On 1 June, 1987 the Pakistan Industrial Credit and Investment Corporation Ltd. (hereinafter referred to as 'PICIC) filed application under sections 305 and 306 of the Companies Ordinance, 1984 against Mansoor Textile Mills Ltd. (hereinafter referred to as 'respondent"), and others for winding up of the respondent on the grounds inter alia; that the respondent was unable to pay its outstanding loan amounting to Rs.126,162,226.55, as on 30th September, 1986, that the respondent-company was closed for the last three years, it incurred huge losses as a result of mis-management, malfeasance and misfeasance of respondent Nos.2 to 9, that it was impossible for the respondent to pay the loan amount to the petitioner or other creditors, that the respondents Nos.2 to 9 started pilfering and unauthorisedly removing the machinery and assets of the respondent-company, that respondents Nos.2 to 9 were acting contrary to the Memorandum and Articles of Association of the respondent-company.
2. Alongwith this petition the petitioner filed application under section 325 of the Companies Ordinance, 1984 for appointment of the Provisional Manager on similar grounds.
3. In reply to the aforesaid application, the liability to have received the loan and executing the documents in respect thereto was not controverted. It was, however, maintained that the amount in question was incorrectly calculated and that the disposal of the Mills through the winding up process cannot generate resources enough to satisfy even the secured creditors. It was suggested that if relief package is revised it will improve the financial position of the respondent-- company to discharge its liabilities. The closure of the Mills, for a period of 4-1/2 years was admitted but itst was attributed to labour problems and clash of workers with the management. The allegation regarding pilferage of the assets of the company was categorically refuted.
4. On 28th March, 1988 the petitioner and respondent No.1 arrived at the following settlement:- (i)Dr. M.S. Rana, Ukay Fibers Ltd, Gulberg, Lahore shall prepare the inventory of the machinery, tools, equipments and other assets of the company with candid cooperation of respondent No.1. For that purpose he shall visit the premises of respondent No.1 on 4th, 5th and 6th of April, 1988 at 10 a.m. Or for any other date thereafter at the same time. He shall submit his report on or before 18th April, 1988.
(ii)The petitioner shall appoint his own guards to protect the machinery, tools, equipments and other assets of the company and they shall remain on the premises till 2bth June, 1988 unless recalled earlier by the petitioner.
(iii)the petitioner and respondent No.1 have pointed out that one Mr. Kaleem Zubairi has made an offer to purchase respondent No.1 and Mansoor Textile Mills Ltd. (both the units) and notified the petitioner to accept the approved relief package unconditionally. The petitioner, indicated willingness to place the proposal before the Industrial Rehabilitation Committee, for consideration.
It has been agreed that in case on consideration of the recommendations made by the aforesaid committee the petitioner does not accept the final proposal. The respondent No.1 shall not oppose the winding up proceedings launched by the petitioner in this Court against both the units (Aaj Textile Mills Ltd. And Mansoor Textile Mills Ltd)------.(The, underlining is mine). The process of finalisation of the aforementioned proposal shall be got completed by the petitioner on or before 26th June, 1988. The decision of the petitioner finally arrived at in this behalf shall be communicated to the Court on or before 26th June, 1988.
(2)In view of the terms of settlement recorded above, the question of appointment of the provisional manager is deferred till 26th June, 1988."
The case came up for hearing on 6th July, 1988 when learned counsel for the parties placed on the record "agreed arrangement" made between the parties in writing and sought incorporation thereof in the order of the Court. Accordingly the terms of the agreement were allowed to form part of order of this Court which are to the following effect:- "Further to the orders of this Hon'ble Court dated 28th March, 1988, the parties have held negotiations in respect of the offer of Mr. Zubairi. The negotiations are still m progress. In addition to the offer of Mr. Zubairi, the parties have decided to solicit direct cash bids for the projects, Aaj Textile Mills and Mansoor Textile Mills Ltd. The Agreed Arrangements for such solicitation are:- .
(1)Bids/offers shall be advertised by the respondent-companies in the press or solicited through private negotiations.
(2)When solicited through advertisements, the offers/bids (when received by the Companies) would be sent directly to PICIC m sealed covers.
(3)All press advertisements shall be liable to the approval of PICIC.
(4)PICIC may or may not accept the offers/bids singly or in consultation with the major creditors.
(5)Any offer, if approved shall result in direct payments of all the money to PICIC and no money whatsoever, shall be received by the respondents.
The parties have also agreed that the Chowkidars/Guards' charges at the Mills shall be bt)rne by the respondent-companies. Such charges were indicated at approximately Rs.25,000 per month with effect from the date of their appointment after the orders dated 28th March, 1988.
The above arrangements that is direct sales or the offer from Mr. Zubairi will be finalized within three months, that is by 6th October, 1988. If they are not approved within this period by PICIC, the respondent-companies shall be wound up in accordance with the orders of the Court dated 28th March, 1988."
On22nd October, 1988 the respondent moved application (C.M No.457-L/1988) seeking further extension of time by three months to enable the respondent-company to finalise the disposal of the assets through private negotiations in consultation with the petitioner. It was contended on behalf of the respondent that strenuous efforts are being made for finalisation of the sale of the assets of the company through private negotiations and in this connection some of the interested parties have already contacted the respondent.
5. This application was opposed by learned counsel for petitioner. It was submitted that this Court had already shown great indulgence in favour of the respondents to dispose of the assets of the company as per terms and conditions settled between the parties but the respondents are deliberately delaying the disposal of the matter and thereby incurring huge losses to the Company and abnormally increasing its liabilities.
6. M/s. Jawed S. Khawaja & Mr.Tariq Kazi, Advocates on behalf of ICP and National Bank of Pakistan, Mr. Mohsin Ansari Advocate for A.B.L., Mian Abdur Rashid, Advocate for Habib Bank Ltd. And Mr. Masood Javaid, Advocate for MCB who represented other creditors of the company, supported the application for winding up of the company on account of the conduct of the respondents Nos.2 to 9 and enormous increase in the liabilities of the company.
7. I have heard learned counsel for parties at some length. It is true that presently the respondent- company is in debt for approximately over Rs.12 crores. The Mills are closed for 4-1/2 years, all the creditors of the company except the petitioner emphasised the desirability of the winding up of the company at this stage on account of the inability of the company to pay in debts and mounting liabilities far beyond the value of its assets. On 28th March, 1988 the respondent No.1 agreed in writing not to oppose the winding up proceedings in case the petitioner did not accept the final proposal made by the Industrial Rehabilitation Committee in respect of offer made by Mr. Kaleeta Zubairi to purchase the assets of the respondent-company. The process for finalisation of the proposal was to be completed on or before 26th June; 1988. The matter could not be finalised by 26th June, 1988 but due to another agreement dated 6th July, 1988 the period for finalisation of the matter was extended for another three months ending on 6th October, 1988. It was settled that if the arrangements in the agreement are not approved, within that period by the petitioner the respondent-- company shall be wound up in accordance with order of the Court dated 28th March, 1988. The matter could not be finalised even in the extended period. There is hardly any justification to further extend time which in my view will be a futile exercise and prejudicial to the interest of the company. The respondents failed to honour their commitments incorporated in orders dated 28th March, 1988 and 6th July, 1988 of this Court and are estopped to seek further indulgence A in this regard.
8. Even otherwise the respondents are unable to pay the massive liabilities, the Mills are closed for the last over four years incurring recurring losses, all the creditors unanimously support the winding of the company at this stage. I am, therefore, of the considered opinion that it is a fit case for winding up of the company at this juncture. Order accordingly.
9. M/s. Kh. Shaukat A.I, Advocate and Malik Muhammad Nawaz, Advocate are appointed Joint Official Managers. They shall be tentatively paid Rs.4,000 and Rs.3.000 respectively per month as their remuneration. This will be in addition to their travelling and other expenses. The petitioner being the main creditor of the company is authorised to nominate one of its Officers to act as Joint Official Manager. His remuneration and expenses, however, shall be borne by the petitioner. The petitioner shall deposit within a week in advance a sum of Rs.50,000 to meet six months remuneration of the two Official Managers and other miscellaneous expenses. They shall settle their own routine to carry out their duties. The Joint Official Managers shall immediately take into their possession and control all the properties, effects and actionable claims to which the company is or appears to be entitled and to submit regular reports to the Court of the progress in the matter.
For the reasons recorded above this petition (CM No.514-L/1987) is disposed of while C.M. No.457- L/1988 stands dismissed.