' This is a petition for winding up of the respondent company under the provisions of sections 305 and 309 of the Companies Ordinance, 1984, (hereinafter called the Ordinance).
2. While petitioner is a Banking organization duly incorporated with its registered office at Karachi, the respondent company is a public limited company with its registered office at Dr. Mehmood Hussain Road, Karachi. As per short term investment agreement, dated 3-2-1986 and long term investment agreement, dated 24-4-1986 respondent obtained from the petitioner a loan of Rs, 13 million and Rs,98,26,000 respectively for investment in the project of the company. For due performance of the terms and conditions of the aforesaid agreements, respondent company executed Sponsors Directors Joint Guarantee, dated 22-4-1986, resolution of the Board of Directors held on 5-1-1986 and 30-3-1986. They submitted no objection certificate of Pakistan Industrial Credit and Investment Corporation, dated 3-4-1986, Form XVII reflecting particulars of mortgage under section 127 of the Ordinance, certificate of registration of mortgage issued by Deputy Registrar Joint Stock Companies, memorandum confirming deposit of title deeds, letter for hypothecation of plant, machinery and equipment, and deed of floating charge, last four documents, dated 12-2-1986. As stipulated in the agreements, finance amount was repayable in six monthly instalments commencing from 1st January, 1988. The rate of mark up was fixed at 22 paisas per one thousand rupees per annum subject to rebate of 7% in case the payment was made within due dates.
3. Winding up of the respondent is sought for the reasons firstly that it is unable to pay the debts amounting to Rs,6,25,47,436 to the petitioner; secondly that in view of heavy financial liabilities the sub-stratum of the respondent company appears to have disappeared, thirdly that the respondent has violated the terms and conditions of finance agreement and trust deed; and lastly that it is just and equitable to wind up the company.
4. In the counter affidavit filed on behalf of the respondent company, it is averred that the petition is not maintainable for want of service of statutory notice under section 306 of the Ordinance, that there does not exist relationship of creditor and debtor between the parties as no loan was provided. It is the case of the respondent that petitioner, however, provided finance for investment towards the cost of the project in lieu of term finance certificates as stipulated in the agreement, dated 3-2-1996. Since the petitioner provided the finance investment in the project it is liable to share the losses if any sustained by the respondent. Respondent has enumerated certain factors for sustaining losses in their project and averred that they cannot be blamed for such situation and that the petitioner is equally liable'to share such losses. With regard to the amount claimed, it has been described as arbitrary and inconsistent with the stipulated terms in the agreement with a further assertion that several sums depsoited by the respondent with the petitioner have neither been accounted for nor reflected in the statement of accounts.
5. An affidavit in rejoinder was filed on behalf of the petitioner controverting various assertions raised by the respondent and reiterating that the petitioner is a secured creditor while the respondent a debtor in the amount specified hereinabove. It is further pointed out that as required by sections 233 and 234 of the Ordinance, respondent company has not delivered any annual account and balance sheet of the company to the petitioner or the Registrar Joint Stock Companies despite repeated letters. With regard to the statutory notice, it is said that it was correctly addressed to the respondent at its registered office as mentioned in the agreements as well as trust deed.
6. This petition came up for hearing a number of times when it was adjourned mainly owing to the absence of Mr. Akhtar Ali Mahmood, Advocate. On 15-4-1997 while allowing further adjournment, I directed the respondent company to submit annual balance sheet and annual statutory reports within two weeks, but without any response. This order was repeated on 22-5-1997 with specific reference to the annual reports for 1995 and 1996. It was also directed to call for a report from the Registrar Joint Stock Companies whether such reports have been filed in his office and if so, copies of the latest reports be filed in office. Joint Registrar Mr. Muhammad Musharaf Khan is in attendance and has submitted a report in writing that respondent company has not filed annual accounts for the years 1995 and 1996 pursuant to section 242 of the Ordinance.
7. I have heard Mr. Anwar Muhammad Khan, Advocate for petitioner while Mr. Akhtar Ali Mehmud, Advocate for respondents is not in attendance as usual.
8. From the report of the Joint Registrar to the effect that annual accounts for the preceding two years have not been filed in his office and the circumstances that the respondent company has not been able to file such reports in this Court despite my repeated directions, I am satisfied that the company has not maintained proper and true accounts and has committed a default in delivering the statutory reports to the Registrar and not held statutory Annual General Meetings at least for the last two years which ground by itself is sufficient to raise an inference that the sub- stratum of the company seems to have disappeared and it is not in a position to run the affairs of the company in accordance with law.
9. There is also considerable force in the next ground for winding up that the company is unable to pay its debts. Execution of the agreements, joint guarantee, hypothecation of the plant and machinery and deposit of title deeds as well as other securities has not been disputed whether specifically or impliedly in the counter-affidavit which circumstances by implication of law is deemed to have been admitted. There is hardly any substance in the argument that the demand against the company is arbitrary or inconsistent as not a single penny undisputedly has been paid towards the return of the finance. Although it is vaguely asserted in the counter-affidavit that various sums deposited with the petitioner have not been accounted for, no vouchers, receipts or documents have been produced to substantiate the alleged payments. Likewise the contention that there does not exist relationship of creditor and debtor between the parties on the face of it seems to be devoid of any force as investment by the petitioner for respondent's project has been expressly admitted. There is no material on record that there was an agreement of participation in profit and loss of the project between the parties and, in fact, no accounts have been produced to reflect that the company has sustained losses on account of the circumstances beyond its power and control or that the petitioner is in law liable to share such losses. It is thus proved that the respondent is unable to pay its debts for the last eight years.
10. In the absence of any evidence to the contrary, the notice sent by the petitioner on 2-11-1995 at the registered address of the respondent is deemed to have been received. Even if the said notice is ignored this circumstance, by itself, would not be fatal to the maintainability of the petition as only circumstance arising out of service of statutory notice and non payment of the debt would result in drawing an adverse presumption against the debtor and not beyond that.
11. In the peculiar circumstances of the case, it seems that the company has no valid and plausible defence to make against winding up petition and for the facts and reasons stated above, I am of the considered view that it is just and equitable to direct winding up of the company. It is ordered accordingly. Official Assignee of Karachi is appointed as Official Liquidator to take over the affairs of the company with all powers under the Ordinance.