JUDGMENT MUNIR A, SHEIKH, J.- The petitioner as a creditor of respondent No. 1-Company through this petition has sought an order for winding up of the said Company.
2. The facts relevant for disposal of this petition shortly stated are that respondent-company opened and operated current Account bearing No. 1214-48 with the petitioner since 1992. At the request of the said company the petitioner granted to it Cash Finance Hypothecation Limit to the tune of Rs. 10.0 Million (Rupees one Crore) with mark-up at the rate of.48/1000 per day. The expiry date of this financial facility was 31.1.1994. In order to secure this facility the company executed agreement for financing on mark-up basis dated 21.1.1993, letter of hypothecation dated 21.1.1993, D.P.Note dated 21.1.1993 for Rs. 12.760 M and Facility letter dated 21.1.1993. This charge was got registered by the Company with the Registrar Joint Stock Companies in favour of the petitioner. In consideration of the said facility respondents No. 2 to 8 also executed personal guarantees in favour of the petitioner by way of security. The respondent No. 1-Company as also respondents No. 2 to 8 along with other Share-holders also pledged 2,100,000 shares with the petitioner representing 96.78 percent of the total holding of the Company.
3. Subsequently the Company passed a resolution on 27.2.1993 and requested the petitioner to enhance the existing limit of Rs. 10.000 Million to Rs. 30.000 Million (Rupees three Crores). This request was also accepted by the petitioner through sanction letter dated 7.3.1993. The said limit was enhanced to Rs. 35.000 Million (Rupees three Crores and fifty lacs) on further request of the Company vide petitioner's advice dated 27.6.1993. The respondent-Company executed further documents in favour of petitioner of the like nature as mentioned above to secure the payment of this loan facility. In addition to respondent company respondents No. 2 to 8 also executed personal guarantees in favour of petitioner of the like nature as were earlier executed by them, as afore- mentioned.
4. The respondent-company again approached the petitioner and requested for further enhancement of this facility from Rs. 35.000 M to Rs. 40.000 M (Rupees four Crores) in order to meet its daily working capital requirements. This request was approved by the petitioner through sanction advice dated 27.6.1993 which was last renewed upto 30.9.1994 vide petitioner's sanction advice dated 26.1.1994, as the Company stated in its request letter dated 27.11.1993 that in the present circumstances the Company was not in a position to repay the above advance at present.
In order to secure this enhanced finance facility the respondent-company further executed documents of similar nature as mentioned above. The charge created was submitted to and got registered by the Company with the Registrar Joint Stock Companies, in favour of the petitioner. In addition to this respondents No. 2 to 8 also executed documents of similar nature as guarantors in favour of the petitioner by way of security.
5. It has been averred that in disregard of its contractual obligations under the above-mentioned facility the respondent-company failed to furnish Stock Reports in time. It has been stated that on a number of occasions when the representatives of the petitioner visited/inspected the factory/godown of the Company it was discovered that the stocks were not available as per the stock reports furnished by the Company. The Company was approached by the petitioner on a number of occasions with a request to make up the shortfall in the stocks but the Company failed/neglected to do the needful and as usual remained unresponsive. The expiry date of the last cash finance limit of Rs. 40.000 M was 30.9.1994 but the Company despite various reminders miserably failed to liquidate its contractual liabilities to the petitioner. It has been stated that the following amounts are payable by the Company to the petitioner:
(a) Principal Amount Rs. 3,99,75,557/81.
(b) Mark-up on 30.9.1994 Rs. 62.82,757/76.
The respondent-Company was sent various reminders calling upon it to pay its outstanding dues but it failed and neglected to repay the same.
7. The winding up of the respondent-company has been sought on the grounds:--
(a) That the Company was to be deemed in law to be Unable to pay its debts as contemplated by Section 306 of the Companies Ordinance, 1984;
(b) That the liquidated resources of the Company immediately available or readily realisable assets in its hands were much less than its current liabilities;
(c) That there was no reasonable prospects of the Company to pay the accrued and prospective liabilities of the petitioner and other creditors by a steady realisation of all of its assets.
8. Apart from the above grounds it has also been alleged that the Company is being run and managed by persons who have failed to maintain true and proper accounts and have committed misfeasance or malfeasance in relation to the Company as is evident, inter alia, from the failure of the Company to furnish monthly Stock Reports and other important information to the petitioner. In the facts and circumstances of the case it will be just and equitable to pass an order for winding up of the Company.
9. An allegation has also been made that the company is being run and managed by persons who have a long history of borrowing huge funds from nationalised banks and development finance institutions without even repaying the same and that funds and resources of the Company have been syphoned off by respondents No. 2 to 8. It has further been averred that respondents No. 2 to 8 have unlawfully depleted the stocks and securities enumerated above and the petitioner has reason to believe that the stocks position prevalent in the factory/godown of the Company is meagre and inadequate thus rendering the security of hypothecation of stocks in favour of the petitioner to be worthless which tantamount to misappropriation of the stocks hypothecated with the petitioner.
10. The respondents have opposed this petition by filing written statement. In reply to paragraph No. 6 of the petition in which it has been stated that respondents No. 2 to 8 being Share-holders of the Company as well as its Directors, were jointly and severally liable for their individual and collective acts of omission and commission constituting matters cognizable by this Court under the provisions of the Companies Ordinance, 1984, they have stated as under: "Para-6: That the Directors are responsible only to the extent that the law has to put that responsibility on them."
There is no denial directly or indirectly even remotely about the assertion of the petitioner that respondents No. 2 to 8 are the Directors of respondent No. 1-Company. It has not been denied that the respondent No. 1-Company opened Account No. 1214-48 with the petitioner as alleged in Para No. 10 of the petition.
11. In reply to paragraph No. 11(a) of the Petition in which the facts regarding grounds of cash finance facility of Rs. 10.0 M along with documents executed by the Company as also respondents No. 2 to 8 have been given, the respondents in the written statement have stated as under:- "Para-11 (a,b,c,d & e); That the documents mentioned in this paragraph are wanting in execution insofar as they have not even been duly filled in and are not complete in themselves for the purposes of supporting the assertion therein."
12. In reply to paragraph No. 12 (a to c) in which facts regarding enhancement of cash finance facility to Rs. 30.000 M and then to Rs. 35.000 M, have been given, it has been stated as follows: "Para-12(a,b,c); That the enhancement of facility from Rs. 10.000 M to Rs. 30.000 M is referable to the record of the Company. Documents mentioned herein being incomplete are not valid documents."
13. In reply to paragraph No. 13 (a to d) in which facts regarding enhancement of cash finance facility to Rs. 40.000 M have been given, it has been stated as under in the written statement: "Para-13; That the enhancement of the facility and the documentation mentioned therein shows that most of the paragraphs have been left blank, such blank documents are not valid in the eye of law."
14. The respondents pleaded that no statutory notice according to law was given. It has been stated that the provisions of Sections 305 and 306 of the Companies Ordinance were to be read together. From the portions of the written statement reproduced above it is manifest that so far as availing of cash finance facilities as stated in the petition firstly for an amount of Rs. 10.000 M then Rs. 30.000 M which was enhanced to Rs. 35.000 M, as also the last finance facility as enhanced to Rs. 40.000 M is an admitted fact having not been denied. Objections have, however, been taken as regards contents of documents executed by the Company and respondents No.2 to 8 to secure the said cash finance facility on the ground that many of them were blank. It may significantly be mentioned here that no allegation has been made that the signatures on these documents were not of respondents No. 2 to 8 or that the same were obtained through any mis-statement of fact, mis-representation or under undue influence.
15. Coming to the question as to how much amount was outstanding against respondent No. 1- Company and payable on the date of institution of winding up petition, it may be mentioned that in paragraph No. 15 of the petition the petitioner has specifically asserted that an amount of Rs.
3,99,75,557/81 was payable as principal amount, whereas the amount payable on account of mark-up as on 30.9.1994 was Rs. 62,82,757/76. In reply to this paragraph in the written statement it has been pleaded as under;- "Para-15; The company has not violated the terms of contract."
It is clear from this that so far as the quantum of the amount due and payable on account of the above mentioned cash finance facilities as mentioned in paragraph No. 15 of the petition is concerned, there was no dispute and the only defence taken was that the respondent-Company did not violate the terms and conditions of the contract.
16. The respondents have pleaded that the winding up petition was not maintainable because the security on the basis of which the facility of loan was granted was ample. It has also been stated that since no other creditor had supported the winding up petition, therefore, the same was not maintainable. An objection has also been raised that in case a creditor has alternate remedy of filing a suit for recovery of the loan no winding up was permissible in law. It has been pointed out that the petitioner had already filed a suit for recovery of the amount.
17. It has also been stated that the fact that finance facility was enhanced three times by the petitioner was itself proof of the fact that the respondent-Company was doing good business otherwise it would not have been enhanced. It has further been averred that the respondent- Company was commercially solvent as the Mill had never been closed even for a day and it was on account of temporary misfortune that payment could not be made which is different from a case of permanent insolvency. It has been stated that mere inability to make immediate payment cannot be a ground for winding up.
18. From the written statement filed by the respondents it is demonstrably clear as observed above that so far as the factum of availing of different cash finance hypothecation limits as mentioned in the winding up petition is concerned, the same has been admitted and acknowledged without any qualification as to the liability arising therefrom. Since Mr. Abdullah Khan Dogar, Advocate, learned counsel for respondents, laid a great deal of stress and rather his argument centered around his submissions that it was a case where the payment of the said amount is not due/recoverable at present as such the question of inability of the Company to pay cannot be raised. He argued that the Company has got sufficient assets and stocks as security and is not in fact insolvent, therefore, I will in the first instance deal with this aspect of the case.
19. An order for winding up of a Company can be sought or made on all or any of the grounds mentioned in Section 305 of the Companies Ordinance, 1984, one of which is inability of the Company to pay its debts. Section 306(1-A)(a), however, provides that in case a creditor by assignment or otherwise to whom the Company is indebted in a sum exceeding one percent of its paid up capital or fifty thousand rupees, whichever is less, then due, serves on the Company a notice through registered post or otherwise at its registered office, a demand under his hand requiring the Company to pay the sum so due and the Comp? Y has for thirty days thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor, it shall be deemed to be unable to pay its debts. It is manifest from this provision of law that mere non-payment of the debt due on the service of notice by the Company by fiction of law is to be deemed to be its inability to pay its debts for the purpose of Section 305 as regards ground for winding up of the Company on account of inability of the Company to pay it debts. The petitioner issued a notice/letter on 24.8.1994 to respondent No. 1-Company, a copy of which was also forwarded to respondent No. 1 in the capacity of Chairman of M/s. Ittefaq Group. It was demanded through this letter/notice that an amount of Rs.4.370 M was due from respondent No. 1- Company as on 1.7.1993 on account of the said finance hypothecation limits, therefore, the same should be paid at the earliest without further loss of time. Earlier on 29.6.1994 a similar notice was also written by the petitioner to which reference was made in the said notice dated 24.8.1994.
Another notice was issued to respondent No. 1-Company on the same date ie. 24.8.1994 that the limit of the cash finance of Rs. 40.000 M was going to expire on 30.9.1994, therefore, if the Company was interested in renewal of the same, it should apply along with the following documents immediately:-
1. Request letter.
2. Resolution of the Company.
3. Stock Report.
4. Latest audited balance sheet.
5. Insurance of the Stocks hypot hecated.
20. In response to earlier letter dated 29.6.1994 for repayment of the amount no reply was given. As to/the second letter dated 24.8.1994 the respondent No. 1-Company did not provide the documents as mentioned in the said letter. There is no averment in the written statement that in response to the said letter the Company provided the said documents to the Bank to process the same for taking a decision for renewal. It may be mentioned here that if the said documents had been provided to the petitioner, the petitioner bank could take any decision either for acceding to the request or otherwise keeping in view the previous conduct of respondent No. 1- Company as regards non-payment of the amount due under the said facility. Mr. Abdullah Khan Dogar, Advocate, learned counsel for respondents, has placed on record a copy of letter dated 29.9.1994 attached with Civil Miscellaneous No.230/L- 95 moved on 3.4.1995 during the hearing of the arguments, which is a letter in response to one of the letters dated 24.8.1994 calling upon the Company to pay its outstanding dues. It has been acknowledged in this-letter that under the present circumstances and unfavourable cash flow position the Company was not in a position to repay the finance facility. It was requested that the above referred limit may be renewed for another period of one year ie. 30.6.1995. It has been stated in this that necessary charge certificate had already been provided to the bank. There is no mention that the five documents which the Company was required to provide if it wanted to make a request for renewal of the cash finance facility as noted above were ever provided. This aspect of the case gains significance as Mr. Abdullah Khan Dogar attempted o-argue that the petitioner bank once having made an offer to the respondent-Company to make a request for renewal of the facility and the same having been responded through letter dated 29.9.1994 as afore-mentioned, as-such, an agreement between the parties came into being and the petitioner bank was bound to renew the cash finance facility.
21. Letter dated 24.8.1994 written by the petitioner was in the nature of reminder to the respondent- Company that the limit of cash finance facility was expiring and if the Company wanted to get it renewed it should make a formal request along with the documents mentioned therein. There was no promise or even any undertaking that in case the Company would make such a request along with the said documents the bank would necessarily "r was bound to renew it. Apart from this even if the submission of learned counsel for respondents is accepted for the sake of argument the offer was not unqualified and it was required that the respondent-Company must make a formal request based on a resolution passed by the Company coupled with overt act of providing to the bank the documents for its consideration to process the case for renewal. As pointed out above there is no averment in the written statement that the said documents were provided on account of which a fresh agreement for renewal of the facility had come into exitance. Faced with this' difficulty Mr. Abdullah Khan Dogar made Civil Miscellaneous No.287/L-95 after the Court reserved the. Judgment, praying that respondent-Company should. Be granted opportunity to produce evidence to establish the factual points as also an opportunity to cross-examine the author of the winding up petition. Mr. Abdullah Khan Dogar moved another application C.M. No.286/L-95 with which certain documents have been appended, one of which is an extract of resolution allegedly passed at the meeting of the Board of Directors of the Company on 27.8.1994 at 10.00 A.M. Resolving that the Company should approach the petitioner bank for renewal of working capital facility upto Rs.40.000 M. Learned counsel for the petitioner has taken strong exception to the genuineness of this document who submitted that such a document could be fabricated by respondent No. 1- Company at its convenience to use it as evidence. He submitted that though this resolution is shown to have been passed on 27.8.1994 strangely in the letter to the petitioner in response to letter dated 24.8.1994 through which production of a number of documents was called was allegedly issued on 29.9.1994, there is no mention of it or explanation of this delay for if resolution had in fact been passed on 27.8.1994 the respondent-Company would have approached the petitioner bank immediately thereafter. The argument of Mr. M. Saleem Sahgal, Advocate, has force. This document is purported to be a copy of resolution, the record of which is in the possession and control of respondent No.1- Company and it is clear that the same has been cooked up in order to produce before the Court at this late stage in order to meet an objection that in response to letter dated 24.8.1994 no such document was provided to the petitioner bank particularly when no mention of any of the documents required to be produced was made in the reply letter dated 29.9.1994. Even if it is presumed that such a resolution was passed but it is clear that the same was never provided to the petitioner bank in response to letter dated 24.8.1994, therefore, even if the same was available in the record of the Company it would not advance the case of respondent No. 1- Company. Mr. M. Saleem Sahgal, Advocate, learned counsel for petitioner has seriously disputed the correctness of even issuance of letter dated 29.9.1994 as alleged by the respondents He maintained that this letter was not relied upon by the respondents in the written statement and no plea was even otherwise raised that the bank was approached in response to letter dated 24.8.1994 for renewal of facility along with five documents mentioned in it. The argument has force.
The plea that the respondent- Company issued the said letter cannot in these circumstances be accepted.
22. The availment of cash finance facility, the liability arising therefrom and non-payment of the same even after notice dated 24.8.1994 are the facts about the correctness of which there is no denial rather they are admitted facts. Learned counsel for respondents, when questioned as to how respondent No. 1 Company can avoid the presumption arising from these facts under Section 306 of the Companies Ordinance that respondent-Company shall be deemed to be unable to pay its debts, made the following submissions:--
(a) That the admission of availment of cash finance facility has a legal effect of making respondent- Company liable to pay but failure of repayment of the same in order to constitute inability to pay as contemplated under Section 306 of the Companies Ordinance could only be if the debt had become payable/recoverable as per terms of the contract on the date of issuance of notice and the date of institution of the winding up petition.
(b) That in this case the transaction of cash finance facility was not in fact a transaction of ordinary loan in which a specific date is always fixed for repayment of the loan whereas according to commercial practice 4 and usage which has the force of law, such a facility is a continuing process which is usually renewed on the expiry of the last date fixed.
(c) That under Section 306 of the Companies Ordinance no order for winding up of a Company can be made . On presumptive insolvency of a Company on its mere failure to pay debt, whereas it is to be established that the Company was in fact insolvent.
(d) That there was no date fixed in the agreement regarding cash finance facility before which the liability was required to be liquidated, therefore, it is a case in which the debt had not become due or payable, as such, the winding up petition is premature.
(e) That the debt in such like finance facility would be payable only as and when the fixed assets and other assets of the Company including the security was rendered insufficient or destroyed rendering the Company unable to discharge its liability from such assets.
23. In amplification of his argument he submitted that the documents placed on record by the petitioner relating to cash finance facilities show that various columns of the same have been left blank. There is no date fixed as such as the last date before which the debt was to be repaid, therefore, the same was not due/payable as envisaged by Section 306 of the Companies Ordinance, therefore, the winding up petition was not maintainable.
24. The first sanction advice dated 14.2.1993 through which cash finance facility of Rs. 10.000 M was granted, provides unambiguously that the expiry/validity date was 31.1.1994 and it was provided therein that the same had been sanctioned subject to adjustment mark-up and overdue PADs in other concerns of the group upto 31.1.1994. In pursuance thereto the respondent-Company executed an agreement for financing on 21st January, 1993, in which it was provided that the Company had agreed to sell to the bank during the period ending 31.1.1994 the goods upto a total of Rs. 10.000 M/ Against another column which had been duly filled the respondent-Company agreed to purchase immediately the said goods from the bank at a price of Rs. 12,760,000/-. The signatures on this document on behalf of the Company have not been denied. Since it was a finance facility/debt advanced on the basis of mark-up system it was provided that the respondent-Company had agreed to sell to the bank the goods of the value mentioned therein as under such system the mode of payment of loan is in the form of sale of goods secured. In the letter of hypothecation under the head "schedule" it had been mentioned that hard and soft board chip and particle board stores and spares had been hypothecated. On 21.1.1993 a promissory note in the sum of Rs. 12,760,000/- was also executed in favour of the petitioner. As required under Section 127 of the Companies Ordinance, 1984, the respondent- Company got a charge registered with the Registrar of Joint Stock Companies. In the same manner personal guarantees were provided by respondents No. 2 to 8. In the said document the relevant columns as to date, the name of guarantor and the sum for which he stood as guarantee, have also been filled.
Respondents No. 2 to 8 also pledged their shares,
25. The respondent-Company approached the petitioner bank through letter dated 21.1.1993 based on a resolution passed by the Company on 18th March, 1993, with a request' to enhance the finance facility to Rs. 35.000 M. It was stated in this letter that uneven cash flow had resulted in shortage of working capital, therefore, it was necessary to meet day to day procurement of raw material that the said enhance j:ash facility may be granted to them. Sanction was granted on 27.2.1993 and the limit was enhanced to Rs. 30.000 M @ 0.48/1000/day as mark-up with the expiry date as 31.1.1994.
This sanction was in substitution of the earlier above mentioned sanction which stood cancelled.
Similar documents were executed in relation to this enhance facility and the relevant columns in the agreement for financing and other documents with the last date for selling the goods to the bank and the amount of consideration to be paid by the respondent-Company has been specifically mentioned unambiguously.
26. The respondent-company again on 4th April, 1993, passed a resolution to approach the petitioner bank for enhancement of the finance facility to Rs. 40.000 M In pursuance thereto a letter was written to respondent-company by the bank on 27.11.1993, stating that the initial cash finance facility was enhanced to Rs. 30,000 M, which was further enhanced to Rs. 40.000 M to meet company's capital requirements. It was categorically stated by the respondents in the request that under the present circumstances the Company was not in a position to repay the advance at present, therefore, the same may be renewed for another period of one year. It may be mentioned here that the last date for payment of the loan as fixed in the previous sanction was 31.1.1994. The petitioner bank on 26.1.1994 acceded to this request and sanctioned the limit of Rs. 40.000 M. The expiry date fixed was 30.9.1994. It was expressly stated that the said approval/renewal was being granted for adjustment purposes only which is very must significant. Similar documents as mentioned above were further executed by respondent- Company undertaking to sell the goods to bank at fixed price which amount tallies with the amount which ultimately after adding the amount due on account of mark-up was to fall due.
27. In view of this material placed on record by the petitioner bank the correctness of which has not been disputed it could not be maintained by any stretch of argument that it was a case where no date was fixed for payment of loan to the bank. The last date for payment was 30.9.1994 and the respondent-Company having failed to pay the same before the said date even after receiving a notice dated 24.8.1994, therefore, the presumption as regards inability of the Company to pay debt as contemplated under Section 306 is fully and aptly attracted. The argument of learned counsel for respondents that the debt had not yet become payable/due is devoid of any merits. It is well established law that no party to a contract/agreement can be allowed to set up any plea contrary to the express terms of agreement in order to prove or establish through oral evidence or mercantile practice or custom and usage to plead that the express terms of the agreement should not be enforced or that the parties orally settled some different terms, therefore, I need not dilate upon the discussion of the merits of arguments based on any practice or usage. Otherwise also learned counsel for respondents failed to point out that in such a to any usage the debt was not payable.
28. Learned counsel for the respondents argued with full vehemence at his command that in a case where the payability of the debt at present is disputed the proceedings in the winding up petition cannot be maintained. In aid of this argument he placed reliance on judgments reported as Trade and Industry Publications Limited Versus Industrial Development Bank of Pakistan (PLD 1990 S.C. 768), Mulla Abdullah Bhai and 9 others Vs. Sana Rope Mills Ltd. (PLD 1971 Karachi 597) and Hashmi Can Company Limited Versus KK. & Co. (P\'t.) Ltd. (1992 SCMR 1006).
29. There can possibly be no cavil with the principle of law that unless a debt is payable on the date of filing of the winding up petition, the same cannot be maintained. Every case is to proceed upon its own peculiar facts and circumstances and in each case the Court has to examine whether the dispute regarding payability of debt in order to oppose the winding up petition has been raised bona fidely and on substantial grounds on account of which the Court is satisfied that the proper remedy would be to file a civil suit in a given situation. In the case of Hashmi Can Company Limited (Supra) relied upon by learned counsel for respondents the correctness of the very accounts was disputed and it was pleaded that on account of supply of defective cans by the petitioner in that case seeking winding up of the Company had suffered losses and damages had been claimed against it. In such circumstances the discretion exercised by the Company Judge in favour of rejection of winding up petition was not interfered with. In the case of Trade and Industry Publications Limited (Supra) the facts were that the winding up petition had been moved on the base of two kinds of debts. A dispute was raised that the debt had not yet become payable. It was found that the said plea may be correct in respect of one of the debts but as regards other it was held that on account of failure of the Company to pay one instalment in-time as a consequence of which the full amount of debt became due it was held that the winding up petition was maintainable qua this debt. It was also held in this case that failure of the Company to pay such debt after it was called upon to pay through notice would raise presumption under Section 306 of the Companies Ordinance that the Company was unable to pay the debt. In the case of Mulla Abdullah Bhai and 9 others (Supra) it was also observed that unless the debt was payable immediately, winding up petition could not be maintained.
30. Learned counsel for respondents while reiterating his argument that in a case where there is a bona fide dispute about payability of a debt On the date of institution of a winding up petition, the winding up petition should be held to be not maintainable, referred to M/s. Industrial Development Bank of Pakistan Versus M/s. Trade and Industries Publications Limited' (1989 MLD 374) and the case of Bengal L.C. Mills & others Vs. Mahaluxmi C. Mills & others (AIR 1955 Calcutta 173). I have already held that there is no ambiguity in this case as to the last date of payment of the debt obtained by the respondent Company, therefore, the rule laid down in these judgments on the basis of peculiar circumstances of these cases is not applicable. In the case of Bengal L.C. Mills and others (Supra), a substantial dispute had been raised based on the construction of two stipulations in the same agreement as to the date from which the repayment of the debt was to commence. It was provided in the agreement that the repayment of loan was to be made when the project after completion would start earning profits, whereas in the Schedule of the payment given in the argument the repayment was to commence earlier to that. It was held in the light of these stipulations in the agreement that both had to be construed harmoniously and a substantial dispute had-arisen as- to the date from which the repayment of loan was to commence. There is no such situation in this case, therefore, reliance upon the rule laid down in this judgment is wholly misplaced. It may also be added here that in a winding up petition the respondent-Company cannot object to the maintainability of the petition merely by saying that according to it there was a dispute as regards payability of the debt. The objection if any to that effect must be based on substantial grounds and should also be bonafide. Both these elements are missing in this case, as the objection has been raised for the sake of objection only. This view finds support from judgment reported as The United Bank Ltd. Versus PAK Wheat Products Ltd. (PLD 1970 Lahore 235).
31. Learned counsel for the respondents, when faced with this difficulty, tried to overcome it by referring to a passage from "Banking Law and Practice in India by M.L.Tannan 1991 Edition Page 655" which are in fact recommendations made concerning loans and financial facilities of different species. The relevant portion reads as under:- "The concept that a cash credit is a roll-over credit although expected to be for short term purposes but is never repaid, would hold good for the loan system as well".
32. He argued that in a case of cash credit financial assistance which is one of the species of the loans a principle is always embodied in the very nature of the loan that it was never to be repaid and would continue to be renewed, therefore, in this case also it should be assumed that the cash finance facility availed by the respondents was never payable- and should be renewed after expiry of the respondents was never payable and should be renewed after expiry of the previous term automatically.
33. I am afraid the argument is plainly unsound. In our country we have introduced Islamic System of Banking based on mark-up. Since there is no mark-up or interest on the accrued mark-up, therefore, it was provided in the system itself that the loan or the cash finance facility obtained for short term should be repaid along with mark-up within the period stipulated. The general principles high-lighted by M.L. Tannan cannot be preassed into service in view of express terms of agreement in this case that-the whole of the loan amount must be paid within the stipulated time. The respondents cannot after agreeing to repay the loan within the time fixed turn around and plead that the same was not payable under the said stipulations, or that the question of payability of the loan should be decided on the basis of so called banking practice, custom and usage.
34. The plea that the signatures on the documents in question were obtained from the respondents when they were blank, raised by learned counsel for respondents in his arguments would have had some force had it been clearly so pleaded in the written statement with the assertion that in fact the terms and conditions settled between the parties were not truly and correctly reflected in those documents or that different terms and conditions from those agreed by the respondents had been incorporated therein. Apart from this since the circumstances under which the signatures of respondents were allegedly obtained on blank documents, being in their personal knowledge therefore, it was necessary that they should have placed on the record if not any other material at least their affidavits stating as to in what circumstances their signatures were so been raised as regards execution of those documents has not been signed by any of the respondents. In support of the written statement an affidavit has been sworn by Mr. Mukhtar Hussain, Manager of respondent No. 1-Company, who is not one of the signatories of these documents. During the pendency of this petition C.M.No. 223/L-95 was moved in which a plea was taken that respondents No. 2 to 8 had resigned from directorship w.e.f. 26.9.1993 and instead the persons mentioned in it had been appointed as Directors, one of whom Mr. Mukhtar Hussain filed an affidavit in which no plea as regards obtaining of signatures of the respondents on blank documents has been raised whereas it has only been stated that the winding up petition had been moved for political victimization of the respondents.
35. A comparison of the documents in question with the sanction advice and the documents through which the respondent No. 1-Company created charge in favour of the petitioner in pursuance of the loan in question obtained by it which it got registered with the Joint Registrar of the Companies reveal that the entries in these documents are in accordance with the terms of loan disclosed in the sanction advice. Additionally it has not been denied that the loan was availed by respondent No. 1-Company and there being no dispute as regards the amount of loan, the rate of mark-up and the total amount recoverable thereunder, as such, even if the signatures on these documents of the respondents were obtained when they were blank the same would not detract from their legality or adversely effect their enforcibility. Mr. M. Saleem Sahgal, Advocate, learned counsel for petitioner, rightly pointed out that in such circumstances the genuineness or legality of the documents could not be questioned which principle has been embodied in Section 20 of the Negotiable Instruments Act, which provides that if a person signs and delivers to another an instrument either wholly blank or having written thereon incomplete negotiable instrument fulfilling the conditions prescribed therein, such other person shall be deemed to have been authorised to make or complete it into a negotiable instrument. He also referred to a case reported as Habib Bank Limited Versus M/s. Waheen Textile Mills Ltd. & 5 others (PLD 1989 Karachi 371) to argue that it would be in accordance with the usual mercantile practice if the customers after signing blank documents deliver it to the bank for obtaining loan. I have already observed the argument as raised looses all its legal efficacy for there is no plea that the stipulations incorporated in these documents were different from those settled between the parties, therefore, the rule laid down in this judgment is aptly applicable to this case.
36. I am fully convinced that the plea is devoid of any substance and has not been raised with bonafide intention. It is nothing but an abortive attempt to raise an objection merely for the sake of objection against the maintainability of the winding up petition, therefore, does not deserve any serious consideration and is hereby repelled.
37. Mr. A.K. Dogar objected to the maintainability of the winding up petition on the ground that the petitioner has already filed a civil suit for the recovery of the disputed loan before the Banking Court against the respondent-Company, therefore, the winding up petition should be dismissed or in the alternative proceedings in the same be stayed to await the decision of the Banking Court. He also maintained that even otherwise availability of other remedy of filing regular suit for the recovery of debt is a bar against the maintainability and continuation of proceedings in the winding up petition. He lastly argued that this Court in its discretion should dismiss the winding up petition in view of the fact that the petitioner his already sought other remedy for the recovery of the debt by filing the above-mentioned suit. In support of his argument he placed reliance on judgment reported as Mulla Abdullah Bhai and 9 others Vs. Saria Rope Mills Ltd. (PLD 1971 Karachi 597) arid some judgments from Indian jurisdiction.
38. The question as to whether availability of other remedy to the petitioner and institution of a suit for the recovery of debt in dispute by itself operates as a bar against the maintainability of a winding up petition has to be decided with reference to the provisions of the Companies Ordinance, 1984. There is no provision in the said Ordinance nor Mr.A.K. Dogar was able to point out and one providing that institution of a civil suit for recovery of a debt by the petitioner or availability of other remedy would necessarily operate as bar against the maintainability of the winding up petition. Section 316 provides that when a winding up order has been made or a provisional manager appointed no suit or other legal proceeding shall be proceeded with or commenced against the Company except by leave of the Court. The Court hearing the winding up can also pass an order for transfer of the suit or other proceedings to itself for trial. It is manifest from this provision of law that in case a suit had also simultaneously been filed and proceedings were pending before some other Court in that suit it is the suit which can either be transferred to the Court hearing the winding up petition or the proceeding in the same stayed in case leave is not granted by the Court to proceed with, but it does not provide stay of proceedings in the winding up petition. It is also clear from this provision of the Companies Ordinance which pre-supposes that a situation may arise where a civil suit had also been instituted and pending before some other Court simultaneously with the winding up petition and the mandate of the law is that proceeding in the civil suit should not continue except with leave of the Court hearing winding up petition, therefore, it is not possible to accept the argument that jurisdiction of the Court as regards winding up petition is barred where-a civil suit for recovery of debt has also been filed.
39. Section 314(2) of the Companies Ordinance, however, confers discretion on the Court hearing winding up petition to refuse to pass an order for winding up in a case where the winding up of the Company had "been sought on the solutory ground that it was "just and equitable" to wind up the Company and direct the petitioner to seek other remedy available to it. Such a provision was not enacted in the repealed Companies Act, 1913, therefore, with the enactment of this provision it can safely be held that the refusal to make an order for winding up of the Company on the ground of availability of other remedy to the petitioner can be made if the winding up had been sought only on the ground that it was "just and equitable" to do so and not other grounds. The principle laid down in judgment reported as Mull a Abdullah Bhai and 9 others Vs. Saria Rope Mills Ltd. (PLD 1971 Karachi 597) and other reported judgments from Indian jurisdiction under Companies Act, 1913, relied upon by Mr. A.K. Dogar, can no longer be pressed into service. It may be pointed out that even under this provision of law it cannot be claimed by a respondent in a winding up petition as a matter of right that the availability of other remedy operates as a bar against the adjudication of the winding up petition.
40. The question as to whether pendency of a civil suit in relation to the same debt before the Civil Court was to operate as bar against the maintainability of winding up petition came up for consideration in the case Of The United Bank Ltd. Versus PAK Wheat Products Ltd. (PLD 1970 Lahore 235) and it was held that mere pendency of a suit was no ground to hold that winding up petition was not maintainable. It was observed that the Court dealing with winding up petition was to satisfy itself about the bonafides of the petitioner which question has to be decided on the basis of facts and circumstances of each. In the case of National Bank of Pakistan Versus Punjab National Silk Mills & others (PLD 1969 Lahore 194) this Court took a view different from the principle laid down in the case reported as Mulla Abdulla Bhai and 9 others Vs. Sana Rope Mills Ltd. (PLD 1971 Karachi 597). In re: M/s. Ali Woolen Mills Ltd Vs. Industrial Development Bank of Pakistan and 3 others (PLD 1990 S.C. Page 763), the principle of law decided by this Court in the case of United Bank Limited (Supra) has been approved. It has been held by the Supreme Court that mere availability of other remedy did not have the adverse affect on the maintainability of the winding up petition.
41. From the scrutiny of the provisions of the Companies Ordinance in particular Section 318 which provides that a winding up order if made shall operate in favour of all the creditors and of all contributories of the Company that the nature and scope of winding up proceeding is materially different from the suit. The former is a class remedy whereas the later is limited to a dispute as to recovery of debt between the two parties. As held in a case reported as Mulla Abdullah Bhai and 9 others Vs. Sana Rope Mills Ltd. (PLD 1971 Karachi 597), in a winding up petition the creditor has only to establish that the Company was unable to pay debt and not to prove in the strict sense the debt itself, whereas in the suit the controversy is between the two parties only and that too restrict to the recovery of an ascertained amount.
42. Apart from what has been discussed above jurisdiction vested in this Court under Sec';on 314(1) of +vie Companies Ordinance to pass an order of "'"ding r being necessarily discretionary, therefore, it will still be op~n to the Court to decline to pass an order for winding up in its discretion in case in the facts and circumstances of a particular, case it was found that the petitioner should follow and pursue the other remedy which question in this case will be considered in the later part of this judgment while discussing the question of inability of respondent-Company to pay debt and attending circumstances of this case.
43. The next question which falls for consideration and in fact is the crucial question is as to whether inability of the respondent-Company to pay debt to justify an order for its winding up. As I have already observed, according to Sections 305 and 306, read together if a Company merely neglects to pay debt when called upon to pay on its becoming due, its inability to pay within the contemplation of the expression as used in Section 305 is to be presumed. Mr. A.K. Dogar, Advocate, learned counsel for the respondents is not in agreement with this interpretation of the said two provisions of the Companies Ordinance. He argued that there is no scope for holding that mere non-payment of debt by the Company on demand when it becomes due, would itself be to be a ground to presume that the Company was unable to pay debt. He stressed that if the total assets of the Company exceed its liability there was no question of insolvency of the Company and consequently its inability to pay debt. Reliance has been placed on judgments reported as Pakistan State Oil Company Ltd. Hi. Pakistan Oil Pipelines Limited and 6 others (PLD 1993 Karachi 322) and Kamatak Vegetable Oils and. Refineries Ltd. Versus Mardras Industrial Investment Corporation and another (AIR 1955 Mardras 582). He submitted that the current liability in respect of debt in question is Rs. 5, 49, 06, 579/-, whereas according to the documents placed on the record by the petitioner itself a charge has been created in favour of the petitioner and got registered with the Registrar of Joint Stock Companies to the tune of Rs. 6,00,00,000/-. As regards value of assets he referred to the documents produced by the petitioner according to which the value of the assets of the Company was more than Rs. 7,00,00,000/-. He reiterated that temporary inability to pay debt immediately on its becoming due can furnish no ground under the law to file a winding up petition, whereas it is permanent inability of the Company which could be the basis to demand its winding up. To amplify his argument he maintained that unless it was shown that the securities already provided by the Company and its fixed assets and stocks had been rendered valueless or had otherwise vanished it is only in that eventuality that a winding up petition can be maintained.
44. I am afraid the submissions though appeared to be ingenuous but not tenable on close scrutiny of the provisions of the Companies Ordinance and the rule laid down by the Superior Courts as regards the scope of the expression "inability" of a Company to pay debt as used in Sections 305 and 306 of the Ordinance, lt may be pointed out that the expression "insolvency" as one of the grounds for seeking winding up of a Company has not been used in these provisions of the Ordinance. The ordinary dictionary meaning of the expression "insolvency" may be the same as pointed out by Mr. A.K. Dogar ie. The fixed assets of the Company if exceed the total liabilities of a Company it may not be called to be insolvent. Instead of using the expression "insolvency" the Law Markers used the word "Inability" in the relevant provisions of the Companies Ordinance as a ground for winding up of a Company which is very much significant and has to be construed in the manner as provided in the law itself. There is a difference between inability of a Company to pay debt on its becoming due and its capacity to meet all the liabilities ultimately from the fixed assets.
The creditor is only concerned with the payment of its debt when it becomes due and if a Company is unable to pay the same when demanded it would fall within the scope of expression "inability" to pay debt to maintain a petition, may be the value of the fixed assets are far in excess of the total liabilities. As a matter of fact in my view this argument carries the germs of its own defeat, for, while raising the plea that the value of the fixed assets of the Company it shall be deemed to have impliedly admitted that it was unable to pay the debt as the fixed assets are to be taken over and applied for satisfaction of the claims of the creditors only after the winding up order is passed.
45. The question of ability or inability of the Company to pay its debt which become due is to be determined with reference to the conduct of the respondent-Company and the income or the profits earned by it from the business for if the Company does not earn sufficient profits to pay its debt or if earns profits but does not pay the debt or its management acts in a manner that instead of paying the debt the profits are applied to some other use, in my view it will be a case of inability of the Company to pay debt as contemplated u/S. 306 of the Companies Ordinance on the failure of the Company to pay the debt due, on demand, it could not be presumed that it was unable to pay debt and winding up of such Company could be made only if value of its assets was less than its total liabilities. Under Section 306 though a Company may be otherwise not factually insolvent keeping in view the value of its assets against its liabilities but by fiction of law it has been presumed to be unable to pay debt for the purpose of winding up in case it neglets to pay the debt becoming due, which is called commercial or technical insolvency.
46. The above mentioned view finds support from a chain of reported judgments of the superior Courts which may be discussed. In a case reported as Trade & Industry Publications Limited Versus Industrial Development Bank of Pakistan (PLD 1960 Supreme Court 768) while interpreting Section 306 of the Companies Ordinance the Supreme Court held that in a case of failure to pay debt due in response to notice insolvency was presumed though it could also independently be proved.
47. In yet another case reported as M/s. Ah Woolen Mills Ltd. Versus Industrial Development Bank of Pakistan and 3 others. (PLD 1990 S.C. 763) it was held that in a case where a Company was unable to meet current demand though on realization the assets of the same may be in excess of the liabilities, it is presumed to be commercially insolvent. In another case reported as Punjab National Silk Mills Versus National Bank of Pakistan & others (1986 SCMR 1126) it was held that a secured creditor could also maintain a petition for winding up and merely because the debt has been secured was held to be no ground to held that the winding up of the Company at the instance of such a creditor could not be maintained.
48. In a case reported as Kamatak Vegetable Oils and Refineries Ltd. Versus Madras Industrial Investment Corporation Ltd. And another (AIR 1955 Madras 582) after analysing the relevant law it was held that where the Company fails to pay debt which becomes due, there was no difference between secured and unsecured creditor for the purpose of maintaining a winding up petition.
Mr. M. Saleem Sahgal, Advocate, learned counsel for petitioner made reference to judgment reported as IOC Australia Pvt Ltd. Versus Mobil Oil Australia Ltd (1975) 2 ACLR 122 which is a case from Australia and Re Alexanders Securities (No.2) (1983) 2 QDR 434 in support of his contention that for the purposes of maintaining a winding up petition a secured and unsecured creditor stands on the same rooting and the debtor Company could not maintain that the security was ample and the debt should be realized from the same.
49. Mr. M. Saleem Sahgal, Advocate, learned counsel for petitioner also referred to a commentary, Pennington Company Law 5th Edition Page 859 in which the author of the book after examining the law relating to winding up of the Companies opined that non-payment of debt when due was itself a ground for maintaining winding up petition though the Company may be in a position to pay the same over the lengthy period or through process of steady realization and that it is immaterial that the debt due can be paid from the liquid resources of the Company.
50. The argument of learned counsel for respondents that no presumption under Section 306 that the Company was unable to pay debt merely on its failure to pay debt due when demanded cannot be accepted without doing violence to the express provisions of the said Section or unless it I held that the same is redundant. Mr. A.K. Dogar, Advocate, learned counsel for respondents, submitted that the Company has paid debt of some of the other creditors, therefore, in such circumstances the Company cannot be held to be unable to pay its debt. The submission has not impressed me. It was held in a case 'reported as Wali Muhammad, etc. Versus Muhammad Sharif and 7 others (PLD 1976 Lahore 535) that if some of the creditors were paid it would not furnish a ground to raise a plea that the Company cannot be treated to be unable to pay the debt of the creditor bringing winding up petition.
51. Learned counsel for respondents then argued that before application of penal provisions of Section 306 of the Companies Ordinance it is necessary to raise a demand and in this case no demand was raised as required by the said provision of law, therefore, no presumption can be raised in this case that the Company was unable to pay the debt. The argument is devoid of any force. As has already been discussed the demand was raised more than once and finally it was raised through notice dated 3.10.1994. It may be mentioned here that winding up petition itself can be construed to be a notice as contemplated by section 306 and the Company failing to make any effort to make payment of debt or offer to clear the dues can be presumed to be unable to pay debt within the contemplation of this provision of law.
52. The next question which requires consideration is as to whether in this case it has been established to the satisfaction of the Court that a Company was unable to pay debt. As has already been held the Company failed to pay any amount inspite of notice served upon it to pay the debt, therefore, it is to be presumed that the Company was unable to pay debt. Apart from this other material is also available which proves that as a metter, the factum of inability of the Company to pay debt stands admitted unambiguously. The Company in its letter dated 5.4.1993 addressed to the petitioner, seeking additional short term financing facility to the tune of Rs. 5 Million admitted that uneven cash flow had resulted in the shortage of working capital to meet day to day procurement of raw material. In a subsequent letter dated 27.1.1993 written by the Company to the petitioner, it was stated that in the present circumstances the Company was not in a position to repay the advances at present. It is clearly proved from the admission of respondent- Company itself through these letters that the Company was unable to pay the debt. Mr. M. Salim Sahgal rightly argued that apart from presumptive inability of the Company under Section 306 of the Companies Ordinance it has factually been proved independently that the Company was unable to pay the debt, therefore, order for winding up should be made.
53. It remains to be decided whether discretion vested in this Court under Section 314(1) of the Companies Ordinance should be exercised in favour of making an order of winding up in the facts and circumstances of the case even after the proof of the fact that the Company was unable to pay the debt. It is well-settled law that the discretion vested in a Court is required to be exercised judiciously on application of mind to the facts and circumstances of each case and in particular the conduct of the defaulting Company.
54. It is not disputed that an amount of Rs. 20,800/- per day was due as mark-up which the Company was liable to pay each month. According to the statement of accounts placed on the record by Mr. A.K. Dogar, Advocate, learned counsel for respondents the petitioner started realizing Rs. 20,000/- per day from the amounts available in the accounts of the Company from 17.4.1994 though at that time an amount of Rs. 49,35,313.76 had become due on account of mark-up and upto 14.11.1994 through this adjustment/coercive recovery an amount of Rs. 28,80,000/- could be recovered. Learned counsel for respondents submitted that according to the said statement of accounts an amount of Rs. 6.95.813,54 was available in the said account of the Company on 14.11.1994, out of which the bank under this right of general lien adjusted only Rs. 1,00,000/- though it could adjust the entire amount available which conduct of the petitioner should be considered to hold that it was not in fact interested in the payment of the amount due.
55. I am afraid the argument is wholly fallicious. Lt is the duty and obligation of every debtor to follow the creditor to pay the debt. If the petitioner had shown some leniency to respondent- Company from its legal obligation to pay the debt to protect it from the legal consequences arising from failure to pay the same. It is the conduct of respondent-Company in relation to payment of debt which is relevant consideration.
56. Instead of making an offer during the proceeding in this petition to pay the debt or show willingness to pay the same, a stand was taken by the Company and other respondents that the documents executed in this case were defective in law on account of having been signed when they were blank. Learned counsel for respondents when questioned as to whether the Company is now in a position to pay debt and ready to pay it if time is granted submitted that these proceedings should not be allowed to be used as instrument for recovery of debt and the petitioner should be directed to seek other remedy and the respondent-Company cannot make any commitment for the payment of the debt in this Court in these proceedings.
57. Learned counsel for respondents then argued that the adjudgment of an amount of Rs.
20,000/- per day by the petitioner from the account of the Company was itself a proof that the Company was doing business and earning profits, therefore, it could not be held to be insolvent or that it is unable to pay the debt. I have already held that a Company if fails to make payment of the debt after demand though it had earned profits would be deemed to be unable to pay debt if it is established that the funds were used or applied for some other purpose instead of repayment of the loan. Learned counsel for petitioner has brought on record the statement of bank accounts of the respondent-Company which establishes the correctness of the plea raised in the winding up petition that the funds of the Company were siphoned off. This statement shows that on 21.1.1993 an amount of Rs. 37.0. 000/-, on 23.1.1993 an amount of Rs. 15,00,000/-, on 13.1.1993 an amount of Rs.
9,00,000/- on 1.3.1993 an amount of Rs. 21,00,000/- on 1.3.1993 another amount of Rs. 2.0. 000/-, on 6.3.1993 an amount of Rs. 50,00,000/-, on 29.3.1993 an amount of Rs. 5,00,000/-, on 4.4.1993 an amount of Rs. 1,50,000/- and on 15.4.1993 an amount of Rs. 22.0. 000/- were transferred to Hudaibia Paper Limited, a sister Company, whereas on 5.4.1993 an amount of Rs. 1.0. 000/- and 7.4.1993 an amount of Rs. 5,00,000/- were transferred to another sister concern ie., Hudaibia Engineering Company Limited. The total amount so transferred to these sister concerns comes to Rs.
1,68,00,000/-. The Company was under an obligation to discharge its liability regarding the debt in question and instead of paying the same the earnings of the Company were through underhand means transferred to the other sister Company.
58. The respondent-Company was called upon times and again to provide stock reports through different letters, a copy of which was also sent to respondent No. 2 who was known as the Chairman of Companies in the Ittefaq Group but no response was made. Mr. A.K. Dogar during hearing of the petition placed on the record the position of stock available in the record of the Company to show that sufficient stocks were in fact available at all relevant times. It is not the question of mere availability of the stocks but the question was as to whether the Company had discharged its liability to provide the stock reports to the petitioner. There is no material placed on record by the respondents that in response to letters written by the petitioners the stock reports were provided to it.
59. As I have already discussed, in the winding up petition a specific averment was made that respondents No. 2 to 8 being Directors of the Company were liable under the law, as such, in respect of the debt in question. No denial was made in the written statement that they were the Directors, whereas it was stated that the Directors would be liable in accordance with law.
Subsequently during the arguments an application (C.M. No. 223/L-95) was moved by the respondents that respondents No.2 to 8 had in fact resigned from the Directorship long before and instead other set of persons were elected/appointed as Directors, the names of whom have been given in this application. No certificate from Registrar Joint Stock Companies has been placed on the record that information to that effect was supplied to him. This conduct of respondents No.2 to 8 clearly shows that an attempt has been made to absolve them from their liabilities as members of management in consequence of winding up of the Company. It may be mentioned here that none of respondents No. 2 to 8 has come forward to file even an affidavit to commit as to what was his legal status and as to whether the said statement that they had resigned was in fact correct.
They have even not signed the written statement in support of this plea.
60. Learned counsel for respondent argued that the present winding up petition has been filed for political victimization of the respondents as they are opposing the present Government and on account of political rivalry. His argument was that the winding up petition was actuated by malice.
Learned counsel for petitioner has brought to my notice that in this case all the finance facilities were sanctioned within a record period of 133 days which rather established political exploitation of the position by the respondents which they were occupying as rulers of the country rather than a case of malice on the part of the petitioner. He pointed out that the last sanction of the finance facility was made after the induction of the present Government which itself is the proof of the bona fides of the present regime, for, if it had any malice the finance facility would not have been sanctioned.
61. In view of these facts I am not satisfied as argued by Mr. A.K. Dogar that the present winding up petition has been made for political victimization of the respondents and suffers from mala fides.
62. Mr. A.K. Dogar, Advocate, lastly argued that since no other creditors of the Company have supported the winding up petition, therefore, the same should be dismissed. The petitioner has appended with the winding up petition the list of other creditors of the Company and a notice was published in the official Gazette as also in the newspaper for information of all concerned. None of the said other creditors has entered appearance from which it can safely be presumed that they do not oppose the petition which conduct amounts to supporting the petition because as observed above the winding up order once made is to be deemed to have been made on the joint petition of all the creditors for their benefit. If any of the other creditors did not want to derive any benefit from this provision of law it should have appeared before the Court and oppose the petition.
63. Considering the conduct of respondents as discussed above I am not inclined to exercise discretion in favour of refusal to make an order of winding up or to direct the petitioner to seek the other remedy available to it. The respondent-Company has been proved to be a Company which is unable to pay debt, therefore, it is eminently a fit case for making an order for winding up in order to safe-guard the interest of the financial institution.
64. For the foregoing reasons this petition is accepted. The respondent No. 1-Company is ordered to be wound up. Mr. Muhammad Naseem Kashmiri, Advocate, 1-Mozang Road, Umar Plaza, Ill-Floor, Lahore, is hereby appointed as Official Liquidator. He will take into possession all the assess, movable and immovable, as also the books of accounts and other registers/record of the Company and will proceed with the liquidation thereof according to law.
65. The O.I. Shall be paid provisionally an amount of Rs. 50,000/- by the petitioner to meet the liquidation expenses. He shall be paid an amount of Rs. 10,000/- per month which shall be adjustable against the amount becoming due t6 him as commission. All these amounts shall be adjustable against the assets of the Company.
66, Notices stating that the respondent-Company has been ordered to be wound up, be published in the daily Urdu 'Jang', daily English 'Dawn' and weekly 'Kghkashan' as also in the official Gazette.
Intimation of this order shall also be given to the Registrar, Joint Stock Companies. The petitioner shall deposit the publication charges within 10 days.