RANA BHAGWAN DAS, J. -- This is a winding up petition. Under Section 271 of the Companies Act, 1913 corresponding to Section 444 of the Companies Ordinance in respect of Amin Jute Mills Limited (hereinafter referred to as the said company) incorporated in Chittagong on 28.5.1953 with its registered office at Chittagong and principal place of Business at Building No. J-B, State Life Square, I.I. Chundrigar Road, Karachi, under the provisions of the Companies Act, 1913. Authorised share capital of the company was Rs.2 Crores divided into 20 lacs shares of Rs.10/- each. Petitioner was elected to the Board of Directors on competition in 1960 and continued to be a Director until the fall of Dacca on 16.12.1971.
2. It is the case of the petitioner that at the relevant time it was the policy of the Government of Pakistan to encourage West Pakistan businessmen to set up Industries in the former Province of East Pakistan for the economic upliftment of that Province. Participation of Government of Pakistan in the company is reflected in the circumstance that 25% of the share and four of the subscribers to the Memorandum of Association represented the Pakistan Industrial Development Corporation.
In pursuance of the said policy the company was incorporated in Chittagong by promoters all of whom were West Pakistanis. Majority of the subscribers to the Memorandum and shareholders of the company were West Pakistanis and some of them are common household names associated with the creation of Pakistan and its survival and development in early years. The company expanded its range of activities over a number of years and invested in projects in West Pakistan as. Well as taking part in International trade. Indeed the company was one of a Group of concerns belonging to Amin Group, which is a prominent family of West Pakistan Enterprises and Industrialization. Since the inception of the company paid up and subscribed share capital of the company increased to Rs.323.18 lacs. While the PIDC disinvested its 1/4th share in the company, the State owned/managed Pakistani banks and financial institutions had acquired more than l/3rd share out of the above-said capital, In December, 1971 out of eight Directors in the Board of Directors only Mr. A. Sattar was the Director who was the resident of former East Pakistan, which subsequently emerged as Bangladesh whereas all other seven Directors are Pakistani nationals.
After the cessation of East Pakistan in December, 1971, the said company advertised in West Pakistan newspapers that Share-holders of the company residing in Pakistan should send details of their share-holdings in the said company and accordingly Share-holders, who notified the company of their addresses and share-holdings owned 27,00,000 shares out of total number of 32,31,800 shares, It is averred in the petition that for the year 1970 the company declared a cash dividend at the rate of 10% and a dividend in specie amounting to Rs.16,15,896/-. Ratio of one share of Amin Fabrics Limited for every 20 shares of Amin Jute Mills Limited held by Share-holders was duly notified by Karachi Stock Exchange. According to the petitioner, while the said cash dividend was paid dividend in specie was never distributed which constitutes a debt owed by the company to its shareholders. Other ground urged for winding up of the company is that the petitioner as well as other Share-holders of the company are also creditors of the company.
3. According to the petitioner,' on 29th May, 1975 an extra-ordinary general meeting of the said company and its Share-holders was held in which Directors of the said company were elected as authorised representatives of the Share-holders and it was resolved to give an authorised representative so elected full authority to take such measures as he considers necessary to safeguard the interests and realise the assets of the company in Pakistan and abroad so that the interests of the Share-holders may be protected, It was further resolved unanimously to authorise the Directors to re-construct the Share Register of the said company.
4. According to the petitioner, after dismemberment of Pakistan, Government of Bangladesh issued Bangladesh Abandoned Property (Control) Management s Disposal Order, 1972, which declared that all properties owned by specified persons, who were citizens of State, at war with Bangladesh after March 25, 1971 were confiscated by the Government of Bangladesh without the payment of any compensation. Under the said Order a company with more than 50% of share capital owned by Pakistani nationals was to be treated as a specified person and its property subject to seizure.
Furthermore with effect from 26th March, 1972, the Bangladesh Industrial Interprises (Nationalisation) Order, 1972 declared that the share of the Industrial Enterprises which had not already vested in the Bangladesh Government would vest in the Government as share-holder with the natural consequence that for all practical purposes the said company was nationalised and had ceased to carry on business in Pakistan.
5. According to the petitioner, Pakistani Share-holders of the said company held a meeting on 20th December, 1984 which was attended by Share-holders representing 23,76,112 shares including N.I.T., ICP, State Life Insurance Corporation and unanimously passed a special resolution authorising the petitioner to apply to this Court for winding up of the said company which is solicited on the grounds that the company has been unable to carry on its business and lost its majority viable assets due to separation of the former Province of East Pakistan; that there is no reasonable hope of the revival of the said company or resumption of its object of trading and manufacturing for profit; that substratum and subject-matter of the company is no longer in existence and that it is just and equitable that the said company be wound up in view of the aforesaid facts and events.
6. Notice of the petition was issued to the Registrar of Companies and the petition was advertised as required by the Sindh Chief Court (Original Bide) Rules. Some times, in November, 1986, when this petition came up for hearing Mr. Kamal Azfar, the then Advocate for the petitioner pointed out to the Court that Deputy Administrator of Abandoned Properties had taken over the control of the assets of the said company, therefore, a notice was ordered against the said authority, Parawise comments were, however, filed by Administrator, Abandoned Properties Organization only in January, 1992 whereafter the petition remained pending from time to time.
7. In the comments it was said that the petition is not maintainable in law in view of Abandoned Properties (Management) Act XX of 1975; that after the fall of Dacca Amin Jute Mills Limited falls within the definition of specified person as laid down in the above Act; that no doubt all assets of Amin Jute Mills Limited relate to Share-holders, the said company is distinct legal entity and such property vests in it and not the Share-holders, It is urged that as the said company failed to shift its registered office to West Pakistan as per Companies (Shifting of Registered Office) Ordinance V of 1972, it falls within the category of specified person. With regard to declaration of dividend, it is urged that since registered office of the company was not shifted at the relevant time and it became a specified person, the property vested in the Federal Government as it did not physically pass on to the Share-holders. As regards the assets of the company, it is said that main assets of the company were situated in the former Province of East Pakistan and only a part of the assets were situated in former West Pakistan, which were declared as abandoned property with the consequence that Amin Jute Mills Limited ceased to exist as a company under the Companies law.
Therefore, resolutions of the Share-holders passed in the meetings held on 29.5.1975 and 20.12.1984 were completely uncalled for. With regard to the petitioner, it is pointed out that by order dated 2.12.1977 he was authorised by the Administrator to manage the assets and carry on business on behalf of the Board of Trustees/Administration but he was not authorised to move for winding up. In fact, he was liable to render accounts of the company but he did not furnish the same and filed this petition with mala fide intentions and ulterior motives.
8. In reply to the parawise comments the petitioner urged that the Administrator Abandoned Properties Organization has no locus standi in the matter in view of notification dated 7.12.1988 issued by the Federal Government (Board of Trustees of Abandoned Properties) published in the Gazette of Pakistan Extra-ordinary dated 27.12.1988 exempting proportion of the properties of the said company belonging to the Pakistani Share-holders from the operation of the provisions of Abandoned Properties (Management) Act, 1975 with effect from 16.12.1971. Various averments made and contentions raised in the comments are denied as being erroneous, mis-leading, belated and not maintainable. With regard to the said company acquiring status of specified person as urged by the Administrator, it is pointed out that this question has been finally ordered by this Court in High Court Appeal No. 16/1982 and Civil Appeal No. 14-K/1987 preferred from the said judgment before the Supreme Court was dismissed as infructuous vide order dated 2nd June, 1991.
9. At the hearing Mr. Muhammad Ali Sayeed, learned counsel for the petitioner with reference to sub-section (3) of Section 444 of the Companies Ordinance submitted and rightly so, that the said company shall be deemed to be an unregistered company after being taken over and nationalised by Bangladesh Government in 1972. Learned counsel urged that it may be wound up as an unregistered company notwithstanding that it has otherwise ceased to exist as a company by virtue of the laws of this country under which it was incorporated, In this connection learned counsel made a pointed reference to Section 271 of the Companies Act, 1913 under which the present petition was filed. This provision is analogous to the provisions of Section 444 contained in the Companies Ordinance, 1984. Only difference between the two provisions is as under:-
10. In the Companies Act, 1913 the provision read as follows:- "If it is otherwise proved to the satisfaction of the Court that a company is unable to pay its debts."
In the Companies Ordinance, 1984 the provision is worded as follows:- "If it is otherwise proved to the satisfaction of the Court that the company is unable to pay its debts; and, in determining whether a company unable to pay its debts, the Court shall take into account the contingentA1 and prospective liabilities of the company and its solvency."
Adverting to the objections raised on behalf of the Administrator Abandoned Properties Organization first contention of the learned counsel is that the said company being a specified person under Act XX of 1975 by virtue of Section 3 of the said Act all properties shall be deemed to have vested in the Federal Government on and from 16th of December, 1971. Second limb of the argument of the learned counsel is that as no step was taken for shifting of the registered / office of the said company from Bangladesh to this country in pursuance of the Companies (Shifting of Registered Office) Ordinance, 1972, present petition filed in this Court on 31.12.1984 is completely misconceived and not maintainable at law. This submission is also premised on the provisions contained in Section 15 of the above-said Act providing for an appeal by an aggrieved person from an order of the Administrator. Contention on the face of it would have an element of attraction and perhaps been fatal to the maintainability of this petition but by reason of notification dated 7.12.1988 issued by the Federal Government and published in Gazette of Pakistan dated 27.12.1988 exempting proportion of the properties of the said company belonging to the Pakistani Share- holders from the operation of the provisions of above-said Act w.e.f. 16.12.1971 the argument looses its efficiency and is no longer available. Since the notification exempts the properties of the said company belonging to Pakistani shareholders presently represented by the petitioner from the operation of the provisions of Act XX of 1975 with retrospective effect petition on the fact of it would be maintainable and cannot be dismissed on this score alone, In fact the declaration of the properties of the said company to the extent of its ownership vesting in Pakistani Share-holders as abandoned property within the meaning of Section 2(a) of the Act and vesting. Of such properties in the Government ceased to have any effect retroactively with publication of the notification in the official Gazette. Objection, therefore, has an academic value and is of technical nature which may not operate as bar to the grant of rights of the Pakistani Share-holders in the said company as mere technicalities cannot thwart the grant of rights to parties when otherwise due under the law.
Learned counsel confronted with this position in law was unable to press this contention any longer and felt satisfied that after the. Publication of exemption notification petition could be maintained before this Court under Section 444 of the Companies Ordinance after the repeal of Companies Act, 1913 in view of saving clause contained in Section 508 of the Ordinance.
11. Learned counsel with reference to paragraph 7 of the petition reflecting that out of 32,31,800 total shares about 27 lac shares were owned by the Pakistani Share-holders who are residents of Pakistan seeking winding up feebly contended that it would not be possible to bifurcate the share holding in the said company vesting in the Administrator, Abandoned Properties Organization from the share-holding of Pakistani nationals. Learned counsel is of the view that on this account the petition would be incompetent and improperly constituted but I see no merit in it. I think in the event of a winding up order Official Liquidator appointed by this Court would be conveniently able to scrutinize, manage and administer the asses and liabilities of the company with reference to its Share-holders, In any event, Pakistani Share-holders possessing and owning an absolute majority in the share-holding of the company cannot be made to suffer adversely for the reason that minority share-holding belonged to the Abandoned Properties Organization. The argument is thus without any merit and not tenable at law.
12. Learned counsel for the petitioner referred to sub- clauses (a), (b) and (c) of clause (iii) of sub- section (1) of Section 444 to urge that the said company being unregistered company is liable to be wound up for the reasons; firstly that it has ceased to carry on business; secondly that it has been unable to pay its debts and thirdly that it is just and equitable that the company should be wound up. With regard to the first ground, it may be observed that obviously after the tragic event of 16th December, 1971 on account of creation of Bangladesh and emergence as an independent State, the said company has in fact ceased to carry on business in this country which by itself is a valid ground for passing a winding up order. With regard to inability of the company to pay its debts, learned counsel referred to the averments in paragraph 8 of the petition with regard to declaration of cash dividend for the year 1970 and a dividend in specie in the form of fully paid up shares of Amin Fabrics Limited in the ratio of one share of Amin Fabrics Limited for every 20 shares of Amin Jute Mills Limited. This position has not been disputed in the parawise comments filed by the Administrator, Abandoned Properties Organization, It is furthermore substantiated by publication of such announcement in the Gazette published by Karachi Stock Exchange Limited dated 26.11.1970. According to the petitioner while the cash dividend was duly paid, the dividend in specie remaining unpaid it constitutes a debt owed by the company to its Share-holders.
Accordingly petitioner and other Share-holders are creditors of the company and for this reason as well, the company is liable to be wound up. Plea taken in para 8 of the parawise comments to the effect that as the registered office of the said company was not shifted to Pakistan and the shares did not physically pass on to the Share-holders such property vests in the Federal Government is completely misconceived and ill-advised on the face of it. This question was considered by a Division Bench of this Court in Maudood Ahmed Farooqui v. Amin Fabrics Limited (PLD 1983 Karachi 176). After referring to the definition of "Abandoned Property" and elaborating dictionary meaning of the expression "belonging to a specified person", Division Bench observed as under:- "It is settled law that once a dividend is declared by a company it becomes payable as a debt to the shareholders and the Share-holders can sue the company for its recovery."
Division Bench further observed that "in our view a debt due to a share-holder in the hands of the company cannot be treated as property belonging to the company. A debt in the hand of a debtor does not belong to the debtor but it belongs to the person to whom it is payable. A debt is something which is owned by one person to another.-It is an obligation and liability to pay or return something, In this view of the matter the dividend declared by Amin Jute Mills which though not paid to the Share-holders could not be said to be the property of Amin Jute Mills as it was admittedly a debt due to its Share-holders."
13. With regard to the jurisdiction of this Court to direct winding up of unregistered company including a foreign company under Section 444(i)(iii) it is not the requirement of law that the said company had been carrying on business in Pakistan or had an office or a place of business in Pakistan. For winding up a company, it would suffice to show that company proceeded against had some assets within the jurisdiction of this Court. Such assets are not required to be of commercial nature but could be of any nature, It would be sufficient if by making of winding up order, assets of the company would be of benefit to a creditor or creditors in some other way.
Obviously Amin Jute Mills apart from assets in Bangladesh does have valuable assets in Pakistan where it used to carry on business before inception of Bangladesh. I am fortified in this view by an authoritative pronouncement by Nasir Aslam Zahid, J. (as his Lordship then was) in James Finlay P.L.C, v Hellenic Lines Limited (1986 C.L.C. 2933).
14. In this view of the matter, I am clear in my mind and there is no manner of doubt that it is just and equitable to direct winding up of the company. Accordingly this petition is allowed and Official Assignee of Karachi appointed as Official Liquidator to take over the affairs of the company. He will be assisted by the petitioner as well as other Share-holders of the company in locating the assets of the company.