JUDGMENT RANA BHAGWAN DAS, J.- In this petition for winding up of respondent-company under the provisions of sections 305 and 309 of the Companies Ordinance, 1984 (hereinafter referred to as the Ordinance'), sole question for determination is whether by reason of failure of the respondent-Company to pay its debts to the petitioner-Corporation, it would be just an equitable to direct its winding up.
2. Ln the petition filed almost nine years back, averments of the petition in brief are that an amount of Rs.25,84,65,683.95 is due from the respondent-Company as on 31st December, 1987 converted into Pak rupee on the exchange rate prevailing on 19-3-1988. Lt is further said that notices of winding up were served on the Company, the last of such notices being dated 9t h March, 1988 returned undelivered with the endorsement that the Company had left the premises long back.
Another copy of the notice sent on other address by registered post was returned undelivered with the endorsement of refusal. Petitioner, however, mainly relies upon letter dated 23-2-1988 of the respondent-Company containing a proposal for the liquidation of stuck-up debts which according to the petitioner contains an admission of liability, In the same breath the petitioner avers that the said proposal was yet another attempt to avoid, delay and to deny the payment lawfully due to the P.I.C.I.C. Lt is further the case of the petitioner that the respondent has failed to make payment since 18-3-1974 without specifically narrating as to when was the loan/finance facility extended to the respondent and on what terms and conditions.
3. Case of the respondent, as reflected in its written- statement is prefaced by legal objections to the effect that the petition is not maintainable for want of service of statutory notice and for the reason that the petitioner has already filed a Suit No. 423/1983 for recovery against it which is still pending adjudication in this Court. On facts it is stated that the petitioner has not approached this Court with clean hands and its claim being incorrect, baseless and inadmissible, the petition itself is misconceived. With regard to the address for service of notice, it is claimed that the registered office of the company is A-5, SITE, Karachi and not the address shown by the petitioner at which the notice is purported to have been sent. As regards the letter, it is said that the respondent has neither admitted any liability nor was any lawful demand made, as alleged. Referring to the suit filed by the petitioner, it is said that the same is being contested and unconditional leave to defend has been granted by the Court which shows that the respondent has a very good prima facie defence in relation to the alleged claim.
4. At the hearing of the petition, it was vehemently contended that the petitioner is guilty of suppression of material facts from this Court by deliberately not disclosing the factum of filing Suit No, 170/1980 re-numbered as Suit No. 423 of 1983 before the Special Court of Banking at Karachi and now pending before this Court, It was further agitated that in the said suit unconditional leave to appear and defend the suit had been granted to the respondent by the Special Court presided over by a Judge of this Court as far back as 10-11-1981 in which the issues were settled on 4-5-1982.
This position has not been controverted by the learned counsel appearing for the petitioner who, however, contended that this circumstance is not material and in any event not fatal to the maintainability" of this petition. Be that as it may. the fact remains that the petitioner has already filed a suit for recovery of Rs. 60,860,991.50 against the respondent in which the issues for decision include a specific issue as to what amount is due and recoverable from the defendant/petitioner has conveniently omitted this fact in his averments which is not without significance.
5. Adverting to the contention of the petitioner that statutory notice was sent to the respondent at its registered office at Hakim Sons Building, West Wharf, Karachi, calling upon the respondent to pay a sum of Rs.2,49,220,000 as on 31- 1-1988 within a period of 30 days there is a covered envelope on record containing a notice by registered post with the endorsement that the addressee company has left the premises long back. There is another covered envelop on record containing endorsement 'refused' addressed to the respondent at its office situated in Insurance House No. 2, Habib Square, Karachi. While a copy of the loan agreement between the parties dated 31-12-1974 placed on record along with the petition, recites the registered office of the respondent at Hakimsons Building. West Wharf, Karachi, the letter dated 23-2- 1988 containing respondent's proposal and heavily relied upon by the petitioner bears the address of registered office of the company as A/5 SITE, Manghopir Road, Karachi. Be that as it may. since this letter is. earlier in point of time in all reasonableness and fairness statutory notice ought to have been addressed to the respondent at its present address rather than the address supplied statutory notice by the respondent at its present address in the circumstances is therefore not without substance. On its part, respondent has placed on record a copy of the letter dated 3-3- 1982 addressed to the Assistant Registrar, Joint Stock Companies notifying the change of registered office of the Company as required by section 72 of the Companies Act, 1913 on Form VI to establish their bona tides, at any rate, non-service of statutory notice on the respondent is of not a greater consequence as in that even only a presumption arising under section 306 Of the Ordinance may not be lawfully drawn.
6. Ln the facts of the present petition in which a regular suit for recovery of a definite amount has been filed on behalf of the Company in which evidence of one of the plaintiffs witnesses has already been recorded and which is fixed for further evidence on 22-8-1997 and in which unconditional leave to defend has been granted to the respondent. Company, I am of the view that any expression of opinion about the liability of the respondent for payment of debts or its inability to pay in the peculiar circumstances of the case would neither be just nor proper. Learned counsel for the petitioner has taken pains to refer to paragraphs 212 and 213 in the Hals bury's Laws of England, Volume VII, two decided cases from Chancery Division and cases reported as Federation of Pakistan v. Standard Insurance Company Limited (PLD 1986 Kar. 409) and Ulbricht's we GES M.B.M., Austria v. Ulbricht's (Pakistan) (Private) Ltd. PLD 1992 Kar 249) to substantiate the contention that the letter heavily relied upon by the petitioner was written "without prejudice" and it contained a sound proposal for revival of the unit which cannot be treated as admission of liability or tantamount to respondent's inability to pay the debt but advisedly I would refrain from expressing any opinion on the merits, impact and effect of this letter as it might pre-empt the fate of the suit already pending on the original side of this Court. At any event, the winding up proceedings cannot be used as lever for pressurising a Company to pay a debt which is seriously disputed by it.
7. Ln somewhat identical case Saiduzzaman Siddiqui, J. (as his Lordships then was) in the case reported as Pakistan v. Standard Insurance Company Limited (1986 M LD 2762) observed as under:- "In such proceedings, the principal question before the Court is, whether the debt, for which the inability, is imputed is disputed or not, and, if the debt is disputed by the Company, then such a dispute by the Company is based on substantial ground. If the Court, after examining the material placed by the Company, reaches the conclusion that the denial of the liability by the Company to a particular debt is based on substantial ground, then it will refuse to make an order of winding up, as the object of these proceedings is not to coerce the company to make payment to an unpaid creditor, but to secure discontinuation of the functioning of a Company, which has ceased to be commercially solvent."
In Abdullah Bhai v. Saha Rope Mills Limited (PLD 1971 Kar. 597) late Qadeeruddin Ahmed, C.J. (as his Lordship then was) dealing with a winding up matter laid down that the creditors are clearly in error in entertaining the view that winding up proceedings are a substitute for a suit to recover their debt. Late Chief Justice further observed that if a debtor is merely unwilling to pay his debts, then the normal remedy is a suit. If a creditor instead of instituting a suit against debtor company, files an application for winding it up, I always ask myself, why has he done so, instead of following the straightforward course of proving his claim directly and then executing the decree? If his debt is undisputed, then the decree will follow easily. If on the other hand, the object of creditor applying for winding up a debtor company is to bring pressure on it, then it is an abuse of legal process by itself sufficient to displace the prima facie position that a creditor is entitled ex debit justice to a winding up order.
8. Alliance Motors (Pvt.) Limited (1997 M LD 1966) is yet another case in which Hyder Ali Pirzada, J. (as he then was) made an illustrative observation to the effect that it may be easy for a Court when once it is shown that the company is unable to pay its debts to bury it and distribute whatever is available as desirable surplus. But it is the duty of the Court to welcome revival rather than affirm the death of the company and for that purpose the Court is called upon to make a direct exercise, In a recent case decided by my learned brother Rasheed Ahmed Rizvi, J. in Mesto Arabia Industries Limited v. Gamon (Pak.) Limited (1997 CLC 230) it was held that the questions whether there exists any bona fide dispute regarding the debts of a company and whether the petition for winding up is filed with the objection of putting pressure upon a company to pay its debt are also relevant factors to be considered by a Court while passing winding up order. The object is not to coerce a company to make payment to an unpaid creditor, but to secure discontinuation of the functions of a company which has ceased to be commercially solvent.
9. For the aforesaid facts and circumstances and after a resume of the case law on the subject I am of the view that the petitioner by filing this petition after eight years of filing the suit for recovery has perhaps resorted to winding up proceedings with a view to pressurise and coerce the respondent to come to terms. I think that in is circumstances of the case it would neither be just nor equitable to direct winding up of the respondent without the determination of the debts outstanding against it and a definite verdict that it is unable to pay the same. Petition is, therefore, dismissed with costs.