ORDER IHSAN-UL-HAQ CHAUDHRY, J.--1. The petitioner- Bank through this petition under section 309 read with section 305 of the Ordinance, 1984 has prayed for winding up of the respondent- Company on the ground that the respondent is unable to pay its debts.
2. The relevant facts as ascertained from the arguments of the learned counsel for the parties and documents on record are that the petitioner through two agreements was allowed foreign currency loan equivalent to Pak. Rs. 15.023 millions and long term local currency financial assistance of Rs. 2.965 besides short term financial of Rs. 5.500 millions. It is the case of the Bank that although the respondent fully utilized the loans yet failed to re-pay the same as per agreement between the parties. The result was that the liability in October, 1992 on all three counts swelled up to Rs. 5,42,47,731.39. The petitioner served the respondent with legal notice dated 16th September, 1992 but the respondent neither sent a reply nor took any steps to liquidate the liability. Now this petition wherein it is maintained on behalf of the petitioner that the respondent is not in a position to meet its financial liabilities. The respondent filed reply and resisted the petition on facts as well as legal plane.
3. The learned counsel for the petitioner argued that if a company after receipt of notice under section 306 of the Companies Ordinance fails to pay its debts within the statutory period of one month then it will be deemed to be unable to pay its debts within the meaning of sub-section (e) of section 305 of the Companies Ordinance. In this behalf, the learned counsel has referred to the case of Trade and Industry Publications Limited v. Industrial Development Bank of Pakistan (PTCL 1990 CL. 1026). It was argued that the respondent availed the loan facilities but only made payment of Rs. 0.780 million in the year 1989-90 and Rs. 1.610 million in the year 1991 and thereafter no amount, whatsoever, had been made. It was argued vehemently that even during the pendency of this petition for 1-1/2 years the respondent-Company did not bother to take steps to liquidate its lability or at least part thereof. In this behalf, it was added that according to the information collected by the petitioner IDBP filed a suit against the respondent and got a decree of Rs.
83,00,000. Moreover, NDFC who is respondent No. 2 in this petition, is also claiming an amount of about two millions? It>is submitted that all these facts established beyond any doubt that the respondent is unable to pay its debts and it is neither commercially solvent nor there are any reasonable chances for conduct its business in the near future, therefore, it is equitable to wind up the company. It was maintained that the object of the company for which it was incorporated has substantially failed and it is not possible for it to carry on its business and its assets are insufficient to meet the existing liabilities. The learned counsel for the petitioner in this behalf has referred to case of M/s.) Ali Woollen Mills Ltd. v. (M/s.) Industrial Development Bank of Pakistan and 3 others (PLD 1990 SC 763 = PTCL 1990 CL. 1080).
4. On the other had, the learned counsel for the respondent No. 1 argued that the petition has neither been signed nor verified nor filed by a competent person.
In this behalf, the learned counsel has referred to Bank's resolution dated 12th June, 1967. The other objection is that winding up proceedings are no substitute for a suit for recovery, therefore, the present petition is incompetent, mala i.e and liable to be dismissed. In the third place it was argued. That in the agreement of loan both foreign currency and as well as local currency the columns as to date of payment, instalments etc. Were left blank. It is concluded that the loan was re-payable in the year 2001 as is clear from the loan statement. It is added in this behalf that at the best this lapse can be terms as inadvertent and to supply the omission petitioner has to i.e a suit under section 33 of the Specific Relief Act for getting both the documents rectified. On merits it was argued that the loan is not yet due. Moreover, the industry was established as deletion programme of the Suzuki Car and subsequently due to the change in the policy of the Government the Suzuki Car Project was handed back to the Japanese, who are not interested in the deletion programme of the Government and getting parts locally manufactured.
5. The learned counsel for the petitioner while summing up the arguments submitted that the petition was signed, verified and presented by S.V.P. (Law) of the petitioner, who is fully authorized according to amended resolution dated 30th May, 1974. In this behalf, he has referred to para. 10, clauses (1) and (4). It is added that in any case the respondent cannot raise this objection. It is for the Principal to object to' the competency of the S.V.P. (Law), who filed this petition. In this behalf, the learned counsel has referred to case of Khyam Films and another v. Bank of Bahawalpur Ltd. (1982 CLC 1275).It is argued that the spaces left blank in the agreements of financing between the parties is of no consequence because the same are to be read with "sanction letters", which are part and parcel of these agreements. It is added that according to section 41 of the IDBP Ordinance (hereinafter to be referred as Bank Ordinance) certificate of liability is the conclusive proof of the amount due to the Bank. It is added that section 38 of the Bank Ordinance empowers the petitioner to require any industrial concern to pay the loan forthwith. In this behalf, the learned counsel has referred to case of Industrial Development Bank of Pakistan v. Modem Poultry Farm Limited (1990 CLC 1030). It is added that when a borrower is not in a position to meet its financial liabilities then the creditor can move for winding up as held in the case of Modem Poultry Farm Limited (supra). In this case the petitioner after waiting for the respondent to discharge its obligations in respect of amounts advanced to it proceeded to serve notice under section 306 of the Companies Ordinance on 16th September, 1992 but the respondent not only failed to liquidate its liability but also the notice remained unresponding.
6. I have given my anxious considerations to the arguments of the learned counsel for the parties, gone through the record and precedent cases. The learned counsel for the respondent-Company has objected to the competency of the petition on the ground that the same is neither signed nor verified nor filed by a competent person. The petition has been signed, verified and filed by S.V.P. (Law). The learned counsel for the petitioner has pointed out that the resolution dated 12th June, 1967 relied by the learned counsel for the respondent in support of the contention was modified amended by memo dated 30th May, 1974. The relevant portion of the same reads as under:- The following amendments may therefore, please be made in Classifications 'A' and 'B' of Board's Resolution No. 3D (III) of 1967 dated 12th June, 1967 effective from 21st May, 1974: (1) The term 'other confirmed officers Grade II and above' may be added under Classification 'A'. (2) And the term "confirmed Officers Grade III (other than Engineers) and confirmed Junior Officers" may be added under Classification 'B'". It is clear from the above that all confirmed officers in Grade II and above have been added in Classification "A". The petition having been signed, verified and filed by Senior Vice- President, who is an officer of the rank equivalent to Deputy Chief Manager, therefore, the same is in order. Moreover, the petitioner has no locus standi to challenge the competency of the S.V.P. The learned counsel for the petitioner in this behalf has rightly referred to the case of Khyam Films and another (supra). The relevant portion reads as under: "__ .The fact that the person did or did not have authority can effectively be challenged only by the principal. If in spite of the objection taken the principal continues to recognise the authority of the agent to institute the suit I am inclined to think that this would amount to a ratification and the suit would still be a validly instituted suit...." The other objection was that the columns as to the date of payment, instalment etc. Are blank. It was argued that the loan is repayable in the year 2001. The argument is clearly misconceived as the sanction letter is part and parcel of the agreements and schedule of payment, number of instalments have clearly been specified therein.
Moreover, this is clearly an afterthought. If there was any truth in the plea then the petitioner would have immediately informed the Bank of this position in reply to the legal notice.
7. This is not all. The admitted position is that the respondent did make payments in 1989-90 and 1991. Above all the Bank is empowered under section 38 of the Bank Ordinance to call for the payment before the agreed period. The learned counsel in this behalf has rightly referred to the case of Modem Poultry Farm Limited. This power is over and above the provisions of the schedule for re-payment of the loan, therefore, the objection canvassed on behalf of the respondent that the amount is payable only in the year 2001 is without any merit.
8. This brings us to the last legal point that the liquidation proceedings are not substitute for the suit for recovery. The provisions of the IDBP Ordinance and the Companies Ordinance are not in derogation of each other or any other law. It is in the sole discretion of the petitioner to opt for a remedy deemed best to safeguard its interest. The petition cannot be dismissed simply for the reason that the petitioner could have proceeded for recovery of the amount as held in the case of Trade and Industry Publications Limited (supra).
9. Now coming to the merits. The respondent-Company has failed to liquidate its liability in spite of notice under section 306 of the Companies Ordinance, 1984, therefore, it would be deemed unable to pay its debts as held in the case of Modem Poultry Farm limited (supra). This is not all. No. Documentary evidence worth consideration is available on record to show that the respondent is commercially solvent. On the other had, the documents on record clearly prove that it owed huge sums of money to the petitioner and other creditors. It is practically conceded while arguing that the respondent was established as deletion programme of Suzuki Car and subsequently due to the change in the policy of the Government the Suzuki Car was handed back to the Japanese, who are not interested in the deletion programme of this Government. The logical conclusion of this argument is that the respondent is neither commercially solvent nor there are reasonable chances of its doing business in the near future. It is, therefore, just and equitable to accept this petition and direct winding up the respondent-Company.
10. The upshot of the above discussion is that this petition is allowed and the respondent is ordered to be wound up. The consequential orders in regard to the payment of the Official Liquidator etc. Shall be passed at the time of the announcement of this order.