' The petitioner who was an employee of the Pakistan General Insurance Company Limited has filed this petition for winding up under section 162 of the Companies Act on the ground of inability of the Company to pay its debts.
2. The petitioner's case is that he was retired from service with effect from the 1st June 1974. After his retirement he applied for payment of gratuity to him in consideration of his 26 years' long unblemished service. The Directors, by resolution Exh. R. W. 1/1 dated the 3rd June 1974, granted a gratuity of Rs. 10,000 to him which although calculated on incorrect basis was accepted by him on the assurance of some o7 the Directors that his case may be reconsidered. On the 8th July 1974, the petitioner made a representation that he was entitled to a further sum of Rs, 11,240. The Chairman of the Company and one other Director Ch. Muhammad Hussain pleaded the inexpediency of calling the Directors' meeting but he agreed that if the petitioner was able to get the signatures of the majority of the Directors on a resolution for payment of the above amount, the same would be paid to him, The petitioner, therefore, obtained the signatures of five Directors out of nine which formed the majority on a resolution Exh. P. 9, which was inadvertently dated as 8th May 1974, instead of 8th July 1974. The petitioner handed over the original resolution to the Company against a receipt dated the 23rd July 1974, but no payment was made to him. Ultimately the petitioner served a notice under section 163 of the Companies Act on the 20th May 1975, on the Company. In spite of this statutory notice of three weeks the Company did not pay the petitioner's dues to him. In this notice it is alleged that the Company is unable to pay its debts.
3. There are some other allegations in the petition about misfeasance against the Directors but it is unnecessary to make a reference to them since no evidence on that point has been produced.
4. In their written-statement the respondent-Company admitted that the petitioner was an employee of the Company and was retired with effect from the 1st June 1974. The allegation that his service record was unblemished was denied. It was admitted that a sum of Rs. 10,000 was paid.
The allegation about the agreement of the Company to pay a sum of Rs. 11,240 was denied. It was contended that the petitioner fraudulently prepared a resolution and went from Director to Director falsely stating that the Chairman had agreed to the payment of farther amount and for this reason a resolution dated the 16th June 1975, was passed by the Company expressly repudiating the said resolution Exh. P.
9. It was also pointed out that the resolution is dated 8th May 1974. It was explained that the petitioner was first dismissed from service on the 18th April 1974, on grave charges of misconduct but later on compassionate ground his order of dismissal was converted, into one of retirement.
5. The following issues were framed on the 24th November 1975
(i) Whether the respondent-Company is unable to pay its debt ?
(ii) In the circumstances of the case, is it just and equitable that the Company may be wound up?
(iii) Relief.
6. The petitioner appeared as his own witness and closed his evidence. The respondent also examined only one witness, namely, Ashfaq Hussain, Secretary of the Company. Some documentary evidence was also produced by both the parties.
7. The petitioner made a statement in support of his claim. This statement is to the same effect as the allegations made in the petition. He stated that Exh. P.
9. Copy of the impugned resolution is dated 8th May 1974, but this was only a clerical error as the exact date is 8th July 19/4, on which date the Chairman of the Company had told him that he should get the signatures of the Board of Directors on such a resolution. In reply to a Court question, however, he admitted that Mehr Ghulam Dcstgir, one of the Directors, had not signed on the 8th July 1974, but bad signed the document on the 10th or 11th July in that year. According to him, the resolution was put up in the meeting of the Board of Directors dated 15th/16th July 1974, and he was informed by two of the Directors, Rana Aman Ullah and Seth Muhammad Sarwar, after the meeting that all the Directors had supported him. The notice Exh. P. 3 served on the Company under section 163 of the Companies Act which is an admitted document was also proved by him.
He further proved the photostat copy of the reply to the notice Exh. P.
4. In cross-examination, he admitted that be was first dismissed from service but on an appeal the dismissal was converted into retirement. In cross-examination, it was suggested to him that a space where the date 1-6-1974 was given in the resolution Exh. P. 9 was first left blank by him and was filled later. He denied this suggestion although my own observation is that the space must have been left blank and the date must have been filled up later. He further stated that Ch. Muhammad Hussain had produced the resolution in the meeting of the Board of Directors and it was returned to him on the 16th July 1974. He was askew to explain why he had not given the resolution Exh. P. 9 to the Secretary of the Company but on the other hand had delivered it to the Despatcher, In reply, he stated that this was done on the direction of the Secretary.
8. Ashfaq Hussain R. W. 1 produced a copy of the resolution dated the 18th July 1975, which proved that the impugned resolution was declared to be fraudulently procured and was also rescinded. He denied in cross-examination that the resolution in original was put up in the Directors' meeting dated the 16th June 1975.
9. It is proved by Exh. R 1, a receipt signed by the petitioner on the 3rd June 1974, that he had received a sum of Rs. 10,000 as gratuity in full and final settlement of his claim and that he had no further claim over the Company. This document is sufficient to disprove the contention of the petitioner. There is no reason to believe his assertion that the resolution, a copy of which is Exb. P. 9 was prepared on the 8th July 1974. It is clearly dated 8th May 1974, and it must have been prepared on that date. It was contended in support of the plea about the date 8-5-1974 being erroneous that if the document had been prepared on a-5.1974 the date of retirement i.e. 1-6-1974 would not have been recorded in the body of Exh. P.
9. This argument is without any substance for the simple reason that this date has been filled up later in the blanks left in the said document. There is no explanation for leaving the blanks about the date of retirement. The blank would be necessary to be left if on the date of preparation of Exh.
P. 9, the date of retirement was not known. If this date was already known there was no point in leaving the space blank.
10. Now it is established on the record that the date of retirement could not be within the knowledge of the petitioner on 8-5-1974 ; it must be within his knowledge on 8-7-1974. It is proved by Exh. R. 4 that the order of dismissal of the petitioner was converted into that of retirement by the appellate order dated 11-5-1974. It was in this document that it was recorded that the petitioner shall be retired from service with effect from 1st June 1974. This document which was issued later than 8-5- 1974 supports the conclusion that the resolution was prepared earlier on the 8th May 1974 and since the date of retirement could not be within the knowledge of the petitioner on that date he left the space blank for that date. In a document prepared after the passing of the date of retirement of the petitioner blank space for that date cannot be expected to be left. The petitioner recovered a sum of Rs. 10,000 as gratuity in full and final settlement of his claim after the date of preparation of the impugned resolution. No further amount was therefore payable to him.
11. The petitioner's case that the Directors had approved this resolution in the meeting dated the 15th/16th July 1974, is not proved. In fact there is no resolution to this effect. On the other hand the admission that a meeting of the Board of Directors was held on the 15/16th July 1974, disproves the contention of the petitioner that the Chairman and one other Director, namely, Ch. Muhammad Hussain, had considered it inexpedient to call the meeting of the Directors. This assertion cannot be believed since the meeting of the Board of Directors was held within a week when the plea of inexpediency is said to have been taken by the Chairman or Ch. Muhammad Hussain. Clearly, therefore, there was no occasion for the signing of the resolution in the manner stated by the petitioner.
12. Assuming that the resolution was passed by circulation as stated by the petitioner, it cannot he considered to be a valid document conferring any right upon the petitioner and consequently its rescission by the Board of Directors in the meeting dated the 16th July 1975, was quite legal.
' The learned counsel for the petitioner has relied upon Article 121 of the Articles of Association of the Company in support of the plea that a resolution subscribed by the majority of the Directors on circulation is as good as a resolution passed during the meeting of the hoard of Directors. Article 121 provides that "question arising at any meeting shall be decided by a majority of votes." It further provides that "The resolution in writing circulated and assented to by the majority of Directors shall be as effective and valid as if it has been passed at a meeting of the Directors duly called and constituted for the said purpose".
13. According to the petitioner this resolution was circulated among only five Directors out of nine. It was never taken or brought to the notice of the other four Directors. A plain reading of Article 121 proves that a meeting, even if not attended ty all the Directors, must be held after informing the entire body of Directors about the agenda of the meeting If this analogy is applied to the resolution passed by circulation it will clearly follows that in order to be valid, a resolution passed by circulation should be circulated among all the Directors irrespective of the fact whether they would like to support it or to oppose it. This is necessary for the reason that the business of the Company being carried on through the Directors, each Director must have full knowledge of the affairs of the Company particularly its financial affairs. A resolution not circulated among all the Directors would, therefore, not be of any consequence although it may have been subscribed to by a majority of the Directors. In view of this I would hold that the resolution relied upon by the petitioner is not a validly passed resolution.
14. It is clear from these facts that the contention of the Company that the petitioner is not their creditor is bona fide and action as required by' section 162 of the Companies Act is not, therefore, expedient to be taken against the respondent. For all these reasons, this petition is dismissed with costs.