1. ' WAJIHUDDIN AHMED, J.---The appellants in their Memos. Of appeal against the common order dated 12-6-1996 passed by the learned Single Judge in Judicial Miscellaneous Nos. 51 of 1993 and 67 of 1993 have elaborated upon the background of the disputes which led to the passing of the impugned order. The salient features of such resume of facts do not appear to be disputed and may briefly be recounted. However, since the same have been picked up from the Memos. Of appeal, such portion thereof as is not supported by the record or remains subject to proof would not carry binding effect for any one who disputes the same. Reverting, it is maintained by the appellants that late Fazal Ahmed and his sons including Gulzar Ahmed and Munir Ahmed, over the years, set up a number of industrial units in Pakistan, two such units being "Naveed Textile Mills Limited" (Appellant No,1) and "Central Cotton Mills Limited" (Respondent No,1). All such units were controlled and managed by late Fazal Ahmed and his family and because of commonality of management, such family concerns held shares in one another. Upon the demise of the said Fazal Ahmed, the various companies, as a result of family settlement and understanding, fell under the control and management of his sons. Naveed Textile Mills Limited was to be managed and controlled by Gulzar Ahmed and his family whereas Central Cotton Mills Limited came to be controlled by Munir Ahmed and his family. In order to consummate and give effect to such arrangement, certain transfer of shares also took place and one such transfer on or about 27-1- 1990 was of 5174130 shares (out of 776100 shares) held by the Central Cotton Mills Limited in the Naveed Textile Mills Limited and the transfer was in favour of Gulzar Ahmed and his family as also, to certain companies controlled by the latter. In the same context, allegedly for internal family reasons, some of the 517400 shares were also transferred in the names of Aftab Ahmed and his family (another son of late Fazal Ahmed or to companies controlled by the said Aftab Ahmed.
2. These transfers were apparently registered in the books of Naveed Textile Mills Limited. Again, according to the appellants, after a passage of more than a year, Munir Ahmed aforesaid, using the Central Cotton Mills Limited as a vehicle, attempted to take control of Naveed Textile Mills Limited, by, inter alia, impugning and challenging the abovesaid share transfeRs, Such was manifested by the institution of Suit No,227 of 1991 (Central Cotton Mills Limited v. Naveed Textile Mills Limited). That suit is still pending and the learned single Judge referring to it says that the same constitutes the genesis of the present litigation and if that suit was to be decided, the present controversy may possibly conclude as a consequence. In Suit No,227 of 1991, on an application for appointment of receiver and grant of injunction this Court on the original side found (1993 M LD 42) that prima facie the Central Cotton Mills Limited was able to establish that transfer of the aforesaid 517400 shares of such mills was not valid and, therefore, interim relief was required to be administered. The interim relief extended was to the effect that while Naveed Textile Mills Limited may implement a resolution, set out in the notice dated 9-4-1992 published in daily "Morning News", the persons to whom the shares were transferred shall not, during the pendency of the suit, sell, transfer, alienate, pledge or encumber the 776100 shares in dispute, the dividends on such shares would be deposited in Court and Naveed Textile Mills Limited would give notice in writing to the Central Cotton Mills Limited of its intention, if any, to pass a special resolution at least 15 days prior to the date on which such resolution was proposed to be passed. It is urged by the appellants that such order did not in any manner indicate that Central Cotton Mills Limited were found entitled to any voting or other rights in respect of the disputed shares or that the registered transferees would not exercise such rights. Against the referred prder, High Court Appeal 78 of 1992 was brought by the Central cotton Mills Limited, in which, inter alia, it was prayed "that the A.G.M. Be held again with the appellants' enjoying and exercising voting rights on the basis of their holding 776100 in the equity share capital of Naveed Textile Mills Limited, the Respondent No,1 abovenamed". Such appeal was dismissal, in limine on 19-8-1992. Against the dismissal, the Central Cotton Mills Limited filed Civil Petition for Leave to Appeal 420 of 1992 but, per order dated 21-10-1992, the Supreme Court refused the leave to appeal to the said Mills. On 8-6-1993, Naveed Textile Mills Limited, allegedly, issued notices for holding their 19th Annual General Meeting on 29-6-1993. Elections of Directors was also to be held at such meeting. The notice was published in daily "Business Recorder" of 9-6-1996. Munir Ahmed aforesaid is claimed to have preferred in this Court Judicial Miscellaneous No,47 of 1993 on 22-6-1993 as a co-petitioner of Central Cotton Mills Limited, his wife and daughter etc. Such petition being under section 179 of the Companies Ordinance, 1984. One of the prayers in Judicial Miscellaneous No,47 of 1993 pertained to the petitioners' exercising voting rights at the elections in respect of 776100 shares covered by Suit No,227 of 1991. On 27-6-1993, Official Assignee was appointed to supervise the holding of the A.G.M. Already fixed on 29-6-1993, but at such A.G.M. The business to be conducted was not to include the election of directors, which was deferred to a subsequent date. The A.G.M. Was accordingly held. However, Central Cotton Mills Limited and others preferred Judicial Miscellaneous No,51 of 1993, inter alia, seeking that the proceedings of the AGM held on 29-6-1993 be declared to be invalid and a fresh meeting be called. On 26-8-1993, in Judicial Miscellaneous No,47 of 1993 it was ordered that election of directors be held on 30-8-1993 but the result may be withheld subject to orders of the court. These elections having been held on 30-8-1993, Central Cotton Mills Limited and others filed Judicial Miscellaneous No, 67 of 1993 again under section 161(8) of the Companies Ordinance 1984, whereby the meeting held on 30-8-1993 was sought to be declared invalid and a fresh meeting was required to be held. Meanwhile, per order dated 21-8-1995, Judicial Miscellaneous No,47 of 1993 was disposed of as infructuous, the parties having been allowed, if they so wished, to refer to the record of such Judicial Miscellaneous at the hearing of the two subsequent petitions. It is the order dated 12-6-1996 passed in Judicial Miscellaneous Nos. 51 of 1993 and 67 of 1993 which has occasioned these two High Court appeals.
3. ' Through the impugned order the learned Single Judge has declared and directed as under:-- "In view of the circumstances, the proceedings of meeting held on 29-6-1993 and of adjourned meeting held on 30-8-1993 are declared to be invalid and the respondents are directed to immediately take steps in accordance with the Companies Ordinance and Memorandum and Articles of Association to call for the Annual General Meeting immediately. The Official Assignee is appointed to conduct the said meeting under his supervision. The two Judicial Miscellaneous Nos.51 of 1993 and 67 of 1993 stand disposed of in terms of the above order."
4. ' The order quoted above was passed upon recording findings as below:-- "There is not enough proof that the notices were despatched individually to all the directors/shareholders as provided under section 233(4) of the Companies Ordinance, 1984.
5. ' The agenda prepared for the meeting did not include the election of the Chairman for the proposed meeting.
6. ' The director's term though had expired on 31-3-1993 but no steps were taken for the election as required under sections 177 and 178 (3).
7. ' The meeting was held under the Chairmanship of an unelected Chairman.
8. ' Notice of the adjourned meeting was not issued as provided under Article 74 of the Articles of Association of the Respondent Company and Rules of the Karachi and Lahore Stock Exchanges.
9. ' In my opinion, since the requirements of the provisions under the Companies Ordinance are mandatory, the non-compliance of the same render the meetings held on 29-6-1993 and 30-8- 1993 invalid."
10. ' Before us Mr. Khalid Anwer for the appellants has contended that due notice was issued for the Annual General Meeting (A.G.M.) proposed to be held on 29-6-1993. None of those present at the A.G.M. Objected to the sufficiency of notice. Respondents-shareholders themselves were not prejudiced as, much prior to the holding of such meeting, they came to the Court questioning it and what is more actually participated in it. On his part, Mr. Muhammad Ali Saeed for the respondents says that issuance of a 21 days clear notice for an A.G.M. Is mandatory, that no copy of such notice addressed personally to the shareholders has been produced, let alone the despatch register. What is more, even the annual balance-sheet was not despatched, there again transgressing a mandatory provision. All of the notice, therefore, that remains is its publication in two newspapers which in itself does not constitute due compliance with law.
11. ' On 17-9-1996, we disposed of these High Court Appeals through a short order which, for the sake of ready reference, is reproduced hereunder:-- "While we would record our reasons separately for the short order, which is being passed now, such emerges from a background where there are certain aspects upon which the learned counsel agree whereas there remain others regarding which they do not agree. All such are detailed below:--
(1) There would under the Official Assignee be, within a period of two months, an Annual General Body Meeting of the appellant No,1 Mills, which shall be deemed the Annual General Meeting for the years 1993 and 1996 as far as elections to the Board of Directors are concerned. The proceedings, as a result whereof elections to such Board were held on 30-8-1993, would stand totally rescinded, not referable for any purpose.
(2) The elections, proposed in the aforesaid meeting, now to be convened within two months time, would ensure and carry a tenure of three years, commencing from the date of the meeting.
(3) In the forthcoming meeting as above, on all such questions on which a poll was demanded and taken in the meeting held on 29-6-1993, any of the parties/shareholders would be free to ask the Official Assignee to retake the poll and on merely being so asked the Official Assignee would retake the poll.
(4) Pursuant to the arrangements as above, the meeting, which in the meantime, had been scheduled to be held on 23-9-1996 would no longer be held and the appellants shall coordinate efforts with the Official Assignee to hold the above proposed meeting in accordance with what has been recorded here. It is clarified that the Official Assignee in the forthcoming meeting would not merely supervise but would preside over the same and take all decisions in his own right as if he was the Chairman of the meeting.
(5) In view of the disposal of the dispute in the foregoing terms, none of the parties shall raise any question simplicitor as to the competence or authority of any of the directors or the shareholders for whatever may have been done in relation to the conduct of the affairs of the appellant Mills under the Company Law and the memorandum and Articles of Association but, at the same time, everything that was so done if intrinsically lawful would remain so and if vice versa not remain so and may be challenged in due course of law by whomsoever, as be concerned. This would include the proceedings at the annual general or other meetings of the company held up to the date of the meeting proposed to be held.
12. ' The above were matters on which consensus has been reached, relative to what the learned Single Judge has said or what we propose to say separately in our own order but there is one aspect on which the learned counsel disagree. That is this:-- ' While Mr. Muhammad Ali Sayeed and Mr.Khairat H. Shamsi, for the respondents, maintain that every question can be raised in these proceedings and elsewhere about the validity of transfer of shares, if any, which may have taken place between 29-6-1993 and this date and that such aspect should be considered by the Official Assignee and also decided upon by him in the course of the above proposed meeting, Mr. Khalid Anwar and Mr. Munib Akhtar, for the appellants, have contended that such a question, if any, could have been raised in the ordinary course by the aggrieved person but because such a question was never raised it is a foreclosed issue and cannot be agitated in these proceedings and at any event it remains a question not canvassed before or deliberated upon by the learned Single Judge and may not be adverted to here. Since there is no consensus on this question, our own view, in the matter, we would express separately, when we are recording our reasons for this order.
13. ' In terms as above, partly by consent partly without it, these two appeals stand disposed of."
14. ' Coming to our reasons for the above reproduced short order, no documentary or other material was placed before the learned Single Judge nor has any been brought to our attention establishing that personal notices were addressed relevant to the 19th Annual General Meetting of the appellant Mills proposed to be held on 29-6-1993. Mr. Muhammad Ali Sayeed for the respondents has pointed out that even the purported copy of the 19th Annual Report, 1992, placed as Annexure 'A' in these appeals, does not incorporate any notice to the shareholders, which is a common course of practice in such matteRs, In this, Mr. Muhammad Ali Sayeed should be right because the annual balance sheets, which invariably find their way to shareholders of listed companies, do normally incorporate the requisite notice in apparent satisfaction of the applicable legal requirement. There were, obviously, other modes as well to prove despatch of such notices and the easiest, perhaps, would have been the production of the relevant register but none of that seems to have been given a thought by the appellants. It must, therefore, be found, as the learned Single Judge seems to have done, that apart, from the public notice, no personal notices were served, thus contravening section 158(3) of the Companies Ordinance, 1984. That provision, attracting penalties (fines, not resorted to) under section 158(4) for default, "knowingly and wilfully" committed, may well be termed mandatory. The reprieve allowed by section 160(1) of the Companies Ordinance, saving invalidation of the proceedings of a general meeting due to "accidental omission to give notice to, or the non-receipt of notice by, any member" should not be applicable in the instant case because neither the omission appears to be "accidental" nor any insignificant number of members was involved. Where a mandatory provision carries a consequence for noncompliance, quite arguably, the impact of a transgression may be confined to such consequence itself. However, if wider ramifications also follow such restrictive approach may lead to rendering the mandate toothless, as indeed should be in point here. Even so, in order to explore other avenues of redress broader concepts in the statute need to the examined. One such provision, furnishing a pointer, is in section 161(8), where larger good of members can lead to total invalidation of the proceedings of the relevant meeting.
15. ' Here we may take note of an argument from Mr. Khalid Anwar, the appellants' learned counsel, that, at any event, the respondents were aware of the actual date of the meeting, as indeed was established by their filing Judicial Miscellaneous No,47 of 1993, a good deal prior to the A.G.M. Then proposed to be held on 29-6-1993. The argument is capped by an assertion, in line with section 161(8) of the Ordinance that the meeting cannot be declared to be invalid because there was not either "a material defect or omission in the notice or irregularity in the proceedings of the meeting which prevented" members having not less than ten per cent. Of the voting power in the Company "from using effectively their rights". The strength of respondents' voting power is not denied but it is urged that no different result could have ensued even if due notices were proved. The argument is no doubt attractive but not very helpful. The subsection does contemplate the making of the relevant application "by members having not less than ten per cent. Of the voting power in the company" but, as rightly pointed out by Mr. Muhammad Ali Sayeed, it is not necessarily those members alone, who make the application, that may be "prevented". The absence of the definite article "the" before the word "members" in the later part of the subsection implies that the members, ultimately, getting affected may be the members generally. The appellant, being a listed company apparent prejudice to the members in general assumes significance. Besides, just as Section 158(3) of the Ordinance is mandatory so is Section 233(4), regarding the despatch of a copy of the "balance sheet and profit and loss account and income and expenditure account", duly audited "together with a copy of the auditor's report to the registered address to every member of the company at least twenty one days before the meeting" default being punishable under Section 233(6). This requirement also is not shown to have been met. Digressing here, a good deal of argument was raised before the learned Single Judge about the period of notice under sections 158(3) and 233(4), 21 days "before the meeting" in either provision. It remains to be stated here that such is a clear period and is designed to exclude the date of despatch and the date of meeting, actual service being inconsequential. Such is something, which is a departure from the precursor statute namely, the Companies Act, 1913, as also from the English and Indian legislations on the subject. This is not to say that service of notice is not required. It is. All things being equal, however, it is to be inferred and, where legal requirements are satisfied, even presumed.
16. ' Reverting, question arises as to what is the effect of non-compliance of the mandatory requirements of sections 158(3) and 233(4) of the Ordinance? Has it to be confined to fines in contemplation of Sections 158(4) and 233(5) alone? Additionally, is action contemplated in section 161(8) by the prescribed minority, the end all? Some discussion on the subject has already occurred. We may note here that under the Companies Act, 1913, there was no equivalent of Section 161(8) and yet invalidation of general meetings could be adjudged. No different may be the position now. Even so, Section 160(1) precludes invalidation of proceedings solely on account of "accidental omission to give notice to, or the non-receipt of notice by, any member". Likewise, as seen, Section 161(8), which does postulate invalidation of meetings, requires the grievance to be brought by a minimum of ten per cent. Voting strength and a material defect or omission in the notice or irregularity in the proceedings of the meeting "which prevented members from using effectively their rights". In the view we are inclined to take, these provisions do not curtail the power of the Court in cases of gross violations and manifestly unjust conduct. They only streamline such power. In appropriate cases, therefore, relief ex debito justitiae should still be in place.
17. ' This throws up the next question in controversy in these appeals. That. Consists of there, allegedly, having been no chairman of the meeting and a consequential claim that such resulted in voidability of the Annual General Meeting dated 29-6-1993 a proposition for which reliance has been placed on a Single Bench judgment of this Court in Iqbal Alam v. Plasticrafters (Pvt.) Limited 1991 CLC 589. Now the reason behind the plea of absence of a Chairman at the A.G.M. Is grounded in the fact that the term of the Board of Directors, who elect a chairman for their tenure, having expired and the same chairman being required to preside over the A.G.M., there was no chairman to preside at the A.G.M. In question. It is, however, undeniable as a proposition, emerging from section 177 of the Companies Ordinance, that retiring directors continue to perform their functions beyond the prescribed term and till such time as a new board is inducted. The corresponding requirement to hold elections, without unnecessary delay, and intimation to the registrar of impediment, if any, does not ipso facto detract from the enabling postulation. Does this, however, mean that while the directors may so continue, the chairman, who has to be one of their number, ceases to be such chairman? If that is so, it would imply that at each meeting of the Board of Directors after efflux of their terms, a chairman shall have to be elected by such directoRs, There is no express provision in the Companies Ordinance or the Articles of Association (even through Article 70 is similar to the Article in the Re: Iqbal Alam) to such effect. Furthermore, for the purposes of General Meetings, likewise, there is no provision either for the Board of Directors or the General Body of shareholders to elect a chairman in circumstances where the Board of Directors has outlived its terms but continues by dint of section 177 in the Companies Ordinance. To read such a provision in the law or the Articles would amount to reading something, which is not there. This is not permissible The necessary legal inference, therefore, is that if the retiring directors continue beyond their term, as the section postulates, so does the chairman. To that extent, the conclusion of the learned Single Judge was erroneous and the rule has not been correctly laid down in the case of Iqbal Alam (supra). However, because we were of the view that there was a good deal of acrimony between the parties and a fair dispensation was the crying need of the situation, we had through the short order, in our own discretion allowed the Official Assignee not only to supervise but to preside over the forthcoming meeting, something which does not detract from the proposition of law which we have just discussed.
18. ' At this stage may be examined the question of transfer of share made mention of in the penultimate paragraph of the above reproduced short order. It is not disputed that the transfer of 517,400 shares effected on 27-1-1990 has been the subject-matter of Suit No,227 of 1991 and interim orders in the suit were passed, as reported in Central Cotton Mills Ltd. v. Naveed Textile Mills, 1993 M LD 42. Such orders, for the present appear to have attained finality inasmuch as the High Court Appeal and the Civil Petition for Leave in the Supreme Court stand dismissed. In such interim orders it does not seem that the transferees of the aforementioned shares were precluded from exercising their right to vote though several other restrictions were imposed on them. In the matter of day to day unresolved disputes pertaining to disposition of shares, the usual remedy is the remedy of a suit and that suit is pending with specific interim measures, made operative during the pendency. It is doubtful that a proceeding brought before a Company Judge in the High Court can overtake an earlier instituted suit. Even if that were not so, the only Judicial Miscellaneous Application, where such a question was apparently raised, was Judicial Miscellaneous 47 of 1993 and that stood disposed of as infructuous on 21-8-1995. There was, therefore, hardly any valid or subsisting plea before the learned Single Judge about the aforesaid transfer of shares and for that reason no discussion on the subject has taken place. This may have been rightly so. As regards transfers of shares, if any, after 29-6-1993, such pertain to a period while the Judicial Miscellaneous Applications were pending in the Company jurisdiction of this Court. However, no specific pleas about any pendente lite transfers, calculated fraudulently to adversely affect one or more if the contesting parties, appear to have been taken. Little discussion of the point, therefore, has appeared in the order of the learned Single Judge. In the circumstances, no directive need issue so as to preclude any shareholders ex facie, registered of a particular holding, from exercising his right to vote, incidental upon his ostensible entitlement.
19. The conclusion, accordingly, on the basis of which these appeals were disposed of, is that the meeting dated 29-6-1993 was correctly declared by the learned Single Judge to be invalid and so also the subsequent meeting dated 30-8-1993, the last on the ground that for such an adjourned meeting, similar notice as for a first meeting, envisaged in relation to listed companies, was not issued.
20. ' Herein above were the reasons for the short order passed in these appeals on 17-9-1996.