner. Whereas the Respondents No.5 and 6 are Muhammad Naeem Haider Khan, Chief Financial Officer and Company Secretary; and Tayyab Rasool, Group Chief Accountant, respectively. The Respondent No.7 is the Securities and Exchange Commission of Pakistan (the "SECP").
3. The Petitioner owns 25% shares in the Respondent/Company and was also serving as its Director.
The Petitioner alleges that he was unlawfully and fraudulently removed from the Board of Directors by the Respondents No.2 to 6. After his removal, these Respondents have allegedly mismanaged the Company's affairs, withdrew large sums of money and failed to hold mandatory statutory meetings. The Petitioner approached the SECP on 12.10.2023 and again on 30.10.2023 under relevant provisions of the Act; but no action has been taken so far. Hence, this Petition.
II. MEDIATION APPROACH
4. From the very inception of these proceedings, this Court has demonstrated a firm commitment to resolve the dispute through mediation, emphasizing its preference for amicable settlement over litigation. On 29.04.2024, Imran, Chief Financial Officer, Sadiq Feeds Pvt. Ltd, appeared under instructions for the way forward in this case. Mr. Muhammad Imran Malik, ASC for the Respondent/Company highlighted relevant precedent at this Court in "Sohail Nisar Vs. Nadeem Nisar & others" (2025 MLD 105), which underscored mediation as a preferred mechanism to protect family business interests and resolve corporate disputes. The Court noted that the dispute is amongst family members and shareholders of the company, reinforcing the suitability of mediation and Alternate Dispute Resolution (ADR) as a constructive and cost-effective approach.
The Court extensively referred to authoritative judgments from the Supreme Court of Pakistan and the High Courts; including Lahore High Court, Sindh High Court and Islamabad High Court, that collectively promote a pro-settlement and pro-mediation bias within the Pakistani legal system.
These precedents establish mediation as a mandatory and preferred step in disputes involving corporate mismanagement and family business matters, recognizing its potential to save judicial time and preserve personal and commercial relationships. The Court observed that numerous statutes and procedural laws, including provisions of the Act, and specific ADR legislation, mandate or encourage mediation. It also acknowledged the appointment of esteemed mediators including Supreme Court Judges, to facilitate this process effectively. In keeping with this approach, the parties unanimously agreed to proceed with mediation. The Court proposed referral of the dispute to Syed Bulent Sohail Advocate / SIMI Qualified Mediator, IBA International Center for ADR, assisted/coordinated by Mr. Justice (R) Tassaduq Hussain Jillani, the former Chief Justice of the Supreme Court of Pakistan as a facilitator mediator of Pakistan, to oversee and facilitate the mediation process. But later on it was informed that the Parties could not reach a consensus on mediation and the mediation process was called off.
III. SETTLEMENT APPROACH BY HOLDING AGM
5. Thereafter the case was heard from time to time and finally on 27.03.2025 it was again heard at length. This Court in order to protect the interest of the Company as well as its shareholders as per Preamble of the Act, which if read with Sections 4 and 5 of the Act, safeguarding the interests of the shareholders, creditors, stakeholders and general public by inculcating the principle of good governance and protecting minority interests in corporate entities/bodies and providing an alternate mechanism for expeditious resolution of the corporate disputes and the matters connected thereto; issued certain directions with consensus of the Parties with a new technique to hold AGM of all shareholders; which could not be held due to aforesaid disputes/deadlocks. In this approach, the Court acted as loco parentis taking on a protective and supervisory role to ensure the proper resolution of the commercial disputes, while safeguarding the rights and interests of all parties, who are family members. On 27.03.2025, this Court directed the parties to hold the AGM of all the shareholders strictly as per relevant provisions of the Act, its rules, regulations and policy guidelines, giving the proper agenda of items of the meeting and after giving proper notice (with its receipt) by also adopting all other necessary steps stipulated under the Act, at a proper place and time [both the learned counsel will also coordinate in this regard]; that during the AGM, the parties were expected to resolve all the issues in the best interest of the company and to protect the family's goodwill, strictly following the provision contained in Section 215 of the Act, which clearly states that member of a company shall act in good faith while exercising his/her powers as a shareholder at the general meetings and shall not conduct himself/herself in a manner which is considered disruptive to proceedings of the meeting and without being prejudice to his rights under the Act, he/she shall not exert influence or approach the management directly for decisions which may lead to create hurdle in the smooth functioning of management; that the company shall file its audit accounts of the last two years in the AGM for its approval where the Petitioner can see all these accounts and if any issue arises he may request the Court to appoint a third party to conduct the audit proceedings. It was also mentioned that since Section 215 of the Act makes it mandatory for the members not to create any hurdle in smooth functioning of management of the company, therefore, the SECP was advised to look into the matter for overcoming the differences between the parties by seeking guidance given by this Court, under the concept of corporate democracy, in the case of Mian Muhammad Ilyas Mehraj and 17 others versus Appellate Bench No.III, Securities and Exchange Commission of Pakistan, Islamabad and 6 others (2009 CLD 883), wherein it has been held that the accounts of the company are audited annually and are approved in AGM. Carrying financial activities of the company, without proper audit of accounts and it's approval from general body, shows that the management of company deals with account in an unauthorized manner. The company can lawfully manage its affairs, when its members approve the accounts and select among themselves the Board of Directors to perform the functions on behalf of the company. The exclusion of the Directors from the management of the company or exclusion of the share-holders from electing the Directors and approving the audited accounts will negate the concept of corporate democracy. The Directors, who are elected for a specified period, continue to perform their functions beyond such period will amount to usurp the powers given to the Directors. The Directors, who are elected for specified period, may perform their functions only during that tenure. Consequently, Mr. Muzaffar Ahmed Mirza, Chief Prosecutor, SECP was also directed to attend the (aforesaid) AGM and try his best to resolve all the issues between the parties. It was directed that the AGM will be held on 23.04.2025 at the time and place mutually agreed between the parties, fate of which will be informed to this Court on the next date. Now the case is fixed for today.
6. Today, at the outset, learned counsel for the Petitioner has informed that in compliance of aforesaid directions of this Court, the Parties sat down in the AGM and resolved most of their issues.
He stated that the Petitioner/Muhammad Arsal attended the AGM via Zoom link; and after holding direct talk with her mother (Mrs. Sadia Sadiq), he agreed to unconditionally withdraw all the litigation filed by him against the Companies. It was also agreed in the AGM that status quo will be maintained in future and no litigation will be initiated against each other. The minutes of AGM dated 23.05.2025 is taken on record as Mark-A, in which the Agenda Item 4 is: Resolution of Disputes Among Members Pursuant to the Order of this Court under Section 215 of the Act, which shows that the dispute between Mr. Muhammad Arsal and his mother Mrs. Sadia Sadiq regarding company affairs was amicably resolved through mediation during AGM. Both parties agreed to withdraw all litigation against each other and maintain status quo.
For ready reference paragraphs No.1 to 4 of the Agenda Item No.4 are as follows: "1. The legal counsel of Mr. Muhammad Arsal read out the order of the Honourable Lahore High Court, which Directed that the all disputes between the members should be settled during the Annual General Meeting.
2. After the reading of order by Mr. Arsal's Lawyer, Mr. Shahid Ikram Siddiqui Advocate and Muhammad Imran Malik Advocate informed the participants including Mr. Muhammad Arsal that due to pending litigation with various banks, at this point of time, share value of the company is in negative. Any sale or purchase of shares at this stage will not be beneficial for any of the parties.
3. Mrs. Sadia Sadiq, Chief Executive/Director and mother of the petitioner namely Mr. Muhammad Arsal assured him that, the moment, company passes through its difficult phase, due amount of Muhammad Arsal's share will be paid to him or the matter will be resolved amicably as she treats and love all of her sons (including Mr. Muhammad Arsal) equally and without any bias and undue favor.
4. After holding direct talk with her mother (Mrs. Sadia Sadiq), Mr. Muhammad Arsal agreed to withdraw all the litigation unconditionally filed by him against the company. In order to succeeded the mediation process as well as by way of showing good gesture Mrs. Sadia Sadiq instructed Mr. Shahid Ikram Siddiqui and Muhammad Imran Malik (counsels) to withdraw the cases filed against Muhammad Arsal. It is also agreed between the parties that status quo shall be maintained and in future no litigation will be initiated by the both parties against each other."
Learned counsel lastly submitted that the Petitioner would be satisfied and would not press all these Petitions, if direction be issued for proper AGM in compliance of the undertaking/mediation made in Mark-A.
7. At this stage, it is important to mention here that firstly, the concept of mediation has been promoted by this Court in the cases of Faisal Zafar and another versus Siraj-ud-Din and 4 others (2024 CLD 1), Netherlands Financierings Maatschappij Voor Ontwikkelingslanden N.V.
(F.M.O.)versus Morgah Valley Limited and SECP (PLD 2024 Lahore 315=2024 CLD 685), Strategic Plans Division and another versus Punjab Revenue Authority and others (PLD 2024 Lahore 545) and Messrs National Logistics Cell versus Assistant/Deputy Commissioner and others (2025 PTD 614). The approach of mandatory mediation adopted by this Court has been followed by the High Courts of other Provinces as well as the Islamabad High Court and finally, the Supreme Court of Pakistan has also appreciated it in the case of Messrs Mughals Pakistan (Pvt.) Limited versus Employees Old Age Benefits Institution through Director Law, Lahore and others (PLD 2025 SC 1) by holding that: "... Mediation must be increasingly seen as a right of the parties within the litigation process.
Access to justice includes the right to have disputes resolved in a timely and efficient manner.
Mediation, as a faster and cost-effective alternative, satisfies this fundamental aspect of justice.
Mediation respects the autonomy of the parties by giving them control over the process and outcome, unlike litigation, where outcomes are imposed by judges."
In this regard, reference can also be made to the principles settled by Supreme Court of Pakistan on mediation in the cases of Province of Punjab through Secretary C&W, Lahore and others versus Messrs Haroon Company, Government Contractor and others (2024 SCMR 947), Taisei Corporation and another versus A.M. Construction Company (Pvt.) Ltd. and another (2024 SCMR 640), Commissioner Inland Revenue versus Messrs RYK Mills (2023 SCMR 1856), Orient Power Company (Private) Limited through Authorized Officer versus Sui Northern Gas Pipelines Limited through Managing Director (2021 SCMR 1728), Federation of Pakistan and others versus Attock Petroleum Ltd. Islamabad (2007 SCMR 1095). Recently, the Supreme Court of Pakistan has further expanded the scope of mediation in C.P.L.A. No.3519 of 2021 titled "Muhammad Naseer Butt versus Additional District Judge, Lahore, etc." through judgment dated 06.05.2025, relevant paragraph Nos.5, 6, 7 and 8 of which are reproduced hereunder for ease of the matter: "5. Mediation is not merely an alternative to litigation; it is a paradigm shift in dispute resolution, built on the principles of collaboration, confidentiality, and party autonomy. It offers a nonadversarial framework that empowers parties to shape the outcome of their own disputes, guided by a neutral facilitator rather than a judicial determination.
6. The benefits of mediation are manifold. It reduces the costs associated with protracted legal battles, alleviates the burden on courts, and ensures quicker resolution of disputes. The confidential nature of mediation protects the privacy of the parties, and its informal setting encourages honest communication and problem-solving. Moreover, the flexibility of the process allows parties to explore creative, interest-based solutions that a court of law may not be empowered to grant. These benefits were remarkably evident in the present case. What years of litigation could not resolve, mediation achieved within weeks. This reinforces the principle that the earlier a dispute is channeled through mediation, the greater the potential for cost and time savings, reduced emotional strain, and restored relationships."
8. As all these cases relates to one Family, therefore, the most relevant judgment of this Court is (2025 M LD 105) (mentioned above), wherein it was held by my learned bother Shahid Karim, J. that "As the statutory wording makes clear, a court is obliged to refer a case for mediation. This is a mandatory requirement enjoined by law now and equally applies to proceedings under the Companies Act, 2017 to the extent as this Court may determine in its discretion. Reference may be made to section 6(15) of the 2017 Act ... Mediation, in the first instance, should be the preferred mode of resolution and applies, a fortiori, to cases which involve wrangling between close family members. This method has many obvious benefits least of all to save cost, businesses and personal relations. If taken under the scrupulous attention of this Court and by a respectable Mediator, the process will likely succeed in its purpose." It is also important to mention here that this Court in the judgment reported as "Additional Registrar Companies v. Al-Qaim Textile Mills Ltd." (2021 CLD 931) has already declared the SECP as Regulator of entire companies. Therefore, the SECP shall look into the matter and assist the parties / management of the Company for its smooth running. The SECP will also settle down the matters in future in the light of applicable Laws, Rules and Regulations; and the aforesaid judgments especially for holding of regular AGMs. The Petitioner is also directed to have a personal meeting with his mother/Mrs. Sadia Sadiq either in Pakistan or abroad for final amicable resolution of their issues.
9. Moreover, the Parties have shown their faith in mandatory mediation through this Court as developed by the Hon'ble Supreme Court of Pakistan; which is reflected from paragraphs No.5 to 7 of the Agenda Item No.4 of Mark-A, in the following manner: "5. While concluding Mr. Shahid Ikram Siddiqui, apprised that this is a family dispute and instead of fighting with each other Mrs. Sadia Sadiq (mother) and Muhammad Arsal (son) should defend the company together in courts. Mr. Shahid Ikram Sidduqui also apprised the participants that the company is a direct and indirect source of bread of butter for almost 3000 persons so every effort should be made to keep it alive and running in profitable manner and his milestone can only be achieved if all the family members are on same page.
6. Mr. Shahid Ikram Siddiqui expressed his gratitude and humble thanks to Hon'ble Mr. Justice Jawad Hassan of Lahore High Court, Rawalpindi Bench as his Lordship's orders and guidance make this mediation process successful and keep the company alive as well as saving the bread and butter of thousands of workers and their families. It is also observed that role of Mr. Saeed Ullah Registrar SECP in the matter more particularly during mediation process was/is highly appreciable and he guided the parties like elder of the family.
7. After all this process and mediation both the parties, Mr. Arsal and Mrs. Sadia Sadiq family, in the larger interest of company agreed to unconditionally withdraw the litigation filed against each other."
10. As per the aforesaid Agenda Item No.4 of Mark-A, the conduct of the parties and their counsel in disposing of this case shows the public confidence in settling the corporate dispute due to the efforts of this Court, clearly reflecting their faith in the judicial system of Pakistan. The directions issued by this Court are binding on the parties under Articles 199 and 201 of the Constitution of the Islamic Republic of Pakistan, 1973 (the "Constitution"), because the parties have their inalienable rights under Article 4 of the Constitution to be treated in accordance with law. However, on the other hand, Article 5(2) of the Constitution states that obedience to the Constitution and law is the inviolable obligation/duty of every citizen (including the parties to this case), wherever they may be, and of every other person for the time being within Pakistan. Therefore, by obeying the directions of this Court in order to resolve the controversy under the command of law, the parties have unequivocally demonstrated their trust in the legal system.
11. These proceedings reaffirm that Courts are not merely adjudicators of disputes but custodians of public trust in justice. When intra-family corporate conflicts escalate to the point of threatening corporate governance and economic livelihoods, it becomes imperative for the Court to resolve the conflict through lawful facilitation. Public confidence is earned not merely through judicial decrees but through procedures marked by fairness, restraint and due process. In sensitive corporate matters involving generational families, the Court must act not only as an arbiter but also as a facilitator of institutional harmony.
12. The very foundation of a just society, safeguarded by the Rule of Law, rests upon the enduring bedrock of public trust and confidence in its Courts and judiciary. Individuals, including families involved in complex corporate disputes such as the present matter, approach Courts as their ultimate recourse to seek fair and impartial adjudication and resolution. Their willingness to do so, and to comply with judgments, depends on the degree of confidence they place in judicial processes. In this case, the Court's measured and supervisory approach, beginning with a referral to mediation and culminating in a judicially facilitated AGM, demonstrates how judicial prudence can restore governance and legitimacy. This case shows that even the most complex corporate disputes can be resolved when parties sit together, focus on interests, not positions and the Court facilitates principled negotiation. By encouraging reconciliation and the withdrawal of litigation, the Court upheld compliance with the Act while preserving corporate democracy and existing relationships. Where parties falter, it is through lawful and restrained judicial conduct that public trust is preserved, legal order restored and institutional legitimacy upheld.
IV. CONCLUSION
13. The process of resolution adopted in this case was rooted in corporate harmony, family goodwill and the statutory framework under the Act has proven to be both timely and effective. The Court highly appreciates the gracious conduct and conciliatory approach adopted by the learned counsel for the parties, who played a vital role in facilitating this amicable settlement. The Court also appreciates the dignified role of the Petitioner and Mrs. Sadia Sadiq, who, as mother and son, chose cooperation over conflict in the larger interest of the Company, its stakeholders and over 3000 workers are dependent on its continuity. The Registrar, SECP, Mr. Saeed Ullah, is also acknowledged for his pivotal role during the mediation process, providing much-needed guidance akin to that of an elder in a family, as recognized in the minutes of the AGM (Mark-A). This Court reaffirms its unwavering commitment to the principles laid down by the Hon'ble Supreme Court of Pakistan in the afore-mentioned landmark judgments, wherein mediation was emphasized as an essential and rights-based component of access to justice, as observed in those decisions, mediation is not merely an alternative but a necessary and effective means for ensuring party autonomy, reducing judicial backlog and fostering lasting, interest-based solutions.
14. Accordingly, this judgment underscores the importance of "Mediation through AGM" as a model mechanism for resolving corporate and family business disputes, preserving corporate democracy and strengthening institutional integrity through resolution by consensus, as envisioned under the Act and the constitutional and jurisprudential mandates of this Court.
15. In view of the successful outcome of the mediation conducted through AGM these Petitions are hereby disposed of accordingly.
[1]While concluding Mr. Shahid Ikram Siddiqui, apprised that this is a family dispute and instead of fighting with each other Mrs. Sadia Sadiq (mother) and Muhammad Arsal (son) should defend the company together in courts. Mr. Shahid Ikram Sidduqui also apprised the participants that the company is a direct and indirect source of bread of butter for almost 3000 persons so every effort should be made to keep it alive and running in profitable manner and his milestone can only be achieved if all the family members are on same page.
Mr. Shahid Ikram Siddiqui expressed his gratitude and humble thanks to Hon'ble Mr. Justice Jawad Hassan of Lahore High Court, Rawalpindi Bench as his Lordship's orders and guidance make this mediation process successful and keep the company alive as well as saving the bread and butter of thousands of workers and their families. It is also observed that role of Mr. Saeed Ullah Registrar SECP in the matter more particularly during mediation process was/is highly appreciable and he guided the parties like elder of the family."