' C.M. 1941/L of 1992: ' Muhammad Yaqoob Khan for Applicant.
' I have heard the preliminary submissions of the learned counsel for the applicant as also of the other counsel appearing for the creditors. There is no pressing urgency for the appointment of Joint Official Liquidator for the time being. This application shall be taken up on 17-5-1993.
IN THE MATTER OF SHAAFI WOOLLEN INDUSTRIES LTD.
' C.O. 21 of 1991 ' C.M. 1873/L of 1992.
' C.M. 1937/L of 1992.
' C.M. 1892/L of 1992.
' Javed Jalal, 01., Muhammad Yaqoob Khan, Advocate for the Applicant (in C.M. 1873/L of 1992).
' Zahid Hamid, Advocate for the Applicant (in C.M. 1937/L of 1992)
' Malik Fazal Hussain, Advocate for the Applicant (in C.M. 1892/L of 1992).
' This order will dispose of three identical applications, C.M. 1873/L of 1992, C.M. 1892/L of 1992 and C.M. 1937/L of 1992, each filed under section 316 of the Compaines Ordinance, 1984 seeking leave of this Court to proceed with the money suits brought by the applicants against M/s. Shaafi Woollen Industries Ltd. The company under liquidation which suits are pending before the Banking Tribunals at Lahore and Peshawar.
2. C.M. 1873/L of 1992 relates to the suit for the recovery of Rs,2,40,90,635.52 filed by United Bank Ltd., Lahore against the company under liquidation and seven directors/guarantors. This suit was instituted on 14-3-1992 and is pending adjudication before the Banking Tribunal, Lahore.
' C.M. 1892/L of 1992 seeks leave in respect of the following two suits filed by United Bank Ltd., Township, Khalabat (District Haripur) branch against the company under liquidation and 23 others including the directors/guarantors pending before the Banking Tribunal, Peshawar:--
(1) Suit for the recovery of Rs,3,57,64,728.36 instituted before the Banking Tribunal, Peshawar on 5-5- 1992.
(ii) Suit for the recovery of Rs,1,98,22,263 also instituted before the Banking Tribunal, Peshawar on 21- 10-1991.
' Third application C.M. 1937/L of 1992 pertains to Suit No,136 of 1992 filed by Regional Development Finance Corporation against the company under liquidation and three guarantors for the recovery of Rs,26,72,571. This suit was instituted before the Banking Tribunal, Lahore on 1-3-1992.
3. These applications have been opposed by Official Liquidator mainly on the ground that if the permission sought is granted to the applicants, they may claim preference over other creditors. An objection has also been taken with respect to the suits pending before the Banking Tribunal, Peshawar that since the Official Liquidator is under legal obligation to defend the suits, he will have to incur a lot of expenses on travelling, hotelling, boarding and lodging in pursuing the said suits which will be a great burden on the assets of the company and consequently on the creditors including the applicants.
4. It has been submitted on behalf of the applicants that all of them are secured creditors as they had advanced loans/credit facilities to the company under liquidation against the security of hypothecation/pledge of the goods of the company and as for the loans/facilities extended by the United Bank Ltd., Township, Khalabat, the company had also furnished additional security by way of mortgage of immovable properties. It is accordingly argued by the learned counsel for the applicants that being secured creditors, the applicants can rely on their securities which they can enforce in their suits and they cannot be compelled to prove their debts in the liquidation proceedings. According to the learned counsel, leave to sue or to proceed with the suit already filed is generally granted to a secured creditor more so when the company is not the sole defendant but the guarantors are also added as co-defendants as is the position in the instant cases.
5. It is not denied that the applicants are the secured creditors. Law is fairly well-settled that a person claiming to be a secured creditor cannot be compelled to prove his debt in liquidation. He can stand outside the winding up proceedings and rely upon a security and when such a person asks for leave to sue, the prayer should ordinarily be granted, unless there are special grounds to support the contrary course. Refer : The Punjab Pulp and Paper Mills Limited (AIR 1932 Lahore 475).
Similar view has been expressed In re: Capt. Muhammad Aqeel Siddiqi and 2 others reported in PLD 1988 Karachi 72. It was held in that case 'In any case, where a suit to enforce a mortgage or security upon the company's property is filed normally leave to proceed with the suit is granted particularly in cases where a guarantor or guarantors are also joined as parties to the suit because presence of both the company in liquidation represented by liquidator and guarantor or guarantors is either necessary or proper in order to effectually and completely decide all questions involved in the suit". In re: Marine Investment Co. (1868) L.T. 535, it was held that in cases where the company is a necessary party to the action, but there are other defendants as well the Court generally grants leave. Refer : PLD 1964 (W.P.) Lahore 326.
6. In view of the position aforestated, the applicants appear to be entitled to the grant of relief prayed for by them. As regards the objection of the Official Liquidator regarding the expenses to be incurred in pursuing the suits pending before the Banking Tribunal, Peshawar, suffice it to observe that leave cannot be refused on this ground alone and in any case, the Official Liquidator is not required to visit Peshawar on each and every date of hearing. He can engage a counsel from Peshawar to defend the suits, if not already engaged.
' In view of what has been said above, all the three applications are allowed and the applicants are granted leave to proceed with their respective suits but this will be subject to the following conditions:--
(a) the result of the suits shall be reported to this Court soon after the decision of the suits;
(b) that the decree if any passed in favour of the applicants shall not be executed against the company under liquidation/liquidator without the orders of this Court, and
(c) in case the suits are decreed with costs, the decree-holders will not claim the same against the company under liquidation/liquidator. In fact the learned counsel for the applicants have undertaken that they will not recover any such costs.