' RUSTAM S. SIDHWA, J.--This judgment will dispose of two Intra-Court Appeals namely I.C.A. Nos. 2 of 1983 and 6 of 1983 preferred by Riaz Ali Shah and Khaliq Dad, appellants respectively against the consolidated order of a learned Single Judge of this Court, dated 5-5-1982 disposing of a number of miscellaneous petitions, including C.M. Nos. 236/L of 1980 and 290/L of 1980.
2. The brief facts of the case are that in March, 1979, the United Commercial Finance Limited (hereinafter to be referred to as the "respondent Company") purchased 200 kanals of land in Mauza Charrar, Tehsil and District Lahore, roughly at the rate of Rs.11,000 per kanal.
3. The respondent Company entered into five agreements for sale with the present two appellants and three others for the sale of separate parcels of land out of the aforesaid land purchased. The particulars of the agreements entered in favour of the present two appellants are as follows:-
(i) Agreement for sale dated 2-10-1979 in favour of Riaz Ali Shah agreeing to sell 42 kanals 19 marlas 19 square feet of land for Rs.7,14,000. Rs.7,00,000 paid in cash the same day against receipt; Rs.14,000 to be paid on the date of registration of the sale-deed. The sale was agreed to be completed by 15-3-1980.
(ii) Agreement for sale dated 3-9-1979 in favour of Khaliq Dad agreeing to sell 26 kanals 19 marlas of land for Rs.4,42,000. Rs.4,20,000 paid to the same day against receipt; Rs.22,000 to be paid on the date of registration of the sale-deed. The sale was agreed to be completed by 28-2-1980.
4. Before the respondent Company could execute and register the sale-deeds in favour of the appellants, it filed a petition (C.O.No. 48 of 1979) on 20-10-1979 before the Lahore High Court for voluntary winding up under the supervision of the Court. This action was prompted by the fact that in Writ Petition No. 6148 of 1979, the Lahore High Court on 15-10-1979 had passed an order for the prosecution of the Directors of another Corporation, for failure on their part to comply with the provision of the Law. Accordingly on 22-10-1979 the Company Judge appointed Malik Pervaiz Akhtar, Advocate, to be the Provisional Liquidator of the respondent Company.
5. In the meantime, the State Bank of Pakistan having come to realise that the respondent Company was transacting the business of banking in contravention of subsection (1) of section 27 of the Banking Companies Ordinance, LVI of 1962, conducted inquiries in respect of the working of the said respondent Company under section 43-A of the said Ordinance and on 19-2-1980 made a declaration under section 43-B thereof that the said respondent Company was transacting the business of banking in contravention of subsection (1) of section 27 of the said Ordinance. The said declaration was published by the State Bank of Pakistan in newspapers in the manner as required by law. Simultaneously on 19-2-1980, the State Bank of Pakistan filed a petition (C.O. 27 of 1980) under section 43-F of the Banking Companies Ordinance for the winding-up of the respondent Company.
6. On 20-2-1980 the learned Company Judge took up the respondent Company's petition (C.O. 48 of 1979) for voluntary winding-up and passed the undernoted order thereon:- "Dr. Khalid Ranjha, Advocate, for the petitioner.
' Mr. Walayat Hussain, Advocate, for Muhammad A zam, Jalal-ud-Din and Muhmmad Gul Shah (Creditors).
' Mr. Hamid Azhar Malik, Advocate for Moeen-ud-Din (a creditor).
' Mr. Zahid Hussain Khan, Advocate for Malik Ghulam Akbar, Malik Allah Khan, Nazar Hussain and Ghulam Raza Shah ( Creditors) .
' Malik Pervaiz Akhtar, O.L.
' Kh. Muhammad Tufail for the State Bank."
' The State Bank of Pakistan has also filed a petition Which is still pending. This petition has been filed after declaration under section 43-B of the Banking Companies Ordinance, 1962, as amended by the Banking Companies (Second Amendment) Ordinance, 1979. The State Bank of Pakistan is allowed to take action after the liquidation order in this petition. There being no opposition to the liquidation despite the publication of a notice, the Company is directed to be wound up because it is not in a position to continue its business. This order of liquidation has been passed subject to the provisions of the above Ordinance and the State Bank of Pakistan is allowed to take all proceedings under that law.
' Khawaja Muhammad Tufail would like to take instructions from the State Bank of Pakistan whether he would not insist upon the appointment of the liquidator of the choice of the State Bank of Pakistan, and whether the Bank would allow Malik Pervaiz Akhtar to continue as Official Liquidator.
Khawaja Muhammad Tufail shall take instructions within a week.
7. On 27-2-1980, the petition (C.O. No 27 of 1980) under section 43-F of the Banking Companies Ordinance filed by the State Bank of Pakistan for the winding-up of the United Commercial Finance Limited under the provisions of the Banking Companies Ordinance, the appointment of Kh. Shaukat Ali and Kh. Mohammad Asghar II, Advocates, as joint liquidators of the said company and for the stay of the winding-up proceedings initiated by the respondent Company under section 162 of the Companies Act came up before the learned Company Judge, who passed the following order thereon:- "Kh. Mohammad Tufail and Kh. Saeed Zafar, Advocates for the State Bank of Pakistan. Malik Pervaiz Akhtar Provisional Liquidator.
' This petition is now reduced to the position of a formal petition in view of the winding up order dated 20-2-1980 passed in C.O. No. 48 of 1979, that order has been passed subject to the provisions of the Banking Companies Ordinance, 1962, as recently amended. No formal order is required to be passed on this petition. This petition shall be tagged with the above petition."
8. On 27-2-1980, the question whether Malik Pervaiz Akhtar, Advocate, who had previously been appointed Provisional Liquidator of the respondent Company by the Company Judge, could continue as Provisional Liquidator, in view of rule 41 of the Banking Companies (Lahore High Court Rules, 1973), the learned Company Judge passed the following order:- "On the last date I allowed Khawaja Mohammad Tufail to seek instructions within a week whether the State Bank has any objection to permit Malik Pervaiz Akhtar to continue as Official Liquidator.
Learned counsel states that he has not been able to seek the instructions. It is unnecessary to wait further for this purposes since there can be no legitimate objection against the appointment of Malik Pervaiz Akhtar as Official Liquidator. He shall continue as such on the same terms and conditions as laid down under Rule 41 of the Banking Companies (Lahore High Court) Rules, 1973. He shall perform his duties in collaboration and association with the State Bank of Pakistan."
9. On 10-3-1980 the State Bank of Pakistan filed a petition (C.M.127/L of 1980) under section 151, C.P.C.
Praying that Mian Bashir and Syed Ikhlaq Hussain, Advocates, be also appointed as Joint Liquidators alongwith Mr. Pervaiz Akhtar Malik, Advocate, who had been appointed by the learned Company Judge, as the assets of the respondent Company were extensive and spread over 400 Branches and it would not be possible for the liquidator appointed by the Court to attend to the matter single handed. On 12-3-1980, the learned Company Judge appointed Mian Bashir Ahmad, Advocate, as joint Official Liquidator with Mr. Pervaiz Akhtar Malik, Advocate. It was also ordered that the two joint Official Liquidators would share the commission equally.
10. On 22-6-1980 Riaz Ali Shah appellant, filed a petition (C.M.236/L of 1980) in C.O. 48 of 1979, under section 171 of the Companies Act against United Commercial Finance Limited and Malik Pervaiz Akhtar, Advocate, its Official Liquidator, calling upon the High Court to order the final sale-deed to be compulsorily executed and registered by the respondent Company and registered in the appellants' favour, through its Official Liquidator, on receipt of the outstanding balance of Rs.14,000 from the appellant, or, in the alternative, the appellant be allowed to file a civil suit for specific performance of the contract against the respondent Company in the Civil Court.
11. On 28-7-1980, Ch. Khaliq Dad, appellant, filed a petition (C.M. 290/L of 1980) in C.O. 48 of 1973 under section 171 of the Companies Act against the United Commercial Finance Limited and its Liquidator calling upon the High Court to order the final sale-deed to be compulsorily executed and registered in the appellant's favour, through its Official Liquidator, on receipt of outstanding balance of Rs.22,000 from the appellant, or, in the alternative, the appellant be allowed to file a civil suit for specific performance of contract against the respondent Company in the Civil Court.
12. Notices in the above two petitions were given to the Official Liquidators and to the counsel for the State Bank of Pakistan to examine the same and to appraise the agreements and genuineness of the transactions.
13.
13. On 18-8-1980 the Official Liquidator filed his written statement to C.M. 236/L of 1980 admitting the agreement for sale and the receipt of Rs.7,00,000 by the respondent Company, but since the appellant had not produced the original agreement for sale, it called upon the Court to direct the appellant to submit the said original agreements for sale for the perusal of the Official Liquidator as well as of the Hon'ble Court and requested the High Court to summon the Director of the United Commercial Finance Limited to make a statement on oath to establish the correctness and veracity of the agreement for sale and to permit the Official Liquidator, if the Court was so satisfied, to execute the sale on receipt of the balance amount.
14. On 25-2-1981 the learned Company Judge directed the Official Liquidators as well as the counsel for the State Bank of Pakistan to file a consolidated report regarding petitions C.M. No. 236/L of 1980 and C.M. No. 290/L of 1980 giving details of the agreements and their opinion about their authenticity.
15. On 8-6-1981 the joint report by the Official Liquidators and the counsel for the State Bank of Pakistan was filed in respect of the petitions C.M. No.236/L of 1980 and C.M.No 290/L of 1980, in which the said persons stated that on their examination of the said cases they were satisfied, on the basis of the record available to them in the shape of the original agreements for sale and the receipts of money paid and from their verbal discussion with Mr. Daood Ahmad Chaudhry, Ex-President of the Company, that the transactions were genuine. It accordingly called upon the learned Company Judge to pass an order for the registration of the sale deeds on payment of the balance amounts.
The learned Company Judge, by order of the same date, held that before proceeding further, he would like to examine the relevant record and called upon the Official Liquidators to produce the same on the next date of hearing.
16. After a number of hearings, the learned Single Judge, by his consolidated order dated 5-5-1982, covering petitions C.M. 236/L of 1980 and C.M. 290/L of 1980 and some others of the same nature, held that the agreements for sale executed by the company in liquidation were onerous, though the Official Liquidators had not disclaimed the same, that if specific performance were allowed, it would amount to undue preference and he, therefore, rejected their petitions. However, it was ordered that the appellants who were parties to the agreements for sale, would rank as secured creditors so far as their deposits and costs were concerned and that they could also prove any damages in addition and claim the same as ordinary creditors. The learned Judge finally concluded that in case it was shown at any time that the company was solvent, the request of the petitioners for specific performance would be considered. In holding that the agreements for sale were onerous, the Company Judge held that the price of the properties in dispute when purchased by the company ranged between Rs.11,000/- to Rs.13,000/- per kanal, that the price at which the properties were agreed to be sold ranged between Rs.15,000/- to Rs.17,000/- per kanal, that according to the scheme of arrangement submitted by the ex-management, the existing price of the properties was about Rs.32,000/- per kanal, which showed that the contracts were onerous and that any order permitting specific performance would give undue preference to the appellants over other creditors and that though the joint Official Liquidators had not controverted the correctness or genuinenes of the transactions or disclaimed the same, the agreements for salt- were onerous and they amounted to undue preference and affected the other creditors adversely, if specific performance were allowed at that stage.
17. Being aggrieved by the aforesaid order, the appellants preferred appeals against the same, which are now before us for disposal.
18. On behalf of the appellants it is submitted that the agreements of sale in favour of the appellants have been disclaimed, contrary to the principles laid down in that behalf by section 230-A of the Companies Act, In this connection it is submitted that the properties agreed to be conveyed under the two agreements were not burdened with onerous covenants. It is further submitted that the said agreements could not also be treated as unprofitable. It is further contended that the properties which were the subject of sale could also not be treated as unsalable or not readily salable, by reason of its binding the Official Liquidators thereof to the performance of any onerous act or payment of any sum of money. In these circumstances, it is submitted that the agreements for sale could not be disclaimed. In this connection In re-Bastable Ex parte the Trustee (1901) 2 KB 518) and In Re: The Nottingham General Cemetery Co. (1955 Chancery 683) have been cited. It is further submitted that the learned Company Judge has no power to disclaim the agreements under his own hand by virtue of the disputed order, but the disclaimer could only have been made in writing signed by the Liquidators within twelve months after the commencement of the winding up, or such extended period as the Company Judge granted, or, if the Liquidators were not aware of the agreements within one month after the commencement of the winding up, within twelve months after their becoming aware of the same, or such extended period as the Company Judge allowed. In this connection, In Re: Nottingham General Cemetery Co (1955 Chancery 683) and Nazir Ahmad v. King Emperor (AIR 1936 P C 253) have been referred.
19. On behalf of the ex-management of the respondent Company it is submitted that the impugned order is legal and correct, for if the agreements for sale are allowed to be completed, the appellants would have a greater undue preference over the other creditors. It is further submitted that the impugned order is invalid to the extent that it has permitted the appellants to rank as secured creditors, so far as the refund of their deposits and costs are concerned. It is submitted that by virtue of section 49 of the Registration Act read with section 12 of the Specific Relief Act, the appellants do not acquire the right of secured creditors. In this connecion, Kurri Veerareddi and others v. Kurri Bapireddi and another (ILR 29 Madras 336), and T.Nagabhushanam and others v. S. Ramachandra Rao and others (AIR 1923 Madras 241) have been cited.
20. On behalf of the Official Liquidators it is submitted that the Company Judge had no right to proceed with the case under the Companies Act, that the jurisdiction of the Company Judge to deal with the case was confined to the provisions of Part III (other than those of sections 45 to 49 and 59) and Part IV of the Banking Companies Ordinance, 1962, that no application lay to the Company Judge under section 171 of the Companies Act, that the case was one which was covered by section 61 of the Banking Companies Ordinance and that as the learned Company Judge decided the case on the erroneous assumption that sections 171 and 230-A of the Companies Act were applicable, the impugned order was illegal, void and without jurisdiction and that the case should be remanded to the learned Company Judge for disposal of the matter under section 61 of the Banking Companies Ordinance.
21. We have heard the arguments of the learned counsel for the appellants and the ex- management and have also heard the Official Liquidators. The general position as regards duties of an Official Liquidator, in respect of contracts entered into by a company before liquidation, is too well known to be stated. The insolvency of the Company does not alone result in such an incapacity to perform the contract, as to entitle the creditor to treat it as broken and to claim damages. If the contract is beneficial for the company, the Liquidator may like to complete the same. The contract can be performed by the Liquidator within a reasonable time. If it is not so performed within a reasonable time, the creditor may treat the contract as havin been abandoned and ask for its recission. If the Official Liquidator wants to abandon the same, he should disclaim the same, if its terms are onerous, or if the contract is unprofitable to carry it out.
22. We first take up discussion of the impugned order on the assumption that the learned Company Judge had the authority to dispose of the petitions of the appellants under Part V of the Companies Act, 1913, which deals with winding up, in which sections 171 and 230-A both appear.
Before we enter into a legal discussion of the matter, it would be appropriate to qoute subsection
(1) of section 230-A of the Companies Act, which is relevant:- "Where any part of the property of a company which is being wound up consists of land of any tenure burdened with onerous covenants, of shares or stock in companies, of unprofitable contracts or of any other property that is unsalable, or not readily salable, by reason of its binding the possessor thereof to the performance of any onerous act, or to the payment of any sum of money, the liquidator of the company, notwithstanding that he had endeavoured to sell or has taken possession of the property, or exercised any act of ownership in relation thereto, may, with the leave of the Court and subject to the provisions of this section, by writing signed by him, at any time within twelve months after the commencement of the winding up or such extended period as may be allowed by the Court, disclaim the property: ' Provided that, where any such property has not come to the knowledge of the liquidator within one month after the commencement of the winding up, the power under this section of disclaiming the property may be exercised at any time within twelve months after he has become aware thereof or such extended period as may be allowed by the Court."
' The main question that arises is what part of the property of a company, which is being wound, can be disclaimed under subsection (1) of section 230-A of the Companies Act. Section 323 (1) of the English Companies Act, 1948, section 618 (1) of the English Companies Act, 1985, and section 55
(1) of the English Bankruptcy Act, 1883, are word for word similar to section 230-A (1) of our Companies Act, 1913, Charlesworth's Company Law, 9th Ed., (1968) breaks up the properties of a company in liquidation, which can be disclaimed, under the following heads: (1) land burdened with onerous covenants, or (2) shares of stock in companies, or (3) unprofitable contracts, or (4) property that is unsalable, or not readily salable, because it binds the possessor to the performance of an onerous act, or to the payment of any sum of money.
23. The first question that arises is whether the lands which are the subject of the two agreements for sale are burdened with onerous covenants, that is to say, terms and conditions which are burdensome or oppressive to the Official Liquidator, which he would not like to accept. According to Black's Law Dictionary, 5th Edition, "a contract, lease, share or other right is said to be 'onerous' when the obligations attaching to it unreasonably counter-balance or exceed the advantage to be derived from it, either absolutely or with reference to the particular possessor". In the instant two agreements for sale there is no term therein which can be stated to be onerous or burdensome.
The lands which are the subject of the agreements have been bought for roughly Rs. 11,000 per Kanal and are being sold within roughly six to seven months of their purchase for roughly Rs.16,300/- to Rs.16,600/- per kanal, at a profit of 48%. The lands are also not encumbered. No loss is accruing from the transactions. The Official Liquidators and the State Bank of Pakistan are not burdened with the performance of any obligation that can be stated to be onerous, difficult or cumbersome. They have accepted the transaction and in their report to the learned Company Judge, the Official Liquidators have also expressed their agreement to execute the sale-deeds. We would, therefore, hold that the lands covered by the two agreements are not burdened with onerous covenants.
24. We may now examine precedents from the English jurisdiction in this connection. The learned Company Judge, in, pars 4 of his impugned order, has stated the position clearly according to English Law with regard to agreements for sale where the creditor is the purchaser and the bankrupt of company in liquidation is the seller. In Ex Parte Taylor (102, L.T. 84), it was held that an agreement to sell creates an equitable right in the purchaser in the property and, therefore, the Court may sanction its specific performance. In Ex Parte Rabbidge (48 I. J. R. 15 = 38 LTR 663) it was held that a person entering into an agreement to purchase immoveable property had an equitabe right to have the property conveyed to him, upon payment of the purchase money and the court could allow specific performance. In Re Bastable (1901, 2 K.B. 518), it was held that the purchaser has something more than a pecuniary interest in the land itself, which would remain, whatever might be the effect of a disclaimer.
25. In Re Maughan, Ex Parte Monkhouse (14 Q.B.D. 956), ja bankrupt, who held a sub-lease of a ground floor from an Investment Company under an agreement for 21 years, sold his business and the leased premises to another company. Possession of the Premises was given to the purchaser Company. Later, Maughan was declared insolvent. The trustee disclaimed the first sub-lease. It was held that the trustee of the bankrupt was justified in disclaiming the first agreement for lease, as the words "land of any tenure burdened with onerous covenants", meant property from which no benefit could accrue to the bankrupt's estate.
26. In Re Bastable Ex Parte The Trustee (1901 2 KB 518), Bastable was lessee of a house for a term of 99 years from 24-6-1984. On 22-6-1985 he executed a mortgage of the house, by sub-demise for the residue of the unexpired term (less the last day thereof), to secure L. 600 with interest thereon, Basable afterwards paid off L.
300. On 5-6-1900 Bastable entered into an agreement with Miss Silverstone to sell the leasehold property to her, subject to the mortgage, for L.
90. The pruchase was to be completed on 1-8-1900. Miss Silverstone paid a deposit of L. 50 upon the signing of the agreement. The title was accepted by the purchaser, but before completion of the agreement. Bastable was adjudicated a bankrupt on 21-8-1900. The trustee at first agreed to complete the sale on payment of L. 40, but when the purchaser required that some outgoings in respect of the property should be discharged and as the mortgagee had entered into possession, the trustee on 22-12-1900 disclaimed the agreement of 5-6-1900, but no the lease. It was held that the trustee could not disclaim the contract entered into by the bankrupt for the sale of the land unless he also disclaimed the lease itself. One of the questions before the Court of Appeals was whether this was a kind of transaction which was covered by section 55 of the Bankruptcy Act, 1883, which gave the trustee the right to disclaim onerous property. On behalf of the trustees it was asserted that the contract was unprofitable. Collins L.J., held that when the words of section 55 were considered, it was "perfectly clear that it was never meant to extend to such a transaction--a transaction in which a disclaimer would have the effect, not of getting rid of burdensome property in the hands of the bankrupt and of the trustee as representing him, but of divesting from a purchaser an interest which had already passed to him. After considering sub-sections (1) and (2) of section 55, Collns L.J, held that in the case before him there was no such burden upon the property. As regards the jutification set up on behalf of the trustee to disclaim, namely, that the bankrupt's estate would be better of with the land than with the purchase money of the land, Collins L,J., held that it did not appear to him that such a case prima facie fell "within the provisions of section 55", or that "the contract was within the class of property to which it related".
27. In Re: Gee, Ex Parte The Official Receiver (1890 24 Q.B.D. 65) one W. Crowson leased a piece of land to Thomas Gee for a term of 99 years at a ground rent of 17-10-0. The lease permitted the lessee to build houses on the demised land and to maintain and keep in good repair the houses when built. By indenture dated 27-7-1877 the lessee assigned to the lessor the leased land with the buildings then erected and thereafter to be erected thereon, for the residue of the term to secure a debt of L.810 with interest. On 16-1-1889 Thomas Gee was adjudicated bankrupt. The trustee of the bankrupt wanted to disclaim the original lease deed, due to onerous covenants. Cave J., held that as the bankrupt had mortgaged with possession the lease, with the houses thereon, for the residue of the term, there was no land with the trustee burdened with onerous covenants and therefore, he coud not disclaim. If there had been no mortgage, it was held that the trustee could have disclaimed.
28. In Re: Nottingham General Cemetery Company (1955, 2 All ER 504 1955, 1 Chancery 683), a company running a cemetery was by a special Act empowered by conveyances to transfer to purchasers small plots for the exclusive purpose of burial etc, either in perpetuity or for a limited period, subject to the payment of such fees as were prescribed by the rules and regulations of the Company. The Special Act provided that where the conveyance was in perpetuity, it could be treated as a personal inheritance and be sold and disposed of and assigned by the purchaser in his lifetime or he bequeathed by his will. The company went into liquidation. The Liquidator disclaimed the land constituting the cemetery, all implied contracts with the holders of grave certificates (i.e grantees of burial rights in the cemetery) and all contracts for the upkeep of graves.
On behalf of the holders of grave certificates it was urged that the conditions of the grants did not touch the land, but burdened the company with certain duties and, therefore, the Liquidator could not disclaim them, It was held that the lands were burdened with onerus covenants, as lands could not be used for any purpose, as the grants conferred exclusive rights of burial, which, in effect, imposed restrictions, which touched and concerned the land.
29. Thus, it is obvious that the words "land of any tenure burdened with onerous covenants", as contained in subsection (1) of section 230-A of the Companies Act, are intended to cover immovable property burdened with obligations and liabilities, which the Official Liquidator would not like to accept, such as where the obligations prevent the Liquidator speedily being able to dispose of the property, or the obligations compel the Liquidator to hold and maintain the property for too long a period, which would tend to defeat the speedy disposal of the winding up proceedings, or property from which no financial benefit can accrue to the company in liquidation, or which would place the Liquidator in loss or financial embarrassment. In the instant case, the lands which are the subject of the two agreements for sale are not subject to any enerous burden or obligation and the effect of D the disclaimer is not to get rid of burdensome property, but to enable the respondent Company to make a higher profit, by divesting the appellants of the interest which has already passed to them. As held In re: Bastable Ex Parte The Trustee (Supra), such is not the object of the law. We, therefore, hold that the present case is not one covered by the words "land of any tenure burdened with onerous covenants" as contained in subsection (1) of section 230-A of the Companies Act. The learned Company Judge could not have disclaimed the property on the ground that the respondent Company's assets would have been better of with the land than with the purchase money. Such a case does not fall within section 230-A of the Companies Act.
30. As held earlier, properties which can be disclaimed under section 230-A the Companies Act are
(1) lands burdened with onerous covenants, or (2) shares or stock in companies, or (3) unprofitable contracts, or (4) properties that are unsalable or not readily salable because they bind the Liquidator to the performance of onerous acts, or to the payment of any sum of money. As already held above the first category does not apply. The second category is not applicable to this case. As regards the third category, it is nobody's case that the agreements for sale were unprofitable. As already held above In re: Bestable Ex Parte The Trustee (1901, 2 K.B. 518), the Court will not permit the exercise of the power of disclaimer to enable the Company in liquidation to make a higher profit and the liquidator cannot be permitted to disclaim a contract made by the respondent Company for the sale of its lands, merely because the property can be sold elsewhere at a better price. A contract can be disclaimed if it is found unprofitable, that is to say, placing the Liquidator in financial embarrassm ent or liability. It cannot be disciaimed if it is otherwise profitable and is bringing the company 48% gain, in the absence of any strong evidence to show that the transactions are fraudulent. The third category is therefore not applicable. The fourth category is also not applicable to the case in instance. This, therefore, completes our review of section 230-A of the Companies Act.
31. Another objection taken on behalf of the appellants is that the power of disclaimer under subsection (1) of section 230-A of the Companies Act did not vest in the Company Judge, but in the Liquidator and since, in the instant case, the learned Company Judge exercised the power and not the Official Liquidators, the exercise of the power was illegal and without jurisdiction. We do not agree with the contention of the learned counsel for the appellants. According to subsection (1) of section 230-A of the Companies Act, the disclaimer must be made in writing and signed by the Liquidator within the period therein prescribed. If it is not so, the disclaimer is invalid. If any authority is required in this respect, Wilson v. Wallani (5 Ex.D 155) may be cited. In the instant case, no disclaimer was made by the Officer Liquidators, as they were agreeable to the execution of the sale deeds, It was the learned Company Judge, who under his powers of supervision, disclaimed the agreements. The disclaimer shall figuratively be treated as that of the Liquidators, under section 225 (1) of the Companies Act, and time shall be deemed to have been extended at least upto the date of that order. It is the duty of the Official Liquidators to now formally convey the disclaimer.
32. We now take up the objection raised on behalf of the Official Liquidators, namely, that the learned Company Judge had no authority to proceed with the petitions of the appellants under the Companies Act and that the jurisdiction of the Company Judge was only confined to the provisions of Part III (other than those of sections 45 to 49 and 59) and Part IV of the Banking Companies Ordinance, 1962, and that the petitions should have been dealt with under section 61 of the said Ordinance. We agree with the contention of the Official Liquidator in this respect. On 20-2-1980 when the order of winding up was passed, it was noted by the learned Company Judge that the respondent Company had filed a petition under section 162 of the Companies Act and the State Bank of Pakistan had also filed a petition under section 43-F of the Banking Companies Ordinance, 1962, for the winding up of the respondent Company and that whilst notices and citation had issued on the first petition, notice and citation had not issued on the second, and in order that delay may not defeat the proceedings, the learned Company Judge passed the order on the first petition, but clearly stated that the State Bank would take action in the matter after the said order.
The learned Company Judge specifically noted that the order of liquidation was passed subject to the provisions of the Banking Companies Ordinance, 1962, and allowed the State Bank of Pakistan to take all proceedings under that law. When later the Company Judge passed his order on the petition (C.O. 27 of 1980) of the State Bank of Pakistan on 27-2-1980, he made it clear that the main order had been passed on the respondent Company's petition (C.O. 48 of 1979), which was passed subject to the provisions of the Banking Companies Ordinance, 1962, and that, therefore, no formal order was required on the Bank's petition. Subsequent orders passed by the learned Company Judge regarding appointment of the nominee of the State Bank of Pakistan as Joint Official Liquidator, also show that the proceedings were being taken under the Banking Companies Ordinance. In short, what appears is that though the winding up order was passed on the respondent Company's petition for winding up made under section 162 of the Companies Act, the Company Judge made it clear that the said order was one under the provisions of the Banking Companies Ordinance, 1962, and he also allowed the State Bank of Pakistan to take all proceedings under that law in respect of the liquidation of the respondent Company. It is, therefore, clear that under subsection (3) of section 43-F of the Banking Companies Ordinance, 1962, the provisions of Part III (other than those of sections 45 to 49 and 59) and Part IV of the Banking Companies Ordinance, applied to the winding up proceedings and that no petitions lay before the learned Company Judge under section 171 of the Companies Act. Basically, the case was one covered by section 61 of the Banking Companies Ordinance. All petitions by the appellants lay under this section. It appears that the learned Company Judge decided the case on the erroneous assumption that sections 171 and 230-A of the Companies Act were applicable. For this error, we hold the Official Liquidators personally responsible, for it was their duty to have drawn the attention of the learned Company Judge to the orders of his predecessor having a bearing on this subject and the law applicable thereto. In view of the fact that the Company Judge passed a composite order on 20-2-1980 making it clear that the order of liquidation was passed subject to the provisions of the Banking Companies Ordinance, 1962 and that the State Bank of Pakistan was also allowed to take all proceedings under that Ordinance, the winding up proceedings stood drawn within the jurisdiction of the Banking Companies Ordinance. In this view of the matter, the impugned order passed under section 230-A of the Companies Act, 1962, deserved to be set aside and the petitions (C.M. 236/L of 1980 and C.M. 290/L of 1980) filed by the appellants deserves to be remanded to the present Company Judge, so that the same may be dealt with according to section 61 of the Banking Companies Ordinance.
33. For the foregoing reasons, we hold that the consolidated order of the learned Company Judge dated 5-5-1982 passed on petitions C.M. 236/L of 1980 and C.M. 290/L of 1980, is illegal, null and void and is set aside. The said petitions are remanded to the present learned Company Judge, so that the same may be dealt with in accordance with section 61 of the Banking Companies Ordinance, 1962. Since we are remanding these petitions, we wish to observe that nothing herein contained shall debar the parties from asserting such rights and defences as may be available to them under the Banking Companies Ordinance, 1962, or any other law applicable.