1. ' This is a petition under Section 309 of the Companies Ordinance, 1984 for winding up of the respondent Company namely Ahmed Construction Company (Private) Limited.
2. ' It is stated that the petitioner is the Creditor of the respondent-Company and an amount of Rs,1,56,001 is due and payable by the Company to the petitioner together with interest amounting to Rs,2,50,000 totalling Rs,3,81,000. The Company is a Private Limited Company by shares and inter alia its objects are to build and construct buildings and to carry on the business of contractors. It is alleged that the Company has been carrying on unlawful and fraudulent activities under the Scheme called "builder and developer" whereby in return for a deposit and/or contribution grant of a flat is assured.
3. ' The petition contains a number of allegations against the respondent. However for the purposes of deciding this petition Which has been filed by a Creditor against the respondent company, those allegations Which have some relevance or bearing upon the petition will be taken up by me and discussed. It is stated that the respondents have enrolled about hundred clients for providing flats to them and have procured over one crore rupees from them. By a sublease, dated 16-6-1979 the respondents had granted to the petitioner Flat,NoA-11 Block-A Survey No,23 Sheet No,CL-8, Fatima Jinnah Road, Karachi of which constructive possession is claimed by her. The price of the flat is stated to be fixed at Rs,84,700 which was first enhanced to Rs,1,50,000 and finally to Rs,1,90,000 out of which the petitioner has paid Rs,1,56,000 leaving a balance of Rs,34,000 payable by her. This amount she is ready and willing to pay to the Company on completion of the work and upon possession of the flat in a habitable condition. The petitioner has also given particulars of some creditors/investors to whom the respondents are indebted. Reference is also made to a suit bearing No,278 of 1983 filed by M/s. Habib Bank Ltd., in which on 14-10-1984 a final decree was passed against the respondents for recovery of Rs,63,77,472. Other suits bearing Nos.559/87, 501/88, 590/88, 759/88, 760/88 and 761 of 1988 and three Execution Applications Nos.44/84, 45/84 and 37/86 are also said to be pending against the respondents. The petitioner has also given the details as to how the respondents had committed breach of contract with other allottees of flats who according to her have now become creditors of the respondents. The respondents had also filed a Suit No,979 of 1988 against the petitioner in which the sub-lease in respect of her flat was surrendered and the said flat was sold by the respondents to some one else for Rs,2,00,000 only. It is alleged that the respondents had acknowledged their indebtedness to the petitioner by issuance of Cheque No,696112 dated 11-5-1989 which was dishonoured. By notices dated 12-3-1989, 14-6- 1989 and 27-6-1989 being Annexures "L", "P" and "R" to the petition respectively, the petitioner had required the respondents to make payment of her debt which the respondents have failed to do and hence the respondent Company are liable to be wound up. Further, it is urged that the respondents have lost its substratum, not operating its business without any plausible reasons, have stopped and abandoned the project, have ceased to be commercially viable and are indebted to large number of creditors.
4. ' The respondents in their counter-affidavit have vehemently opposed the petition stating that the petition is incompetent, misconceived, not maintainable, mala fide and filed for the sole purpose of coercing and defaming the respondents.
5. ' It is averred by the respondents that the dispute relating to the flat dates back to the year 1975.
6. The provisional allotment of the flat was subject to cancellation as payment of instalment was not received within 7 days. Due to default in payment by the petitioner and others to the respondents, M/s. Habib Bank Limited had filed a suit in the High Court against them in which sale of the flats in the suit was ordered. Subsequently, Execution No,37 of 1986 was filed by the Bank in which the petitioner had filed an application as an intervenor. In the said execution the respondents have made payment of Rs,40,00,000 (Rupees Four Millions) to the said Bank as per the statement of accounts issued by the Nazir of the Court. It is contended by them that the petitioner was an allottee of a flat and not a creditor of the respondents. The petitioner was a persistent defaulter and in result of default allotment of flat was cancelled and sub-lease surrendered. As per her -own admission she has failed to make payment of Rs,34,000 being the balance price of the flat. Further, the tentative price of the flat was liable to be enhanced according to the terms of contract. It is, however, stated that the respondents had offered to the petitioner a sum of Rs,2,25,000 in full and final' settlement of the claim as evidenced by their letter dated 15-8-1989 (Annexure 'A' to the counter-affidavit) but the petitioner refused to accept it.
7. ' Mr. Waheed Farooqui, learned counsel for the respondent-Company has contended that this amount of Rs,2,25,000 offered by the Company included Rs,68,999 over and above the amount paid by the petitioner viz. Rs,1,56,001 and hence the only object of the petitioner now is to blackmail the respondent-Company so as to extract more money from them. Reference is made by the learned counsel to para. 29 of the petition wherein the petitioner's demand is of Rs,3,81,000 from the respondent-Company which includes Rs,2,25,000 over and above the actual amount of Rs,1,56,000 paid by the petitioner.
8. ' Learned counsel for the petitioner, candidly states that the petitioner's sole interest is in the winding up of the respondent Company. Nevertheless the respondents were directed vide order of 10-8-1989 to deposit the said amount of Rs,2,25,000 offered by them in the Court compliance whereof has already been made by them.
9. ' Learned counsel for the petitioner urges before me that the petitioner has filed the winding up petition as Creditor on the ground that Company "is unable to pay its debts" under Section 305(e) of the Ordinance. As to when a company shall be deemed "unable to pay its debts", reference was made to Section 306 of the Ordinance which runs as follows:- "306. Company when deemed unable to pay its debts.--(1) A company shall be deemed to be unable to pay its debts--
(a) if a creditor, by assignment or otherwise, to whom the company indebted in a sum exceeding one per cent of its paid up capital or fifty thousand rupees, whichever is less; then due, has served on the company, by causing the same to be delivered by registered post or otherwise, at its registered office a demand under his hand requiring the company to pay the sum so due and the company has for thirty days thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor; or
(b) if execution or other proceeds issued on a decree or order of any Court or any other competent authority in favour of a creditor of the company is returned unsatisfied in whole or in part; or
(c) if it is proved to the satisfaction of the Court that the company is unable to pay its debts, and, in determining whether a company is unable to pay its debts, the Court shall take into account the contingent and prospective liabilities of the company.
(2) The demand referred to in clause (a) of subsection (1) shall be deemed to have been duly given under the hand of the creditor if it is signed by an agent or legal adviser duly authorised on his behalf, or in the case of a firm that is signed by such agent or legal adviser or by any member of the firm on behalf of the firm."
10. ' Firstly it is contended by the learned counsel that the respondents have failed to pay its debts within the meaning of Section 306(a) of the Companies Ordinance, 1984, as the petitioner before filing the petition for winding up had given a number of notices to the respondent-Company, the earliest notice dated 12-3-1989 being annexure "E" to the petition is as follows:-- 'REGISTERED A.D. 12th March, 1989 ' Ahmed Construction Company (Private) Limited, C.L.8/23, Fatima Jinnah Road, Karachi.
11. WITHOUT PREJUDICE Dear Sir, ' On behalf of and under the instructions of my client, Mrs. Sabiha Shahid Raza, an allottee and sub- lessee of Flat No,A-11 in your project, Qasr-eJashan, I am to write you that my client had paid to you and your company is indebted to her in the sum of Rs,1,56,001 paid by her during 1975 to 1981. Your company in spite of grant of Sub-lease in 1979 in respect of undivided share of sub-plot ever which the said flat is constructed, has failed and neglected to restore possession of the said flat to my client in a habitable condition on payment of the agreed price. On the contrary the company has fraudulently subjected the project to mortgage and consequent Suit No,278 of 1983 filed by Habib Bank Ltd. Followed by an Execution Application No,37 of 1986. You have allowed the said flat to be attached in the said execution proceedings against the interest of my client. At the same time, you filed a suit against my client bearing No,979 of 1988 (which has since been dismissed as withdrawn on 7-3-1989) for the cancellation of the registered Sub-lease.
12. ' My client has filed an application bearing CMA No,285 of 1989 in the above execution proceedings for the determination of her rights, while you have made an application bearing CMA No, 393 of 1989 representing that your chief executive Ch. Maqbool Ahmed under some alleged authority on behalf of my client has surrendered the sub-lessee's rights in favour of the company and the said flat is sold to some one else for Rs,2,00,000 in utter abuse of the process of law and declaring that you owe an amount of Rs,1,56,001 to my client. #TBS 196 Karachi #TBE ' Unless the flat in question is restored to my client in a habitable condition for the agreed price of Rs,1,90,000 my client apart from other actions and remedies available to her demands requiring you to pay to her the entire aforesaid amount of Rs,1,56,001 so due together with interest thereon at the rate of fourteen per cent per annum from the, respective dates the amounts were paid to you.
13. You should make out a pay order for the entire amount in the name of my client on a scheduled bank crossed account payee and send the same to me within thirty days of the receipt hereof.
14. Please be advised that no part payment shall be acceptable to my client. Should you neglect or fail to pay the total sum or compound for it to the rasonable satisfaction of my client by restoring possession of the said flat to her as above, my client has instructions to take appropriate legal actions against the company as well as your chief executive, which may please be noted. Yours faithfully, (Sd.)
15. ATASH MTRZA (Advocate)."
16. ' From the perusal of this letter, it appears that the petitioner has left it open to the respondents either to give possession of the flat or to refund the amount paid by her. No doubt the notice period is thirty days as required under Section 306(a) of the Companies Ordinance 1984, but the notice itself suffers on account of uncertainty and ambiguity. It is uncertain as the sender has assumed a dual position as Sub-lessee/allottee of a flat and also as a Creditor. It is ambiguous as in one breath the petitioner claims possession of the flat as well as refund of her money with interest from the respondents. It is true that after the receipt of this notice the respondents had sent a cheque for Rs,1,56,001 to the petitioner which was bounced but this will not cure the defect in the notice sent by the petitioner. In re Janlazar Manna Estate Limited AIR 1931 Cal. 692 it was held that a statutory notice under Section 163(i) of the Companies Act 1913 (corresponding to Section 306(a)) is a highly formal and important document. No doubt Section 306(a) of the Companies Ordinance 1984 envisages a notice which on the face of it must be clear and unambiguous and unequivocally state that the person sending the notice is a creditor of the company demanding a specific amount of money from a company. Any defect in the notice will render the winding up proceedings on this ground ab initio defective. Next the petitioner's second notice dated 14-6-1989 being Annexure "P" to the petition is a seven days notice and not different in form and substance than the earlier one. In the last mentioned notice dated 27-6-1986 being Annexure "R" to the petition, it appears that by necessary implication the petitioner has abandoned her claim in respect of the flat and has required the respondents to deposit a sum of Rs,1,56,001 (with no interest) in her account with the Nazir of the Court in lieu of the said bounced cheque for Rs,1,56,001 issued by the respondents within three days of the receipt of the notice but not later than 6-7-1989. Again it may be stated here that this notice does not fulfil the statutory requirements of Section 306(a) of the Ordinance as to 30 days notice period and thus is of no consequence. It will also be seen that whereas the petitioner in her first two notices has demanded from the respondents refund of her money with interest, in her last notice she has abandoned her claim towards interest but again in the winding up petition has referred to her claim for Rs,1,56,001 towards the money paid by her to the respondents and Rs,2,50,000 as interest thereon.
17. ' Next it is urged by the learned counsel for the petitioner that section 306(b) of the Companies Ordinance 1984 may be pressed into service as the Company is commercially insolvent and admittedly the execution application against it is pending and has remained unsatisfied. In support of his contention reliance is placed on AIR 1936 All: 840 wherein it was held as under:-- "Clause (1). Section 163 is general in its terms and has application to all sorts of debts be it a simple money debt, a mortgage-debt or a judgment debt. In the case of a judgment-debt, if execution for the recovery of that debt has been taken and has remained unsatisfied, the Court is, in accordance with Cl. (2), S. 163, bound to presume that the company is unable to pay its debts.
18. Nevertheless, the decree-holder is not debarred from making a demand for the payment of the judgment debt by a notice in accordance with CI: (1), S. 163, without having recourse to execution preceedings. In such a case if the demand remains unsatisfied for three weeks the presumption enjoined by S. 163 necessarily follows."
19. ' Section 306(b) of the Companies Ordinance, 1984 is a verbatim reproduction of section 163(2) of the repealed Companies Act, 1913, a bare reading of which makes it quite clear that the provisions therein contained are available only to a decree-holder whose decree has remained unsatisfied in execution thereof but will not extend to any other class of creditors. What AIR 1936 All: 840 however, states is that a decree-holder instead of filing execution proceedings against the Company and taking action under Section 163(2) of the Companies Act, 1913, may give a notice under Section 163(1) of the repealed Companies Act, 1913 to the Company and on the expiry of the notice period may proceed to file winding up proceedings against the Company. But this is not the case of the petitioner who admittedly is not a decree-holder and hence this decision will not help her.
20. ' Next it is urged by the learned counsel that in any case the petitioner's case falls under the just and equitable clause namely (b) of Section 305 of the Companies Ordinance, 1984, which corresponds to Section 162(v) of the Companies Act, 1913. In support he has placed reliance on AIR
(36) 1948 Cal. 335, in which it was held as follows:-- "Invalidity of demand notices set out in the petition for winding up in that they did not comply with the requirements of S. 163, may prevent the petitioner from getting the benefit of the presumption as to the company's inability to pay its debt but the petitioner may prove such inability as a fact aliunde and may rely on the just and equitable ground."
21. ' In this case a petition was filed by the Creditors/Shareholders under sections 153 and 151-A of the Companies Act 1913. The Court had sanctioned a scheme for payment of amounts due to Creditors including the petitioner who had also separately filed a petition for winding up of the Company under section 163 of the repealed Companies Act 1913. The petitioner being a consenting party to the scheme for repayment by the Company, his petition was adjourned sine die. The said scheme had altogether failed whereupon on an affidavit, the petitioner sought direction on his application for winding up. The Court in the circumstances inter alia had held that the position of a Creditor who is bound by a scheme providing for payment at stated intervals and who is not paid in terms of the scheme should not be different from and worse than the position of an instalment bound Creditor whose instalment has not been paid in spite of maturity. Further, a scheme, when sanctioned by the Court becomes binding on the Company and the Creditor and if any amount due under the scheme remains unpaid, the petitioner can rely on just and equitable ground as there was sufficient averment of the Company's inability to pay debts in the petition filed by the petitioner. The facts of AIR 1948 Cal. 335 are entirely different and distinguishable from the present case.
22. ' Mr. Wahid Farooqui, learned counsel for the respondent-Company has urged before me that a petition under section 309 of the Ordinance, must in every respect, comply with its mandatory provisions failing which it must be dismissed in limine. It is an admitted position that 30 days notice as contemplated under section 306(a) of the Companies Ordinance 1984 is required to be given by the petitioner to the respondent-Company before the institution of the petition under section 309 of the Ordinance and as per the record before me the petitioner has not complied with the statutory provisions of section 306(a) of the Ordinance. The petitioner's case also does not fall under section 305(c) read with section 306(b) & (c) or section 305(b) of the Ordinance as discussed above.
23. ' In the result, the petition is dismissed with costs. Mr. Wahid Farooqui, learned counsel for the respondents states at the Bar that respondents shall have no objection if the petitioner is allowed to withdraw the sum of Rs,2,25,000 deposited by them in the Court in full and final settlement of her claim. Accordingly, the petitioner is allowed to withdraw this amount without any notice to the respondents.