' The petitioners, who claim themselves to be the contributors and share-holders of respondent- company namely Associate Engineering Concern (Pvt.) Ltd. (hereinafter referred to as company) seek winding up thereof under section 305/309 of the Companies Ordinance, 1984 on the ground that the same is just and equitable in the facts and circumstances of the case.
2. The respondent-company, which is a family concern was launched somewhere in 1975 with the primary object of construction and fabrication work in the field of mechanical and electrical engineering relating to various industrial projects. Petitioner No,1 was appointed as Chief Executive/Director of the company while his three sons i,e, petitioner No,2 and respondent No,2 alongwith another namely, Abdul Majeed, having shareholdings respectively equivalent to 29%, 21% and 12% were appointed as the Directors of the company. The case as laid in the petition is to the effect that the affairs of the company were being run very smoothly but respondent No,2 started creating hurdles in the smooth functioning of the company became violent and thereafter adopted mood that of force, threats and blackmail, so as to have monopoly in the affairs of the company. The petitioners, who are father and step-brother of respondent No,2 went on to bear the same in the best interest of the family business with the result that the said respondent No,2 was encouraged to an extent that he became desparate and asserted to take over the company by any means so as to oust the petitioner from the management thereof. It has also been the case of the petitioners that respondent No,2 would extort money from the petitioners by use of threats and ultimately on 7th, 19th and 23rd of April, 1995, the said respondent No,2 in the company of persons of nefarious repute confined the petitioners in the office of the company and under the threat of physical violence and at the gun point compelled the petitioners to put their signatures on blank papers, stamp papers and printed forms. The petitioners were also forced to the tender their resignations under the pressure of somewhat similar threat. It was also submitted that respondent No,2 having obtained the signatures of the petitioners on the papers aforenoted have forged many documents to suit his convenience and having achieved the abovesaid illegal and through coercion and 'duress, has proceeded to appoint respondent No,3 i,e, the wife of respondent No,2 as another director. The alleged conduct on the part of respondent No,2 has been described to be criminal with the assertion that the main office of the company was also forcibly occupied by respondent No,2. Having stated the facts aforenoted, the petitioners narrated the consequences thereof by submitting that the petitioners have been forced out of the office and the affairs of the company have been taken over by respondent No,2 who has extorted cash of Rs,25,00,000 and N.D.F.C. Security of Rs,10,00,000 by using the threat of violence as also by keeping the petitioners in fear of death; that there is every possibility of misappropriation of the assets of the company; and that constrained as above, the petitioners lodged an F.I.R., dated 6-5-1995 with Police Station Gulberg under sections 506, 442, 420, 468, 471, 386, 148, 149, P.P.C. Apart from the alleged illegal extortion of money as aforestated, the petitioners did also submit that since the conduct and attitude of respondent No,2 was extremely violent and he was accompanied by persons armed with weapons, therefore, the petitioners were left with no option but to submit to the coercion and duress so as to save their lives and it was under the abovesaid reign of terror that the petitioner No,1 handed over the following securities to respondent No,2, which were issued by the Soneri Bank, The Mall, Lahore:
(i) S.N.T.D.S. No,7594, dated 4-4-1995 for Rs,26,36,000
(ii) S.N.T.D. No,7593, dated 4-4-1995 for Rs,25,00,000
(iii) T.D.R. No,SBL/5480, dated 6-2-1995 for Rs,10,00,000
(iv) T.D.R. No, SBL/5481, dated 6-2-1995 for Rs,10,00,000.
(v) T.D.R. No, SBL/5482, dated 6-2-1995 for Rs,10,00,000.
' It is, however, submitted by the petitioners that immediately when they were in a position to exercise their free will they contacted the management of the bank and orally asked them to stop payment of the abovesaid securities followed by a written intimation, dated 7-5-1995.
' In the background aforenoted, it was maintained that the company is no longer viable as it had ceased to function on and from August/September, 1994 and since no meeting in relation to the affairs of the company could be held because of the conduct of respondent No,2 and the very fact that the petitioners being the majority shareholders, have been completely ousted from the affairs of the company, it is enough to conclude that substratum of the company has gone, therefore, it is just and equitable to wind up the same.
3. The petition was resisted by respondents Nos.2 and 3, inter alia on the ground that the petitioners having resigned on 7th April, 1995, were no more the members/shareholders of the company, therefore they had no locus standi to maintain the petition for the winding up thereof. The total version of the petitioner was termed to be mala fide and it was submitted that the petitioners had not approached the Court with clean hands by maintaining that the securities mentioned in para. 13 of the petition were handed over to respondent No,2 in consequence of a family settlement and even otherwise the said securities had no nexus with the affairs of the company. In this regard the wife, son and son-in-law of petitioner No,1 were sought to be produced in evidence. The stoppage of the encashment of the securities was termed to be illegal and it was submitted that a civil suit in that regard has already been filed by the respondents. Plea of non-joinder and misjoinder was also added and in defence to the main petition agreement, dated 7-4-1995 was relied to maintain that it was agreed thereby that the petitioners alongwith Abdul Majeed decided to disassociate from the company and agreed to tender resignation and transfer their shareholdings to respondent No,2 with the further rider that Mrs. Shaheen Anwar would be co-opted as a Director and that no dispute would be raised nor any claim would be made which might have the effect of detracting from the said agreement. It was in the implementation of the abovesaid agreement that petitioner No,1 resigned on 7-4-1995, which was accepted on the same date and Mrs. Shaheen Anwar was co-opted as one of the directors of the company. Petitioner No,2 resigned on the very next dated i,e, 8-4-1995, which too was accepted on the very day and so was the case of Abdul Majeed, who tendered his resignation on 9-4-1995, which was also accepted on the same date. Necessary resolutions in regard thereto were also passed on the dates that the resignations were submitted.
Consequent thereupon respondent No,2 was appointed as Chief Executive of the company. It was also in line with the agreement dated 7-4-1995 that the three resigning Directors addressed letter to the bank thereby intimating them that the bank account shall be operated by the new Chief Executive. Respondent No,2 filed requisite forms with the Joint Registrar of Companies on 10-4-1995 thereby intimating about the change in the company and that the Directors aforementioned did transfer their shares by issuing receipts individually as also by signing open share transfer deeds.
4. The factual assertions noted above were followed by averment in law that the petitioner having not remained the shareholders of the company could not maintain an application for winding up of the same.
' As far the plea that the petitioners got recorded F.I.R. Against respondent No,2 it was submitted that it was thoroughly investigated by the police and the same having been found to be false a report to that effect was submitted and that the Illaqa Magistrate has since cancelled the same.
The factual part of the petition was denied in toto with more or less the same pleas as aforenoted with the rider that respondent No,2 was the only qualified engineer from amongst the family members who has been supervising the activities of the company and that petitioner No,1 was appointed as Chief Executive thereof out of love and respect for him. It was maintained that the petitioner No,2 being the step-brother of respondent No,2 has misled petitioner No,1 who is out to damage the company as also the person and personality of respondent No,2 at the instigation of said step-brother of respondent No,2. It was vociferously asserted that the criminal case lodged against respondent No,2 was investigated by the police and it was during the course thereof that the wife and two daughters of petitioner No,1 alongwith two sons-in-law and a son of said petitioner No,1, made statement on Holy Qur'an thereby refuting the allegations levelled against respondent No,2 with the result that the said case was cancelled by the Illaqa Magistrate. It was then maintained that the reputation and goodwill of the company was being damaged by the petitioners, who are out to destroy the same and that it is because of this callous attitude of the petitioners that respondent No,2 has not been able to obtain contracts, which have been offered to him.
5. The burst of litigation between the parties was so strong that the matter was once taken to the Honorable Supreme Court and then to Division Bench of this Court on issues such as appointment of provisional manager and the encashment of certain securities, which were ordered by this Court on the motion of the petitioners allegedly for the management of the affairs of the company during the pendency of this application. It was also in view of the fact that it was a family dispute that a learned Division Bench of this Court observed that it would be proper if the main petition is decided within a fortnight from the passing of the order by the said Division Bench. In pursuance thereof the parties seemed to be well-poised and contended to persue the matter on the original side with the result that their learned counsel evinced their attention to argue the case on the present record.
Having agreed to the mode aforenoted, the learned counsel for the parties argued this matter at length, which continued for weeks during the course whereof the facts were grilled with precision and the law applicable thereto was referred to with flair, which in its totality may not be relevant for the disposal of this petition for I intend to decide the same keeping in view the foremost questions involved in this case as to whether a contributory or a shareholder who has allegedly siezed to remain as such on the Register of the company can maintain a petition for winding up as also the allied question as to whether a question of fact based on the plea of coercion and duress be tried and determined in summary proceedings as envisaged by section 9(3) of the Companies Ordinance, 1984, particularly, when the reinstatement of the said contributory/shareholder in the Register of Company is found to be dependent on the finding in affirmative that such a coercion and duress was exercised in denuding the said contributory/shareholder of his title to the shares in the company.
6. Although, it was not specifically pleaded by the petitioners that they had not remained the shareholders in the company yet it has emerged on the record that their names did not exist on the register of the company on the date that the application for winding up the respondent- company was filed and this change is sought to be explained by the petitioners by falling back upon the original assertion as also the arguments based thereon that the documents on the basis whereof the change has been effected in the Register were procured by exercising coercion and duress and that they are in possession of the original shares certificates. Needless to add that this has been the case of the petitioners throughout the proceedings for the learned counsel for the petitioners were at pains to demonstrate from the record that the change brought about in the Register of shares was not sustainable because the documents used in the process thereof were obtained through coercion and duress meaning thereby that the reinstatement of the petitioner as shareholders of the company was definitely dependent upon the finding that respondent No,2 did exercise duress and coercion in obtaining the documents forming basis of transfer of shares of the petitioners and until such finding is recorded in favour of the petitioners, they could not maintain an application as a contributory or a shareholder for winding up of the respondent-company. It is trite law that title to shares is based upon entries and Share Register of the Company as the certificates of holding shares is merely prima facie evidence of existence on a Share Register of Entries at the date on which in the certificate is given. A share certificate is not in any manner a conclusive evidence at a later date of a proper title to shares at any later date. In order to prove the title to shares, one must go to the Shares Register itself, therefore, even it be accepted that the original share certificates are with the petitioners it would be of no help to them nor the said, circumstance would advance their case any further because the change having been brought about in the Shares Register prima facie established that the legal title to the shares is no more vested in the petitioner. Obviously, the petitioner cannot claim themselves to be the contributories or shareholders of the company till such time that their names are reinstated in the Register of Shares and for that the allied question as to whether any duress or coercion has been exercised by respondent by respondent No,2 in obtaining the documents forming basis of the transfer of shares need to be decided. I am afraid such an exercise cannot be undertaken in these summary proceedings as envisaged under section 9(3) of the Companies Ordinance, 1984 for the reasons that the exercise of coercion or duress are complex and complicated question of facts and law which can only be decided by recording evidence and holding an elaborate inquiry which can more appropriately be done in regular proceedings before the Civil Court which is a Court of plenary jurisdiction. This is the view of this Court which has been reiterated over the period of years.
Reference may be made to Khurshid Ahmad Khan and another v. Pak. Cycle Manufacturing Company Ltd., Shandarah and 4 others PLD 1987 Lah. 1, Salah-ud-Din v. Almansoor Private Ltd. And others PLD 1987 Lah. 569 and 2 others unreported judgments rendered in Civil Original No,30 of 1991 and I.C.A. No,6/7 of 1990. In view of the settled preposition of law as above, I have specifically refrained myself from commenting upon any other arguments of the learned counsel for the parties lest I might inadvertently comment or foreclose any of questions being agitated and contested between the parties.
7. For the reasons stated above this petition is dismissed with no order as to costs. The petitioners may, if so advised, seek their remedy by filing a civil suit so as to get their title determined in regard to the shares in the company.
' The provisional manager appointed by this Court shall immediately hand over the management of the company to respondent No,2 and shall also render true and lawful accounts for the period that he has remained in control of the affairs of the respondent-company.