' This order will also dispose of Civil Miscellaneous No,4/L of 1995 in Civil Original No,111 of 1994 and Civil Miscellaneous No,6/L of 1995 in Civil Original No,120 of 1994 as common questions of facts and law have been raised in all of them.
2. This application has been moved by respondents praying that in view of the suit having been filed by the petitioner for the recovery of debt before a Banking Tribunal the main petition for winding up may be dismissed or in the alternative proceedings in the same should be stayed.
3. Learned counsel for the petitioner in support of his arguments referred to section 314(1) of the Companies Ordinance, 1984 which is comparable to section 170(1) of the repealed Companies Act, 1913 and argued that this Court has been vested with a discretion to either dismiss the winding up petition or stay the proceedings in the same if a suit for recovery of the debt had been filed by the petitioner creditor in the Court of general jurisdiction competent to try it. He argued relying upon following reported cases that either an order for the dismissal of the winding up petition should be passed or the proceedings therein to await the decision of the suit may be stayed:
(1) The Company v. Rameshwar Singh of Darbhanga AIR 1920 Cal. 1004;
(2) Bengal Luxmi Cotton Mills Ltd. And others v. Mahaluxmi Cotton Mills Ltd. And others AIR 1955 Cal.
273;
(3) Muhammad Amin Brothers Ltd. v. Dominion of India and others AIR (30) 1952 Cal.
323.
' He also referred to the following reported judgments in support of his plea that the winding up petition should be dismissed as the proper remedy in such a case was to file a suit for recovery of the debts.
(1) Tulsidas Lalu Bhai v. Bharatkhand Cotton Mills Company Ltd. AIR 1914 Born. 251;
(2) P.R. Doraiswa mi Ayyar v. Coimbatore Easwara Sahaya Nidhi Ltd. AIR 1929 Mad. 265;
(3) D.Davis & Company Ltd. v. Brunswick (Australia) Ltd. And another AIR 1936 PC 114;
(4) Messrs Industrial Development Bank of Pakistan v. Messrs Sarela Cement Ltd. Company 1993 CLC 1540;
(5) Ladli Prasad Jaiswa l v. The Karnal Distillery Company Ltd. PLD 1965 SC 221;
(6) Mullah Abdullah Bhai and 9 others v. Saria Rope Mills Ltd. PLD 1971 Kar. 597;
(7) Ulbricht's Wwe. Ges-M.B.H. Austria v. Ulbrichts (Pakistan) (Private) Ltd. PLD 1992 Kar. 249;
4. Mr. M. Saleem Sahgal, Advocate, learned counsel for the petitioner in the main petition argued that in the light of the provisions of Companies Ordinance, 1984 there is no -room for raising a plea that a winding up petition was not maintainable in view of another remedy being available for the recovery of debts or that the proceedings in the same could be stayed during the pendency of a civil suit filed by the creditor simultaneously before a Court of general jurisdiction for the recovery of the debts as scope of both kinds of remedies are absolutely different from each other. His argument was that the respondents could not claim as a matter of right that if a civil suit had also been filed by the creditor for recovery of the debts the winding up petition should necessarily be dismissed or proceedings in the some stayed. He placed reliance on:
(1) Central Bank of India v. Sukhani Mining and Engineering Industries Private Ltd. And others (Company Cases) Vol. 47, 1977;
(2) Butterworths Company Law Cases (1983 BCLC) 102;
(3) Re Leasing and Finance Services Ltd. 1991 B.B.C.P. 29;
(4) National Bank of Pakistan v. The Punjab National Silk Mills Ltd. And others PLD 1969 Lah. 194;
(5) The United Bank Ltd. v. Messrs Pak Wheat Products Ltd. PLD 1970 Lah.
235.
5. In furtherance of this argument he submitted that a winding up petition is not a lis inter parties for the benefit of 'A' as against 'B'. It is the invoking by 'A' of a class remedy for the benefit of himself and other members of the class.
6. I have considered the arguments advanced by learned counsel for both the parties in support of their respective pleas, examined the provisions of the Companies Ordinance, 1984 and compared the same with the correspondent provisions of the Indian Companies Act, 1913 and the abovementioned reported judgments cited during the arguments. Section 311 of the Companies Ordinance, 1984 provides that a winding up of a company by the Court shall be deemed to commence at the time of the presentation of the petition for winding up. The corresponding provisions in the Indian Companies Act, 1913 was as contained in section 168. Section 311 of Companies Ordinance, 1984 falls in the Chapter described as "Commencement of Winding up".
7. It is followed by the Chapter "Powers of Court hearing Application". Under this Chapter sections 312 to section 320 fall. Section 312 provides that a petition for winding up of a company shall come up for regular hearing, be proceeded with and decided in the manner laid down in section 9. There was no similar provision in the Companies Act, 1913. Section 9 of the Companies Ordinance, 1984 provides that notwithstanding anything contained in any other law, all matters coming before the Court under this Ordinance shall be disposed of, and the Judgment pronounced, as expeditiously as possible but not later than ninety days from the date of presentation of the petition or application to the Court and, except in extraordinary circumstances and on grounds to be recorded, the Court shall hear the case from day to day. The expression judgment used in this section has been defined in the explanation attached to it to mean a final judgment recorded in writing. It has also been provided that in the exercise of its jurisdiction the Court shall in all matters before it follow the summary procedure.
8. Section 313 of the Ordinance is a provision conferring jurisdiction on the Court in a winding up petition to make an order for restraining further proceedings in any suit or proceedings against the company upon such terms as the Court may think fit. Section 169 of the Companies Act, 1913 was also to the same effect. These provisions of law show that instead of staying proceedings in the winding up petition the mandate of law is to stay proceedings in the suit where a winding up petition had been made. Section 314(1) deals with the powers of the Court on hearing a winding up petition which provides that the Court may after hearing the petition dismiss the same or pass any order which it deems fit. It is clear from this provision of law read with sections 312 and 9 that it is after hearing the winding up petition finally that the Court has to decide in its discretion whether the same should be dismissed or any order other than an order for winding up of the company should be made for by it has been provided in subsection (4) of this section that in spite of the fact that the Court is of the opinion that an order for winding up of a Company was justifiable, the Court may, instead of making such an order, make such other order as it thinks fit in the circumstances for regulating the conduct of the affairs of the company and bringing to an end the matters complained of etc.
9. This application has been moved before the final hearing of the main petition, therefore, in my view it is premature at this stage to argue that instead of making an order for winding up of the company, an order of any other nature should be passed including an order for staying proceedings in the same. It will be open to the applicant to argue at the time of hearing of the petition that the Court should in its discretion pass an order of a particular nature instead of an order for winding up of the company which shall be considered, examined for forming an opinion by the Court as regards the exercise of discretion in the matter. At this stage in view of the abovementioned provisions of the Companies Ordinance and the other provisions which I am proceeding to discuss in the following part of the order the applicant cannot, as a matter of right, claim that the main petition may not be heard and the proceedings in the same be either stayed or the same be dismissed.
10. Subsection (2) of section 314 of Companies Ordinance, 1984 provides that where a winding up petition was presented on the ground that it was just and equitable that the company should be wound up, the Court in its discretion could refuse to make an order of winding up if it was of the opinion that some other remedy was available to the petitioners and that they are acting unreasonably in seeking to have the company wound up instead of pursuing that other remedy.
There was no identical provision in the Companies Act, 1913. This change in the law is very much significance as it has now been expressly provided that the petitioners can be directed to pursue the other remedy available to it in case the winding up petition had been moved on the single ground that it was just and equitable that the company should be wound up. It has again been left to the discretion of the Court to pass such an order even in such a situation and the stage for taking a decision whether discretion should be exercised in favour of asking the petitioner to pursue the other remedy is the final hearing of the main petition. However, in this case the winding up of the company has not been sought only on the ground that it was just and equitable that it should be wound up but on other grounds also viz. Inability of the respondent company to pay debts, misfeasance and malfeasant etc. As mentioned in section 305 of the Ordinance.
11. The only express provision in Companies Ordinance, 1984 empowering the Court to stay the proceedings in the winding up petition are as contained in section 319 thereof. Similar provisions were enacted in section 173 of the Companies Act, 1913. This provision of law confers discretion on the Court hearing a winding up petition to stay proceedings in the same if an order for winding up of company had been made but such an order cannot be made later than three years after making order for winding up whereas there was no such limitation as regards time for making such an order under section 173 of the Companies Act, 1913. It is clear from this that the Court has a discretion for staying the proceedings in the winding up petition after an order for winding up had been made. Section 316 provides that in a case where an order for winding up of company has been made, no suit or other legal proceedings shall be proceeded with or commenced against the company except by leave of the Court subject to any condition if attached by the Court. These provisions of law as also section 313 are indicative of the fact that it is the proceedings in the suit which could be stayed and not the proceedings in the winding up petition. Both these provisions of the Companies Ordinance envisages a situation where the suit was pending before an order for winding up of the company was made or hearing of the petition for winding-up.
12. There is a considerable force in the argument of Mr. M. Saleem Sahgal that the nature of proceedings in a winding up petition is different as it is a class remedy which has the support of section 318 of the Companies Ordinance, 1984 which provides that an order for winding up of a company shall operate in favour of all the creditors and of all contributory of the company as if made on the joint petition of a creditor and of a contributory. In a suit for recovery of debts, a lis is only between the parties and it is restricted to the recovery of debt only whereas in a winding up petition grounds other than inability of company to pay debt as provided in section 305 of the Ordinance can also be urged which had been done in this case.
13. The upshot of the above discussion is that before final hearing of the winding up petition as envisaged by section 314(1), sections 312 and 9 of the Companies Ordinance, 1984, the respondents could not claim as a matter of right that no proceedings in the winding up petition could be taken if a suit for recovery of debt had also been filed or that the petition should be dismissed on that score simplicitor. This application shall, therefore, remain pending and should be decided alongwith the main petition.
14. It will be open to the respondents to argue and urge that in the facts and circumstances of this case including the circumstance that a suit for recovery of the debt had already been filed, this Court should exercise discretion in favour of passing an order other than an order for winding up of the company which shall be considered by the Court before forming an opinion as to what kind of order should be made, because after the hearing of the main petition and consideration of the case at length on merits the Court would be in a position to form an opinion in this regard. For this purpose the respondents were not required even to make any application.
15. The case to come up on 28-3-1995 for arguments in the main petition. Alongwith the main petition the question of issuance of interrogatories etc. For which an application has been moved by the respondents shall also be considered.