MALIK ASRAR AHMAD KHAN, MEMBER.-1. Mr. Mohammad Khuram, S/o Mian Mohammad Anwar and others, shareholders of Kotri Textile Mills Limited filed an application under sections 231, 263, 269 and 271 of the Companies Ordinance, 1984, on 19th May, 1986, with the following prayer:-
(a) The existing directors of the company be disbanded.
(b) An Extra Ordinary General Meeting of the shareholders may be called to be presided over by the nominee of CLA to transact the following business:
(i) the shareholders be allowed to exercise their right of vote personally or by proxy;
(ii) 7 directors including chief executive be elected for a period of 3 years; and
(iii) cause the said elected 7 directors including the chief executive to take control of the affairs and business of the company.
The applicants, inter alia, alleged that:
(i) Mr. Mohammad Waqar one of the Directors had ousted Mian Muhammad Anwar the Chief Executive of the company and unlawfully removed the record from the registered office of the company;
(ii) the affairs of the company were being run in a manner prejudicial to the interest of the shareholders;
(iii) annual general meeting held on 15th June, 1985 had not been convened properly as no proper notice was issued;
(iv) the directors filed suits against each other in the Courts i.e., Civil Courts and High Court of Sind, Karachi;
(v) due to the above litigation, the annual general meeting of the company due in March, 1986 had not been convened; and
(vi) the company had taken a loan of Rs. 20 million and the amount being earned was being deposited in another account opened by Mr. Waqar in the name of the company.
2. In order to take cognizance of the case and to investigate into the affairs of the company, a notice dated 8th September, 1986, pursuant to section 263 of the Companies Ordinance, 1984 was issued to the Secretary of the company and also to Mr. Mohammad Waqar, Director of the company to show cause in writing by 30th September, 1986, as to why the appointment of Inspector under section 263 of the Companies Ordinance, 1984 may not be made. In response to this Mian Muhammad Waqar vide his reply dated 24th September, 1986, categorically denied all the allegations and maintained that no violation as such had been made. He further submitted that the issues raised in the show-cause notice were sub-judice before the High Court of Sind, Karachi. The matter was, therefore, held in abeyance.
3. After disposal of the cases by the Civil Courts and High Court of Sind, Karachi, the instant case was fixed for hearing on 28th July, 1990, at Karachi. Mian Muhammad Waqar appeared in person and submitted that in pursuance of a mutual settlement, he had resigned from the directorship of the company and had no concern with the management and affairs of the company. This contention of Mian Muhammad Waqar was supported by Mr. S.A. Hassan a Director and representative of the applicant and the company. Mr. S.A. Hassan submitted that in terms of the said settlement all the issues raised in the application had been resolved and the applicant Mr. Mohammad Khuram was elected as Chief Executive of the company. He further submitted that the issues raised in the application as well as in the show-cause notice were dealt with by the High Court of Sind, Karachi in the cases listed as JMSC 25 of 1985, JMSC 15 of 1986 and JMSC 18 of 1986, wherein the following orders were passed on 18th March, 1987: "I appoint the Official Assignee as a Commissioner to take immediate steps for holding of the above annual general meeting which will be presided over by him in accordance with the provisions contained in the Memorandum and Articles of Association of the Company. The following matters will be transacted in the aforesaid annual general meeting:
(i) The passing f the audited accounts for the year 1985-86.
(ii) Appointment of auditors for the subsequent years.
(iii) Election of the Board of Directors."
4. In compliance with this order the annual general meeting was held under presidentship of the Official Assignee on 17th June, 1989, which inter alia says that:
(i) The Audited Accounts, Directors Report and Auditors Report thereon for the year 1985-86 Le., year ended 30th September, 1986 as audited and certified by the Auditors of the company, were approved and adopted.
(ii) It was resolved to elect Directors of the company:
1. Mr. Mohammad Mukhtar Monnoo
2. Mr. Mohammad Anwar Monnoo
3. Mr. Mohammad Khurram Monnoo
4. Mr. Mohammad Waqar Monnoo
5. Mst. Hajra Begum
6. Mr. Khalid Gulzar.
7. Mrs. Ghazala Waqar.
5. On behalf of the applicants Mr. S.A. Hassan further submitted that the said Directors elected Mian Muhammad Khurram, the main applicant, as Chief Executive of the company and as a result all the issues had been resolved. He contended that cause of the complaint was removed and now the affairs of the company were going smoothly. He requested that the application may be filed and the show cause notice may be dropped. He also filed photo copies of the following documents:
(i) Copy of resignation letter dated 18th January, 1990 of Mian Waqar from directorship of the company;
(ii) Form 29-A dated 3rd May, 1990, showing the names of the Chief Executive and Directors of the company;
(iii) Minutes of the annual general meeting of the company held on 17th June, 1989 under the presidentship of Official Assignee Mr. Bashir Ahmad Memon, in pursuance of the order dated 18th March, 1987 of the High Court of Sind, Karachi; and
(iv) Statement of Current Account No. 00798771 of the company for the year 1985-86.
6. I have considered the matter and invited the attention of Mr. S.A. Hassan, Director, to the violations pointed out in the show cause notice. He mentioned that the annual general meeting held on 17th June, 1989 under the directions of the High Court of Sind, Karachi, approved the annual accounts for the year 1985-86, i.e., year ended on 30th September, 1986 and also elected the Directors and Chief Executive of the company. Therefore, all the issues had already been resolved.
He again prayed that the application may be filed and the show cause notice may be withdrawn in the larger interest of the company. In order to appreciate the contention of the applicant and the company, I have perused the documents produced by the applicant and the company and find that the affairs of the company had been agitated due to family disputes and almost all the issues as such had been dealt with by the High Court of Sind, Karachi. In the circumstances, I hereby vacate the show cause notice issued in pursuance of section 263 of the Companies Ordinance 1984.