1. Allowed.
2. This order will dispose of application (C.M.A. No,839/1996) under section 292 of the Companies Ordinance, 1984 (hereinafter Ordinance, 1984) read with section 151, C.P.C. Wherein the petitioners have prayed that the meeting which was to be held on 12-6-1996 at 11-30 a.m. Or any other date or time with the following agenda, may be stayed.
1. "(1) Election of the Chairman of the Board of Directors;
(2) Confirmation of the minutes of the meeting of Board of Directors held on 22nd May, 1996 and of the minutes (Resolution by Circulation) dated 29th May, 1996.
(3) Appointment of Chief Executive;
(4) Appointment of the Secretary of the Board;
(5) Authorization of the payments and signing of cheques; (6), Appointment of working Director(s) and their remuneration;
(7) Election of one director against a vacancy; and
(8) Any other item with the permission of the Chairman."
2. ' Notice of this application was given to the respondents and only respondent No,3 in his capacity as a director of the respondent No,1 has filed counter-affidavit. In the main petition filed under the Ordinance, 1984 the petitioners have prayed as under:--
(1) That the transfers of share, made and recorded in Members Register between 30-3-1996 and 11- 5-1996 are illegal and void and liable to be set aside and the Members Register needs rectification accordingly;
(2) that the present Board of Directors comprises persons whose election as such director is without lawful authority and void;
(3) that there is collusion, conspiracy and mischief in the manner the respondent No,1 is run and its affairs and business conducted to its determined and oppression of the minority shareholders holding 21.15% shares in the equity capital of the Company;
(4) that the election of directors purported to be held on 11-5-1996, be set aside;
(5) that the oppression of the minority shareholders (constituting 21.15% of the shareholders) be ended by appropriate steps, directions and order of this Hon'ble Court by, inter alia--
(a) to appoint the Official Assignee as receiver of the respondent No,1;
(b) to appoint a well-known Chartered Accountant for in depth audit of the accounts, business and affairs of the respondent No,1;
(c) to pass appropriate orders relating to fictitious recounts and accounting of the respondent No,1 and to make persons responsible liable for the loss;
(d) to grant such other/further/additional orders, directions, reliefs as may appear proper to the Court or the petitioners in the trial."
3. ' Alongwith the main petition the petitioners had also submitted applications (C.M.A. No, 718/1996) under section 291(b) read with section 292 of the Ordinance, 1984 read with Order 39, rules 1 and 2, C.P.C. Wherein the petitioners prayed for interim order restraining the respondent Nos.2, 3, 6, 9, 11 and 12 to act as Directors of the respondent No,1 and to stop them from operating any bank account or selling any assets of the respondent No,1. Through another application (C.M.A. No, 719/1996) the petitioners prayed for appointment of Official Assignee or any other person or persons as receiver of the respondent No,1 counter-affidavits were filed to these applications and by consent on 5-6-1996 the following order was passed:-- "All the learned counsel for the parties and their respective clients are present. They have agreed to the following interim arrangements which will continue till the disposal of this case.
(1) All commissions earned by the respondent No,1 company from the sale and purchase of shares or securities by the respondent No,1 shall be reported to the Official Assignee on a fortnightly basis within a week, thereafter this report shall not contain the names of the clients of the respondent No, 1 .
(2) All expenditures on the fixed assets exceeding the sum of Rupees one million per calendar month shall be reported to the Court and shall be made only with the permission of the Court.
(3) The respondent No,1 shall submit a monthly profit and loss account as well as the monthly balance-sheet to the Official Assignee within seven working days at the end of each calendar month.
4. ' The office is directed to fix this matter for hearing of applications as well as the main application immediately after the expiry of summer vacation according to the roster."
5. ' It was after the passing of the aforesaid consent order that the notice dated 8-6-1996 (hereinafter referred to as the impugned notice) was issued by the Chief Executive of the respondent No,1 for holding a meeting of the Board of Directors to carry out business as mentioned in para.1 (supra) and the petitioners have now sought stay of proceedings pursuant to that notice.
6. ' I have heard Mr. Mansoor Ahmed Khan learned counsel for the applicant and Mr. Makhdoom Ali Khan learned counsel for the respondent No,1 as well as Mr. Abul Inam learned counsel for pro forma defendant (NDFC). The other learned Advocates namely M/s. J.H. Rehmatullah, Abid Zubairi, and Zahid Ibrahim appearing for the remaining respondents adopted the arguments of Mr. Makhdoom Ali Khan.
7. ' Mr. Mansoor Ahmed Khan contended that serious irregularities were committed in the holding of election of directors on 11-5-1996 by accepting wrongfully, illegally incorrect proxies by persons to act proxy thereunder and rejecting lawfully appointed proxy. In this respect he referred to Exh.D-1 to D-14, filed alongwith main petition. According to him the election of directors was false, illegal and void and liable to set aside. He further submitted that the minority represented by the petitioner (holding 21.15 per cent. Shares) are already seriously oppressed because of the violation of the provisions of the Ordinance, 1984 and the rules made thereunder as also Memorandum and Articles of Association of the respondent No, 1 . He referred to the additional capital which was required to be offered under section 86 of the Ordinance, 1984. Lastly he submitted that in case if the injunction as prayed for is refused the petitioner will suffer inconvenience and irreparable loss.
8. Mr. Abul Inam learned counsel for the pro forma defendant referred to clause 4 point 3 of the agreement between the respondents (page 14 of the record) and submitted that there had been serious violation of the said agreement.
9. ' Mr. Makhdoom Ali Khan learned counsel for the respondent No,1 and 6 submitted as follows:--
(1) No prejudice shall be caused to the petitioner if elections are held, which is mandatory requirement of the Ordinance, 1984. (Section 199).
(2) The application is an attempt to review the consent order passed on 5-6-1996, which cannot be granted. The petitioners' interest is protected.
(3) the arguments advanced by the learned counsel for the petitioner are not relevant for the purpose of the disposal of application. C.M.A. No,839/1996 and are beyond the pleadings;
(4) the arguments advanced by the learned counsel of pro forma respondent (NDFC) cannot be taken into consideration. NDFC is only a pro forma defendant and has not filed any case alleging any breach of agreement;
(5) that respondent No,2 does not want to continue as Chief Executive of the respondent No,1 vide Annex. CA-2 to counter-affidavit of the respondent No,1 to C.M.A. No, 839/1996);
(6) this Court will not interfere with the internal management of the Company;
(7) since no relief as prayed for in C.M.A. No,839 of 1996 has been claimed by the petitioner in the main petition therefore, no interim relief can be granted;
(8) petitioner's application suffers from laches.
10. ' Mr. Makhdoom Ali Khan cited paragraphs 906 and 956 from Volume 24 of (Halsbury's Law of England, 4th Edn., (the chapter relating to Injunctions) as well as the following case-law in support of his submission while vehemently opposing the stay application:
(1) National Petrocarbon (Pvt.) Ltd. And 2 others v. Registrar of Trade Unions and 6 others 1989 CLC 1975.
(2) Marghub Siddiqi v. Hamid Ahmed Khan and 2 others 1974 SCMR 1975.
(3) P.I.A. v. Hazir (Pvt.) LTD. PLD 1993 Kar.
11. 190.
(4) Shahazadi Baber v. Hina Housing Project Limited 1994 CLC 1601.
12. ' The authorities and decisions cited by Mr. Makhdoom Ali Khan discuss the principles governing the grant of interim injunction and there can be no cavil with them but here I am dealing with an application under section 292 of the Ordinance, 1984 which may be reproduced as under:-- "292. Interim order.--- Pending the making by it of a final order under section 290 the Court may, on the application of any party to the proceedings, make such interim order as it thinks fit for regulating the conduct of the company's affairs, upon such terms and conditions as appear to it to be just and equitable."
13. This section empowers the Court to pass such interim order as it thinks fit regulating the conduct of the affairs of the Company upon such terms and conditions as are just and equitable. However, in my humble view the phrase just and equitable' baffles a precise definition. In Hind Overseas Pvt.
14. Ltd. v. R.P. Jhunjhunwalla AIR 1976 SC 565 the Supreme Court of India in the context of company law observed that it must rest with the judicial discretion of the Court depending upon the facts and circumstances of each case. It was further held as follows:-- "These (just and equitable) are necessarily equitable considerations and may, in a given case, be superimposed on law. Whether it would be so done in a particular case cannot be put in the strait jacket of an inflexible formula."
15. (See also K.G.K. Ananthakrishnan v. Burdwan Kutwa Railway Co. (1978) 48 Comp. Cases 611 at pp. 636, 637.
16. Undoubtedly the discretion vesting in the Court is to be exercised in a just and equitable manner and not arbitrarily and capriciously but as I feel the requirements of Order 39, rules 1 and 2, C.P.C.
17. Are not attracted to the exercise of powers under section 292 of the Ordinance, 1984.
18. ' Nothing has been brought on record to demonstrate that the working of the Company would come to a complete halt if the meeting convened through the impugned notice is not held.
19. Similarly it has not been explained as how and what provisions of the Ordinance, 1984 would be violated if the meeting in question was not held till the hearing of the main petition. There are provisions in the Articles of Association as pointed out by Mr. Mansoor Ahmed Khan learned counsel for the petitioner which take care of situation created by the resignation/retirement of the Chief Executive of the Company. There are also provisions for fixation of the remuneration of the working directors etc. As noted earlier the parties agreed to a formula regarding the functioning of the Company till the hearing of the main petition which with their consent has been directed to be fixed immediately after summer vacations. The parties are supposed to adhere strictly to this interim arrangement and should avoid indulging in exercise which may result in multiplicity of proceedings. The impugned notice dated 6-6-1995 is seemingly an attempt to disturb the situation sought to be achieved under the aforesaid consent order and it appears that the directors through the intended device covered under the agenda as mentioned in the impugned notice wants to strengthen their hold over the affairs of the Company. The petitioners do not recognize the directors as having been validly elected and are complaining of oppressive activities being perpetrated by them. However the truth or otherwise of these allegations will be examined at the time of hearing of the main petition which will take place immediately after the Court reopens in the month of August. It will therefore, be in the interest of justice that the operational sphere of the directors should remain confined to the terms of their interim arrangement. If the directors are not restrained from acting in pursuance of the impugned notice this will tantamount to allowing the balance to tilt in their favour thereby aggravating the grievance of the petitioners which fact, to begin with has manifested itself in the form of the present interlocutory application.
20. ' Thus keeping in view the overall circumstances of the case as divulged through the respective pleadings of the parties it will be just and equitable to prohibit the holding of the meeting called through the impugned notice till the hearing of the main petition. .