MUNIR A. SHEIKH, J.--I This judgment will also dispose of C. O. Nos. 96 of 1994, 97 of 1994, 98 of 1994, 99 of 1994, I0O of 1994, 67 of 1994,72 of 1994; 75t1994/29 Of 1994 and 80 of 1994 as common: questions of law and facts have been raised in all of them.
2. The facts forming the background of all these petitions which are relevant for their disposal shortly stated are as under:--
3. That the following seven families namely:
(i) Mian Muhammad Sharif and others.
(ii) Mian Javed Shafi, Mian Tariq Shafi and others.
(iii) Mian Meraj-ud-Din, Mian Ilyas Meraj and others (represented by petitioners 1 to 7).
(iv) Mian Khalid Siraj, Mian Yahya Siraj and others (represented by petitioners 8 to 15).
(v) Mian Faruq Barkat and others.
(vi) Mian Yousaf Aziz and others and
(vii) Mian Idrees Bashir and others jointly fanned and established 16 fallowing Companies:
1. Ramzan Bukhsh Textile Mills Ltd.
2. Ramzan Sugar Mills, Ltd.
3. Ittefaq Sugar Mills Limited.
4. Ittefaq Foundaries (Pvt.) Limited.
5. Ilyas Enterprises (Pvt.) Limited.
6. Abdul Aziz Textile Mills Limited.
7. Brothers Steel Limited.
8. Brothers Sugar Mills Limited.
9. Barkat Textile Mills Limited.
10. Ittefaq Brothers (Pvt.) Limited.
11. Effective Management (Pvt.) Ltd.
12. Faruq Barkat (Pvt.) Limited.
13. Khalid Siraj Industries (Pvt.) Ltd.
14. Ittefaq Textile Mills Limited.
15. Brothers Textile Mills Limited.
I6. Khalid Siraj Textile Mills Ltd.
This group of Companies was generally known as Ittefaq Group. It has been alleged that these Companies are liable to be treated as associated companies on the basis of the characteristic pattern of inter-twining shareholding as contemplated by section 2(2) of the Companies Ordinance, 1984 it has further been averred that even otherwise the Directors of these Companies were common. The categorization of the said I6 Companies in the Ittefaq Group can be made as follows:-- Iron and Steel:
1. Ittefaq Foundries (Pvt.) Ltd.
2. Ilyas Enterprises (Pvt.) Ltd.
3. Brothers Steel Ltd.
4. Ittefaq Brothers (Pvt.) Ltd.
Sugar Mills:
5. Ramzan Sugar Mills Ltd.
6. Brothers Sugar Mills Ltd.
7. Ittefaq Sugar Mills Ltd.
Textile Mills:
8. Ramzan Bakhsh Textile.
9. Abdul Aziz Textile Mills Ltd.
10. Barkat Textile Mills Ltd.
11. Ittefaq Textile Mills Ltd., (Units I, II and III).
12. Brothers Textile Mills.
13. Khalid Siraj Textile Mills.
14. Khalid Siraj Industries (Bag Making). Miscellaneous:
15. Faruq Barkat (Pvt.) Ltd.
16. Effective Management (Pvt.) Ltd.
4. It appears that some differences arose between the abovementioned seven families as regards the said Companies. Some of the families lost the confidence of each other inter se. They decided to distribute the Companies and their assets for which a Memorandum of Understanding was drafted initially on 1-9-1991. Allocation of assets of different Companies as settled between the parties was intended to be made as detailed in this memorandum. I need not go into the question as to which Companies and assets were intended to be allocated to which family which is not necessary to be mentioned same for the purpose of disposal of these petitions. Suffice it to say that this Memorandum of Understanding was signed only by Mian Muhammad Javed Shafi of Family No. 2 on behalf of Ittefaq Group of Industries whereas Mian Muhammad Idrees Bashir of Family No. 7 who were required to sign the same did not put his signatures. It was provided in clause 18 of this Memorandum that the figures given in the same were liable to be changed because of inter-company transactions which might have been recorded in the books but were not included in the schedule of settlement and Memorandum of Understanding and for any other material exceptions. Similarly it was also stated in this clause that interest on Directors loan and related expenses were yet to be charged to each family. According to clause 20 a formal legal agreement covering all aspects of this transaction was to be executed by the parties within next 10 days. As noted above, none of the families except Mian Muhammad Javed Shafi affixed his signatures on this Memorandum of Understanding. Subsequently this Memorandum was sent to Mian Idrees Bashir of family No. 7 alongwith others through letter dated 2-9-1991 by Mian Muhammad Javed Shafi requiring all the families to get the signatures of those family members of each family who were Directors of Companies in the group. Mian Idrees Bashir of Family No. 7 on 4- 9-1991 declined to affix signatures by indicating in the note written by him in the said letter that he was not ready and willing to put his signatures as those families who were in possession of the assets falling to the share of Family No. 7 were not ready to surrender their possession. He raised other objections also by saying that this was one-sided Memo, of Understanding over which an attempt was made to get his signatures forcibly on 2-9-1991. It was also stated in the note that the share of each of the family had not been specified. On 25-9-1991 another Memorandum of Understanding was prepared which was signed by Mian Shahbaz Sharif for himself and on behalf of Family No. 1, Mian Javed Shafi for himself and on behalf of Family No. 2, Mian Meraj-ud-Din for himself and on behalf of Family No. 3, Mian Yousaf Aziz for himself and on behalf of Family No. 6 and Mian Khalid Siraj for himself and on behalf of Family No. 4. It is evident from this, that nobody put signatures on this Memorandum for and on behalf of Family No. 5 (Mian Faruq Barkat) and Family No.7 (Mian Idrees Bashir and others). It was provided in this Memorandum that earlier Memorandum of Understanding dated 1-9-1991 would form as integral part of the same. In this Memorandum the family relinquishing its claim and share holding and rights in any of the companies in the group in favour of the other was termed as seller and the latter as purchaser.
According to clause 6 of this Memorandum the same was to become valid and enforceable between the parties on the happening of the following events:-
(i) Signing of the said agreement by all concerned;
(ii) Handing over of the blank transfer-deeds of shares.
It was also provided that on the effective date the seller as per agreement delivered the blank transfer deeds in respect of all the shares duly signed by the concerned sellers and verified by the Secretary of the Company, resignation of the directors in the manner aforementioned. In this Memorandum the assets alongwith the Companies falling to the share of Family Nos. 5 and 7 were reserved for them. There is nothing on the record that the said to families ever put their signatures on the said Memorandum or that the same had become effective according to clause VI thereof for it was necessary without which it could not become valid and effective and enforceable document. Further, it appears that subsequently on 19-3-1992 another agreement was prepared providing therein that parties subscribing to Memorandum dated 25-9-1991 had agreed to transfer inter se their respective shareholdings so as to bring into effect a division between the families of the Ittefaq Group. The said Memorandum of Understanding was intended to be ratified through this agreement. It was provided in clause VI thereof that it was to become valid, effective and enforceable on the signing of the same by all concerned, handing over of the blank transfer-deeds of shares held by the purchasers in Ittefaq Group Companies and resignations of the nominee Directors of the purchasers in the Ittefaq Group. A copy of this agreement has been placed on record with the written- statement by the respondents in C.O. No. 96 of 1994 which shows that only Mian Shahbaz Sharif for himself and on behalf of Family No. 1 and Mian Faruq Barkat for himself and on behalf of Family No. 6 put their signatures. None on behalf of the other families affixed their signatures on this agreement therefore, as per clause 6 thereof the same also did not become valid, effective and enforceable as one of the conditions on the fulfilment of which the same was to become enforceable had not been complied with i.e., affixation of signatures by all concerned.
Another Memorandum of Understanding was prepared on 30-1-1992 which was signed by Mian Shahbaz Sharif of Family No. 1 and Mian Faruq Barkat for and on behalf of Family No. 5. This does not bear the signatures of representatives of the other five families.
5. The petitioners who represents Families Nos. 3 and 4 have filed these petitions seeking a declaration as envisaged by section 265(a)(23) of the Companies Ordinance, 1984 to the effect that the affairs of the said Companies ought to be investigated by the Inspectors appointed by the Corporate Law Authority inter alia on the basis of the following allegations supported the documents on the record:-
(a) That Mian Muhammad Sharif who has been in total control of the management of the respondent company had been guilty of breach of Trust. Company Funds have been withdrawn and used for creating independent assets. Furthermore, Company assets have been charged to generate funds which have been misappropriated.
(b) The distribution of dividends and other financial benefits associated with the respondent company had been withheld without any justification.
(c) The annual general meetings of the Company had not been held at all or in the manner prescribed by law.,
(d) The returns on the prescribed form had either not been submitted to the competent officers or are fictitious.
(e) That share-Certificates have not been made ready for delivery to the petitioners within the the prescribed by section 74 of the Companies Ordinance, 1984.
(f) That despite repeated inquiries no information about the whereabouts of those share Certificates was provided to them.
(g) The petitioners had not been given the information with respect to the affairs of the company.
6. It has also been alleged that financial position of respondent company was such as to endanger its insolvency. Reliance has been placed on a daily 'Urdu Jang' dated 4-7-1994 according to which Family No. 1 got huge amount as loan from Mehran Bank i.e., Rs. 4,94,00,000 without any sufficient security. It has been stated that investigations were necessary to be held on all aspects of the operations of the respondent/companies inter alia on the following:--
(i) Use of Funds;
(ii) Charge over the assets;
(iii) Diversion of Funds to unauthorized objects;
(iv) Legitimacy of the Regimes;
(v) Genuineness of the record;
(vi) Compliance with statutory requirements in the operations of the respondent Company;
(vii) Preparation and use of forged Transfer Deeds in selected Companies.
7. In support of these allegations the petitioners has placed on record documents to substantiate the same. According to Memorandum dated 1-9-1992, Family No. 3 namely Mian Meraj-ud-Din, Mian Ilyas Meraj and others were allocated Brothers Textile Mills and Ittefaq Textile Mills No. 11 to the extent of 50% shares whereas according to a decision taken in the meeting allegedly held in Lahore on 1-9-1992 (Annexure VI) with the Memorandum of available documentary evidence produced by the petitioners between all families. Ittefaq Textile Mills Unit No. 1 was allocated to Family No. 1 i.e., Mian Muhammad Sharif family providing that the allocation for the balance entitlement would be at the opinion of Mian Muhammad Sharif Sahib. It was also provided that subject to the effect of the opinion in para. (2) above, Brothers Textile Mills and Brothers Sugar Mills would be allocated to Family No. 7 namely Mian Idrees Bashir and others. Though from the recital of this document an attempt has been made to show that this decision was taken in a meeting held on 1-9-1992 which was attended by all the seven families but there is nothing on record in the form of minutes of the meeting produced by the respondent to rebut petitioner allegations that no such meeting was ever held and the petitioners never attended any such meeting and no such decision was ever taken as such the same was a fabrication in order to grab the valuable assets in the company and to bring it into the exclusive use of Family No. 1 and Family No. 7 against the understanding incorporated in the Memorandum of Understanding dated 1-9-1991. Annexure VII attached by the petitioners with the said Memorandum of documentary evidence shows that Mian Muhammad Sharif of Sharif Family issued a certificate that Brothers Sugar Mills Limited, Chunian and Brothers Textile Mills Limited, Bhai Pheru would be solely owned by family of Late Mr. Muhammad Bashir i.e., Family No. 7 headed by Muhammad Idrees Bashir which was contrary to the Memorandum of Understanding. The said to Companies and their assets were allegedly placed at the disposal of Family No. 7 as sole owner by unilateral at without there being any such decision by all the families jointly interested in the same being shareholders.
8. The petitioners have also placed a document Annexure II on record with the Memorandum of documentary evidence which shows that as a consequence of resolution passed on 26-5-1994 the entire business of Ilyas Enterprises (Pvt.) Limited be acquired/purchased by Ittefaq Foundries (Pvt.)
Limited including all assets, property, rights, privileges belonging to Ittefaq Foundries (Pvt.) Limited.
This according to law had the effect of amalgamation of one company into another. This as alleged in the petition was violative of the law as the same could not take place without the approval of the Corporate Law Authority as provided by the Companies Ordinance, 1984. This was alleged to have been done with the ulterior design to cover up mis-appropriated funds by Sharif Family who was the ultimate beneficiary. It has been stated that Ittefaq Foundries (Pvt.) Ltd., used to supply ballets to Ilyas Enterprises which according to Memorandum of understanding was in exclusive control of Mian Sharif Family. The finished products produced by Ilyas Enterprises were sold to projects under the control of Sharif Family which was outside Ittefaq Group of Companies as such the ulterior motive for such amalgamation of to Companies was alleged to be to cover up the misappropriation of funds.
9. A letter dated 19-10-1992 has also been placed on the record written by, Mian Faruq Barkat, Director to Mian Muhammad Arif describing him as respectable Chairman Sahib that the assets of the company and material were being removed by those to whom certain companies were agreed to be allocated treating the same as their personal properties. Mian Faruq Barkat belongs to Family No. 5.
10. In order to establish as to how the management and affairs of different companies were being run by Sharif Family a schedule of change of Directorship of Ittefaq Foundries (Pvt.) Limited and Brothers Steel Mills Limited, Annexure VI has been placed on record with the Memorandum of documentary evidence. According to this one Mukhtar Hussain and his wife Mst. Fahmeeda Mukhtar and his mother Irshad Begum have been shown to be the Directors in these to Companies.
Mukhtar Hussain and Fahmeeda Mukhtar have been shown to be the Directors of the Ittefaq Foundries whereas Mukhtar Hussain, Fahmeeda Mukhtar and Irshad Begum have been shown as Directors of Brothers Steel Mills Limited. It may be noted here that both these companies according to scheme of distribution were allegedly allocated to Family No. 3 namely Meraj-ud-Din Family.
Mukhtar Hussain allegedly was the Private Secretary of Mian Muhammad Sharif the Head of Sharif Family and they were at his whim made the Directors though these persons had no share holding in any of the said to Companies. According to schedule of change in shareholding in Ittefaq Sugar Mills (Pvt.) Ltd., from 1988-89 to 1992 the shares held by Ittefaq Foundries and Ittefaq Brothers (Pvt.)
Ltd., were transferred to Family No. 1 and Family No. 2 thereby raising their percentage from 9 to 19% in the case of Family Nos. 1 and 10 to 24% in the case of Family No. 2 though shares in these, to companies were also owned by all the Families including Family Nos. 3 and 4.
11. According to Annexure VHI liability of different Companies which was to the tune of 315 millions on 31-12-1993 were increased to 672 million on 31-3-1994 i.e., within a period of about three months thus there was increase in the liability to the extent of 357 million. According to the petitioners huge amounts are being obtained as loan against the assets of the Companies in which all the families are still the share holders without there being substantial corresponding gains which should be investigated because the money so becoming available according to the petitioners were being spent of acquiring properties in the personal capacity in their own names by the Sharif Family and others whereas ultimately the companies are to be burdened with the liability to discharge the same as such the Companies were being mismanaged.
12. In order to substantiate prima facie removal of machinery from one Unit in the Ittefaq Group to a site managed and controlled by Mian Muhammad Sharif a letter/ intimation given by one Siraj Din the employee of Sharif Family dated 22-10-1991 has been attached as Annexure IX with the Memorandum of documentary evidence. It shows that the said employee carried out the directions allegedly issued by Mian Muhammad Sharif for removing machinery from Ramzan Sugar Mills to a site including the site of Ch. Sugar Mills exclusively in the ownership of Sharif Family.
This according to learned counsel took place after the said settlement had been made. According to balance sheets for the years 1991-92 and 1992-93 as regards Ramzan Sugar Mills appended as Annexure 'IX' with the memo of evidence of documentary evidence as Annexure 'X', the said mill earned a loss of 190,168 millions whereas other Sugar Mills in the same season earned a record profit considering it a Bumper Crushing Season. According to learned counsel for the petitioners this would show that a huge amount earned from this mill was mis-appropriated for acquiring properties in the name of members of Family No. 1.
13. All the petitions were contested by the respondents who have filed written statements. Learned counsel for the respondents in the first instance raised the following objections to question the bona fides of the petitioners as also the maintainability of the petitions:
(a) That before approaching this Court the petitioners should have approached the Corporate Law Authority under section 263 of the Companies Ordinance, 1984;
(b) as is evident from memos, of understanding the petitioners should seek remedy by filing regular civil suits to enforce their rights under the same either by way of specific performance or for the recovery of assets allocated to them;
(c) the petitioners have approached the Court with unclean hands inasmuch as no disclosure was made regarding Memorandum of Understanding dated 25-9-1991 which was duly signed by the petitioners family.
14. None of these objections in my considered view has any merit. Section 265(a) of the Companies Ordinance which empowers the Court to make a declaration that affairs of a company ought to be investigated by an Inspector appointed by the Corporate Law Authority is independent provision of law and the said power can be invoked independently from section 263 of the Ordinance. Section 265(a) is a complete code in itself and no person is bound to approach first the Corporate Law Authority under section 263 of the Ordinance before invoking jurisdiction under section 265(a) as there is nothing in both the sections to that effect. As regards conduct of the petitioners it may be mentioned here that as noted above, all the Memorandums of Understanding prepared from the to the had not been signed by all the parties concerned i.e., all the Families and their representatives. According to clause 6 of the Memorandum dated 25-9-1991 and the other the same were to become effective valid and enforceable inter alia on the signing of all concerned. In this view of the matter, the status of all the families as regards their shareholding in all the Companies remained unaltered and uneffective therefore so long as the said position continued a shareholder was not bound to seek remedy in the first instance for distribution of assets by filing a civil suit before getting the affairs of the Company investigated as both the remedies are independent from each other and so long as the petitioners are holding interest as shareholders in the Company they can maintain their petitions. Nothing turns on failure to mention Memorandum dated 25-9-1991 as the petitioners have in clear terms otherwise mentioned that there were settlement between the parties according to which an understanding had been reached to distribute the assets of the Company. The allegations were that before finalization of the said understanding the petitioners had been ousted from the affairs of the Companies and they had no access to know as to what was happening and the Companies are being burdened with heavy liabilities and huge amounts obtained as loans were being misappropriated for personal gains.
15. Ch. Muhammad Faruq, Advocate, learned counsel for the respondents and Mr. Afzal Hayat Mufti, Advocate appearing for respondents 1 and 2 in C. O. Nos. 75 of 1994 and 96 of 1994, argued that it was necessary before making the declaration sought that an inquiry should be held and evidence recorded to prove the documentary evidence produced on the record. It is only on the strict proof of the said material in accordance with Evidence Act that the Court could make a declaration sought by the petitioners. Reliance has been placed on judgments reported as Kh. Muhammad Sharif v. Federation if Pakistan (PLD 1988 Lah. 725), In re: Clive Mills Co. Ltd. (1964 Company Cases (Calcutta) 731), 1983 Company Cases (Calcutta)
73. I am afraid there is nothing in these judgments that strict proof of the allegations and the material placed on the record for obtaining a declaration under section 265(a) was required. (AIR 1965 SC 1535) was also relied. The rule laid down in the said judgment is not applicable in this case as the same was a case for winding up of a company. 1964 Company Cases, Volume 34, p. 731 was a case under sections 397 and 398 of the Indian Company Act which provisions of law are similar to sections 290 and 291 of the Companies Ordinance, 1984, therefore, the decision made therein cannot be applied to proceedings under section 265(a) of the Companies Ordinance.
16. In my view what is required under section 265(a) of the Ordinance is that there should be some material before the Court on the basis of which the Court can come to a tentative conclusion that prima facie case had been made out for ordering the investigation into the affairs of the Company by the Inspectors appointed by the authority. The proof of such material in strict sense was not required for the same would amount to making investigation into the affairs of the Company by the Court itself. The law requires only this much that the Court cannot at arbitrarily but should form an opinion on the basis of some material which can be used as prima facie and tangible evidence justifying the investigation of affairs of the Company by the Inspectors appointed by the Authority.
17. Ch. Ijaz Ahmad, learned Deputy Attorney-General while arguing as to the scope of section 265(a) of the Companies Ordinance, 1984 and the limit to which extent an inquiry should be made by the Court before making declaration under the said section that affairs of the Company should be investigated referred to the following books:--
(a) Iyengar Companies Act, IInd Edition.
(b) Daxmann Companies Act, Law, Practice and Procedure, 1991 Edition, pages 1344-1345.
(c) Company Law by Datta, 4th Edition, pages 537-538.
(d) Palmer's Company Law, Volume I, 1987 Edition, page 1028.
(e) Commentary on Companies Act, 1956 2nd Edition, Vol. I, Written by Jagdeesh.
(f) Companies Act by Ramaiya, 11th Edition, page 743.
(g) Annual Law Digest, 1981-1985 by Swamy, Vol. IInd, page 217.
(h) Halsbury's Law of England, 4th Edition, Volume VII, Monograph 971 at page 573.
(i) Gower's Principle of Modern Company Law, page 677.
(j) Philips and Tailors Companies Directors, 2nd Edition, 1988, page 442. (k) Charles Worth Company Law, 12th Edition, p. 419.
(l) Ranking Company Law, page 254.
(m) Judicial Control of Executive Action by Dr. Fazal, pages 240-250.
(n) AIR Manual, 4th Edition, Volume VI, page 787.
(o) AIR 1968 Madras p. 374.
(p) AIR 1967 Calcutta p. 406.
(q) AIR 1969 SC page 707.
The Authors of the abovementioned commentaries while commenting upon the scope of section 237 of the Indian Company Act, 1956 which is comparable with the provisions of sections 263 and 265(a) of the Companies Ordinance, 1984 have, unanimously opined that only some sort of prima facie and tangible material/evidence is required on the basis of which the Court could form an opinion for making declaration that the affairs, of the Company should be investigated and not the proof of the allegations. It has also been held that the expression "affairs of the Company" was wide enough to include any contravention of law and .The Court could make declaration wherever it suspects that all was not well as regards the affairs of the Company. According to these commentaries these provisions have been made to protect minority shareholders and that a single shareholder could approach the Court. They have gone to the extent that an order for holding investigation into the affairs of the company does not have the effect of infringement of rights of any person and the same is not judgment in the strict sense as an order for investigation into the affairs of the company is nothing but merely a step. According to the Authors the affairs of the company includes ownership of the company and share dealings and books of accounts as also the conduct of the Directors. The allegations against some of the Directors for manipulation of accounts was also one of the matters in which investigation could also be made by the Inspectors.
I have derived immense guidance from these books referred by the Learned Deputy Attorney- General if order to arrive at the conclusion as to the scope of section 265(a) of the Companies Ordinance, 1984.
20. Mr, Afzal Hayat Mufti, Advocate for respondents 1 and 2 in C. Os. Nos. 75 of 1994 and 96 of 1994 argued that since by virtue of the aforementioned Memorandum of Understanding it could be argued that at least the petitioners having transferred their beneficial interest in the said Company has no locus standi to make the application for getting the affairs, of the said Company investigated. He also argued that since the said respondents have shown to have earned profits, therefore, there is no need to get the affairs of the said company investigated. He has referred to a chart appended with the written-statement to show that though the said Companies were under heavy debts but the respondents had paid liability to some extent and the burden had been decreased. I am afraid these arguments have no relevancy as regards the investigation of the affairs of the Company are concerned. As has already been observed above, the various Memorandums of Understanding as per their own terms have not become . Effective and enforceable. It was not the case of respondents that the register of the Company with the joint Registrar as regards transfer of shares by one family to the other has been rectified. AJI the shareholders in the record are still continued to be the shareholders therefore, the petitioners enjoy the locus standi to maintain the petition. Section 76 of the Companies Ordinance, 1984 provides the procedure which is required to be followed for the transfer of shares and debenture in the company which is admittedly has not been followed by any of the shareholders. As regards earning of the profits by respondents 1 and 2 the same is no ground for declining the request for holding investigation because as seen above, the expression "affairs of company" is very wide in its scope.
21. Ch. Muhammad Faruq, Advocate, learned counsel lor the respondents in. The other cases has taken me through the documents appended with the written-statement and the contents of the written-statement itself to demonstrate that all the families had accepted the arrangements made in the;^ abovementioned Memorandums of Understanding which fact was also acknowledged by Mr. Ilyas Meraj one of the family members of Meraj Family through a document in which he admitted that the said decisions had been acted upon and possession taken over by the families and the assets of the Company allocated to them and that he had been dealing with the affairs of the Company in effective manner by signing cheques and the other documents and was himself incharge of the affairs of the Company. He also argued that there was tangible evidence on the record that Meraj Family had acquired valuable properties and established other Companies such like Habib Waqas with the assets of the Company in the Ittefaq Group, therefore, petitioners 1 to 7 belonging to Mian Meraj-ud-Din Family are estopped from maintaining the present petitions. The argument that one of the shareholders was in possession and control of the Company in my view is irrelevant as regards investigation into the affairs of a Company. Apart from this, as has been noted above there appears to be no transfer of assets of the Company to each family. As a matter of fact everything is in the melting pot. It has been alleged by the petitioners which is the main grievance highlighted by them that the respondents as against the actual arrangements had taken over the assets of some of the Companies and were controlling their affairs considering themselves as sole owners thereof keeping in view their own interest instead of the interest of all the shareholders which all the families still hold in all the Companies as before. The petitioners have no access to know the actual state o/ affairs therefore they have approached this Court to get a declaration under section 265(a) of the Companies Ordinance, 1984. The allegation that Mian Meraj-ud-Din Family had acquired properties with the assets of the company and established Companies like Habib Waqas with the assets of the Companies in the Ittefaq Group itself provide justification for holding investigation into the affairs of the Companies.
22. The above documents produced by the petitioners provide over whelming prima facie evidence for obtaining declaration that affairs of the Companies ought to be investigated which were required to be rebutted by the respondents in order to show prima facie that the said material was not worth consideration or did not provide reasonable grounds for making such a.
Declaration. Ch. Muhammad Faruq, Advocate, learned counsel for the respondents has not been about to refer any material or document to rebut the said tangible evidence which has been discussed above. The correctness of financial liabilities of the Companies as given by the petitioners in the Chart though was disputed during the arguments by saying that the same was creation of the mind of the petitioners but no counter-chart was produced with certificates from the banks that the said statement was not correct. Mr. Afzal Hayat Mufti, Advocate, however, has placed on the record the documents to show the extent of liabilities of the to Companies which he is representing but the same to reveals that the said companies are under heavy debts.
23. For the foregoing reasons these petitions are hereby accepted and it is declared as envisaged by section 265(a) of the Ordinance that the affairs of the Companies ought to be investigated by the Inspectors appointed by the Corporate Law Authority.
24. During the pendency of these petitions an interim order was made for restraining the respondents from removing and seeming the stocks of sugar. On the complaint made by the petitioners through an application that the said order had been violated, a Local Commissioner was appointed to make inventory of the stocks of sugar and the godowns were ordered to be sealed. Since the scope of main petition under section 265(a) of the Ordinance which is complete code in itself is limited only to making a declaration that affairs of a company ought to be investigated and nothing else and not the distribution of assets or stocks of the company, therefore, the orders for restraining the respondents from removing and selling the stocks of sugar and for sealing the godowns where they had been stocked are hereby withdrawn. Apart from this interim orders cannot remain operative after the disposal of the main case i.e., application under section 265(a) of the Ordinance. As regards application of the petitioners for taking action against the respondents for violation of the temporary injunction order as regards removal and selling of the stocks after the said order was passed the same shall be decided on its own merits and for that purpose sealing of the godowns is not necessary. The abovementioned are the reasons for passing the short order.