Petitioner, who at one time was a shareholder of the respondent Company (Hafizabad Straw Board Mills Limited) and had offered his personal property as a security for the loan advanced to the Company by Muslim Commercial Bank has filed the petition for winding up of the said Company on the ground, inter alia, that the Company is unable to pay its debts. It is alleged by the petitioner that Muslim Commercial Bank Limited brought a suit for the recovery of the loan amount in which a decree was passed by the Special Judge Banking, Lahore, against the Company and the petitioner(who had mortgaged his personal property as a security for the loan) but the Company neglected to pay the decretal amount despite notice of demand served on it by the petitioner. It is further alleged that the Company took a loan of Rs.46,80,000 from Industrial Development Bank of Pakistan and another loan of Rs.5,00 000 from the United Bank limited but has failed to repay these loans to the said Banks.
2. The learned counsel appearing for the respondents has raised a preliminary objection that the petitioner is neither a shareholder nor a creditor of the Company and, therefore, he has no locus standi to maintain the petition for its winding up. Learned counsel for the petitioner, is reply, has submitted that the petitioner is a contingent and a prospective creditor of the Company and, therefore, he can maintain the petition for its winding up. In support of his .Submission, learned counsel has referred to section 309 of the Companies Ordinance, which m its relevant aspect reads as under:-- "An application to the Court for winding up of the company shall be by petition presented, subject to the provisions of this section, either by the company or by any creditor or creditors (including any contingent or prospective creditor/ creditors "
The afore referred provision quite clearly shows that a petition for winding up of a Company can be brought by any creditor including any contingent or prospective creditor. Case of the petitioner is that he had mortgaged his personal property to secure the loan advanced by Muslim Commercial Bank to the defunct-Company. The Bank brought a suit against the Company and the petitioner for the recovery of the loan amount which suit was finally decreed on 17-3-1985 and in execution of the decree, petitioner's property under mortgage has since been attached. Contention of the learned counsel for the petitioner is that in case the decretal amount is ultimately recovered by sale of the mortgaged property of the petitioner, the respondent--Company Will become a debtor to the petitioner and in the circumstances petitioner can be said to be a contingent and/or prospective creditor of the respondent-Company and, therefore, he is entitled to move for its winding up under section 309 of the Companies Ordinance. In support of his contention, learned counsel has placed reliance on a case from Indian jurisdiction reported In re: Kermeen Foods P. Ltd. (Company Cases 1985 Vol 58 page 15G) wherein it was held that a guarantor of the loan to a Company is a contingent creditor ' and as a contingent creditor, he can move a petition for winding up of the Company. Learned counsel appearing for the respondents has not been able to meet this contention which Appears to have considerable force. I accordingly hold that the petitioner in the circumstances is a contingent creditor and in that capacity he is entitled to move for winding up of the respondent-Company.
3.Learned counsel for the respondents has next contended that since the petition for winding up of the respondent Company has been brought by the petitioner as a contingent creditor, it cannot be heard until the petitioner furnishes security for costs and also establishes a prima facie case for winding up. This contention is based on proviso (d) to section 309 of the Companies ordinance which lays down "the Court shall not give a hearing to a petition for winding up a company by a contingent or prospective creditor until such security for costs has been given as the Court thinks reasonable and until a prima facie case for winding up has been established to the satisfaction of the Court."
Learned counsel for the petitioner has expressed his willingness to furnish any reasonable security for costs which the Court may order and as regards the prima facie case; he has submitted that on the allegations made by the petitioner in the petition which are supported by his affidavit, prima facie case for winding up of the respondent-Company is amply made out. The learned counsel has particularly referred to the inability/failure of the respondent-Company to satisfy the decree passed against it in the suit of Muslim Commercial Bank and its default in paying back the loans advanced to it by I.D.B.P. And United Bank Limited. Mr. M. A. War, learned counsel for I.D.B.P. Has pointed out that the Bank has since filed an application under section 39 of the I.D.B.P. Ordinance, 1961 before the District Judge, Lahore, for the recovery of Rs.5,76,48,519.80 due from the respondent- Company as on 15th May, 1991. It has also been pointed out that United Bank Limited , too, had filed a suit against the respondent-Company for the recovery of Rs.5,00,000 which suit was decreed on 27-6-1992 and the respondent-Company has not paid the decretal amount so far. -These facts have not .Been controverted by the learned counsel for the respondent-Company. With respect to the loan of M.C.B., however, he has contended that it was secured by the petitioner for his personal use. On my query, learned counsel has admitted that the respondent-Company had taken this plea in the suit filed by M.C.B. But the plea was not accepted by the Banking Tribunal which passed a decree against all the defendants including the respondent-Company. It is further stated that the respondent-Company preferred an appeal against. The decree of the Banking Tribunal but later on withdrew it. In these circumstances, I am quite satisfied that a prima facie case for winding up of the respondent-Company is made out. Petitioner is directed to deposit Rs.20,000 (Rupees twenty thousand only) as security for costs, within a period of one month.
4. In view of what has been held above, the objection raised by the learned counsel for the respondents is overruled and I hold that the petition for winding up filed by the petitioner is maintainable which is hereby admitted to regular hearing. Respondents are already represented by their counsel. Fresh notices need not, therefore, be sent to them.
To come for further proceedings on 13-11-1993.