1. ' By this order I propose to dispose of the listed application filed by the plaintiff under section 39, Rules 1 and 2 read with section 151, P.P.C. Seeking suspension of operation of the order dated 21-7- 1997 possessed by defendant No,1 and for restraining the said defendant from keeping the plaintiff on the defaulter's counter or de-listing the plaintiff from the Karachi Stock Exchange.
2. ' The brief facts of the case are that the plaintiff is a public limited Company which on public floatation invited equity of ordinary .Shares from the general public. The defendant No,1 is a stock exchange where the plaintiff is registered and transactions of sale and purchase of shares of public limited companies usually take place at the Karachi Stock Exchange in accordance with the policies framed by the Federal Government. The Karachi Stock Exchange is controlled by the defendant No,2, the Corporate Law Authority. The case of the plaintiff is that due to losses suffered by the plaintiff it was not possible for it to declare and pay any dividend to its shareholders during the years 1991-92 to 1995-96 and with great difficulty and concerted efforts the plaintiff succeeded in keeping itself solvent and alive. The defendant No,1 in spite of knowing fully well the economic conditions prevailing in the country, particularly in the textile sector, issued a notice dated 25-3- 1997 under Regulation No,32 of the Listing Regulations of Karachi Stock Exchange (Guarantee) Ltd, calling upon the plaintiff to show cause (within 21 days of receipt thereof.) as to why it should not be placed on the defaulter's counter set up by defendant No,1 in trading. Hall for trading of securities of defaulting companies. The defendant No,1 vide its letter dated 27-7-1997 communicated to the plaintiff that its management has decided to place the plaintiff on the defaulter's counter with effect from August 6, 1977, in purported exercise of powers vested in it under Listing Regulation No,32. The plaintiff under aforesaid letter was further informed that such placement is without prejudice to the powers of defendant No,1 to delist the plaintiff and in case the default committed under the aforesaid Regulation No,32 is not removed within a reasonable time or if in the opinion of the board of defendant No,1 such causes are not removed, delisting of plaintiff would become otherwise necessary in the public interest. The case of the plaintiff, further, is that non-declaration and non-payment of dividends or fall in face value of share of the plaintiff is attributable to the general economic condition of the country and incorrect/wrong textile policy of the successive Governments and the same cannot be attributed to any fault, inefficiency or lack of integrity of plaintiff's management. According to the plaintiff under section 249 of the Companies Ordinance, 1984, declaring of dividends by a company running in loss is prohibited and as such Regulation No,32 of the Listing Regulations of defendant No,1 is violative of section 249 of the Companies Ordinance, and the same is also violative of sections 17 and 18 of the Securities and Exchange Ordinance, 1969 (hereinafter referred to as the Ordinance No,XVII of 1969). It is in this background that it has, inter alia, been prayed by the plaintiff in this suit that regulation No,32(1)(a) and (b) of the Listing Regulations of defendant No 1 be declared illegal, invalid, ultra vires, without jurisdiction, ab initio void and of no legal effect.
3. ' The defendants were served and defendant No,1 has filed its counter affidavit to the application under discussion, wherein the averments as contained in the plaint have been denied.
4. ' Since important questions of law including interpretation of Articles 2(A), 3,4,8 and 25 of the Constitution of Islamic Republic of Pakistan, 1973 were involved and vires of Regulation 32(i)(a) and
(b) of the Listing Regulations of Karachi Stock Exchange (Guarantee) Ltd. Were questioned by the plaintiff, vide order dated 27-8-1997, notice in terms of Order 28-A, C.P.C., was ordered to be issued to the Attorney-General for Pakistan to appear and assist the Court. Pursuant to such order notices were issued on 30-9-1997, 8-10-1997 and 5-11-1997, but it is a matter of regret that neither the Attorney-General for Pakistan nor any other law officer on his behalf turned up with the result that, by consent of the learnedcounsel for the parties, arguments on C.M.A. No,5127 of 1997 were heard.
5. ' It has been contended by Mr. Muhammad Farough Naseem, Advocate for the plaintiff that under section 249 of the Companies Ordinance, 1984, no dividend can be paid by a Company otherwise than out of profits of the Company and under section 492 of the said Ordinance any false statement, any return, report, profit and loss account, income and expenditure account, etc., made/filed by a Company is punishable with imprisonment for a term which may extend to three years and fine not exceeding Rs,20,000. Such being the legal position, the plaintiff, which is constantly running in loss, is mandated under the said provision of the Companies Ordinance, 1984, not to declare any dividend to its shareholders whereas on the other hand the plaintiff for not declaring the profits has been penalized under Regulation 32(1)(b) of the Listing Regulations of defendant No,1. It has, therefore, been contended by Mr. Muhammad Farogh Naseem, that Regulation 32(i)(a) and (b) of the Listing Regulations of defendant No,1 is ultra vires of section 249 of the Companies Ordinance, 1948 and .As such the same is liable to be struck down. The legality and validity of Regulation No,32 of the listing Regulations of defendant No,1 has been assailed by Mr. Muhammad Farogh Naseem on a number of other grounds including; the same being unreasonable; violative of Articles 2(A), 3,4,8 and 25 of the Constitution of Islamic Republic of Pakistan, 1973; the impugned action being destructive of goodwill and reputation of the plaintiff guaranteed under Article 14 of the Constitution; and the impugned action would defeat the efforts of plaintiff to come out of the present scenario.
6. ' On the other hand Mr. Iqbal Latif Bawani, learned counsel appearing for defendant No,1 has contended that Listing Regulation No,32 is not ultra vires of section 249 of the Companies Ordinance and the whole intent and purpose of framing the said Regulation is to:
(a) ensure viability of the companies listed with defendant No,1; and
(b) to save innocent investors from falling in the trap of a company which is on the verge of bankruptcy.
7. ' Mr. Iqbal Latif Bawani has further contended that the plaintiff has given an undertaking at the time of its listing with defendant No,1 to abide by the listing regulations of defendant No,1 and as such the plaintiff is estopped from challenging the validity of Regulation No,32. According to the learned counsel, there are number of other companies operating in the textile sector which are generating profits and no specific reasons for losses being sustained by the plaintiff have been assigned. The learned counsel further asserted that the Listing Regulations which have been framed under the Ordinance of 1969, have a nexus with the aims and objects of the main enactment and Listing Regulation being statutory Regulations there can be no estoppel against the same.
8. ' Both the learned counsel appearing for the plaintiff and defendant No,1 have relied on a number of reported judgments which are as follows: ' Mr. Muhammad Farogh Naseem, Advocate.
(1) R.G. Sehwani Cooperative Housing Society v. Haji Ahmed and 3 others reported in PLD 1983 Karachi-11.
(2) Saleh Muhammad v. Traffic Manager, Port Trust Karachi reported in PLD 1961 (W.P.) Karachi 349.
(3) Qazi Abdul Kafil Khan v. Faqir and another reported in PLD 1962 (WP) Peshawar.
9. 51.
(4) Star Trading Company v. Pakistan Insurance Corporation reported in 1987 CLC 61.
(5) United Bank Ltd. Karachi v. Mohib Ali Tannery Ltd. And 8 others reported in PLD 1994 Karachi 275.
(6) Pakistan Fisheries Ltd v. United Bank Ltd. Reported in PLD 1993 SC 109.
(7) M/s. Firdous Spinning and Weaving Mills Ltd. v. Federation of Pakistan and two others reported in PLD 1984 Karachi 522.
(8) Obyar and another v. The Federation of Pakistan reported in PLD 1984 Lahore 162.
(9) Inamur Rehman v. The Federation of Pakistan reported in 1992 SCMR 563.
(10) Paras Commercial Company and four others v. Commissioner of Income-Tax, Central Zone-A reported in 1993 SCMR 2171.
10. ' Mr. Iqbal Latif Bawani, Advocate.
(1) Jafer Khan and another v. Vice-Chancellor. Islamia University Bahawalpur and 28 others, reported in 1993 MLD 1083.
(2) Rahimyar Khan College of Education v. Islamia University, Bahawalpur reported in 1996 CLC 64.
(3) Ackar and another v. Abu Baker Modi and another reported in 1995 CLC 465.
(4) Muhammad Asadullah Khan v. Chairman, Department of Computer Sciences, Quaid-e-Azam University, Islamabad and 3 others reported in PLD 1994 Lahore 9.
11. ' Before proceeding further I feel it advantageous to reproduce section 249 of the Companies Ordinance, 1984, sections 2(m), 17,18 and 34 of the Ordinance No,XVII of 1969 so also Regulation No,32 (1)(a) and (b) of the Listing Regulations of Karachi Stock Exchange (Guarantee) Ltd., which are as under: "249. Dividend to be paid only out of profits.---No dividend shall be paid by a company otherwise than out of profits of the company."
12. Section 2(m) of securities and Exchange Ordinance.
13. "(m) ' stock exchange' means any person who maintains or provides a market place of facilities for bringing together buyers and sellers of securities or for otherwise performing with respect to securities the functions commonly performed by a stock exchange, as that term is generally understood, and includes such market-place and facilities "
14. "17. Prohibition of fraudulent, acts, etc.---No person shall, for the purpose of inducing, dissuading, effecting, preventing or in any manner influencing or turning to his advantage, the sale or purchase of any security, directly or indirectly (a)..........................................................
15. (b)..........................................................
16. (c)
17. (d)..........................................................
18. (e)
19. (i)
20. (ii)..........................................................
21. (iii).........................................................
22. (iv).........................................................
23. (v)........................................................................................
24. (vi).........................................................
25. 18.Prohibition of false statements, etc.---No person shall, in any document, paper accounts, information or explanation which he is by or under this Ordinance, required to furnish, or in any application made under this Ordinance, make any statement or give any information which he knows or has reasonable cause to believe to be false or incorrect in any material particular.
34. Power to make regulations:---(1)
26. (2). In particular and without prejudice to the generality of the foregoing power, such regulations may provide for all or any of the following matters, namely:
(ii) Qualifications for membership of the stock exchange; admission, suspension and expulsion of members; disciplinary matters, including punishment of the members; De-listing, suspension and defaulters' counter.
27. "32. (1) A listed company may be de-listed, suspended or placed on the Defaulters' Counter, for any of the following reasons:-- (a). If its securities are quoted below 50% of face value for a continuous period 3 years. Provided that if the shares of the company quoted at ' Subsection (4) of section 9 of the Ordinance No,XVII of 1969 reads as under "9 ................................................................
(4) Where after the listing of a security, the Federal Government or stock exchange finds that the application is deficient in any material respect or that the issuer has failed to comply with any prescribed condition or requirement and that the continued listing of the security would not be in the public interest, the Federal Government or, as the case may be, the Stock Exchange may, by order, either require the issuer to correct the deficiency or comply with the prescribed condition or requirement within the time specified in the order or revoke the listing.'
28. ' Under section 34(2)(ii) of the Ordinance No,XVII of 1969 a Stock Exchange is empowered to frame regulations for qualifications for membership of stock exchange; admission, suspension and expulsion of members; disciplinary matters including punishment of the members and under section 34(2) (viii) stock exchange is further empowered to frame regulations for listing and delisting of securities. If provisions of subsection (4) of section 9 of Ordinance No,XVII of 1969 are read in juxtaposition with the provisions of section 34(2)(ii) and (viii) there can be no escape from the conclusion that the Listing Regulations are completely in line with the provisions of the parent enactment. Such being the position, the Listing Regulations framed under Ordinance No,XVII of 1969 can A neither be said to override postulates of statute itself nor the same are unreasonable, against the public policy, unjust and a tool of oppression in the hands of Karachi Stock Exchange. In this view of the matter, I am of the considered view that the judgment cited by the learned counsel for the plaintiff is distinguishable and is not applicable to the facts of this case.
29. ' In the case of Pakistan Fisheries Ltd., Karachi and others v. United Bank Limited reported in PLD 1993 SC 109, leave to appeal Was granted by the Honourable Supreme Court to examine the question as to whether an appeal is competent under section 15 of the Code of Civil Procedure (Amendment)
30. Ordinance, 1980 from an order whereby leave to defend the suit was granted subject to condition of furnishing security in a suit instituted under the Banking Companies (Recovery of Loans)
31. Ordinance, 1979. In the cited case the Honourable Supreme Court of Pakistan while discussing the effect of the word "case" appearing in proviso to subsection (1) of section 12 of the Banking Companies (Recovery of Loans) Ordinance, 1979 and the word "suit" used in sections 6(a) and 7 has held that normal rule of construction of statute is that when two different words in the same context are used in the same section or in other section of an enactment they do not identify the same thing because the legislature does not use two different expressions without intending to convey different meanings. In my view the facts of the aforesaid case are altogether different and are not applicable to the instant case.
32. ' In the case of M/s. Firdous Spinning and Weaving Mills Ltd. v. Federation of Pakistan and two others reported in PLD 1984 Karachi 522, it has been held that taxing and penal statutes and instruments are to be strictly construed and any ambiguity in such statute is to be resolved in favour of citizen or subject. It has further been held in the said judgment that notification or byelaw could be struck down by Courts as ultra wires of parent statute if it was found to be unreasonable but Courts will, however, be slow to declare notification or bye-law to be had on ground of unreasonableness. I have already held that the Listing Regulations are not unreasonable and as such the judgment under discussion is of no help to the case of the plaintiff.
33. ' The facts of the case of Obyar and others v. The Federation of Pakistan, reported in PLD 1984 Lahore 162, are distinguishable inasmuch as in the said case the power of President to grant pardon under Article 45 of the Constitution of Islamic Republic of Pakistan were discussed.
34. ' In the case of Inamur Rehman v. The Federation of Pakistan reported in 1992 SCMR 563, the appellant pursuant to the Foreign Exchange Repatriation Regulation, 1972 declared and repatriated foreign exchange through the Standard Bank Limited (subsequently merged in Habib Bank Limited). Subsequently some more foreign exchange was repatriated by the appellant under the aforesaid Regulation of 1972 which repatriated amount was withdrawn by the appellant from the Standard Bank and transferred to National and Grindlays Bank. Thereafter, on 3rd of August, 1972, the President of Pakistan promulgated the Foreign Exchange (Prevention of Payments) Ordinance, 1972 which, inter alia, empowered the State Bank of Pakistan to direct any authorised dealer in foreign Exchange through whom any person had repatriated any foreign exchange under the aforesaid Foreign Exchange Repatriation Regulations, 1972, to deposit the Rupee equivalent of the amount so repartriated. The State Bank of Pakistan in exercise of the powers conferred on it under the Foreign Exchange (Prevention of Payments) Ordinance, 1972, directed the National and Grindlays Banks to deposit the aforesaid repatriated amount lying with it. The appellant being aggrieved by such order filed a Constitutional Petition before this Court which was dismissed and it was under this background that the Honourable Supreme Court of Pakistan was approached by the appellant. In the cited case, the question which arose was as to whether this Court while dismissing the petition of the appellant had misread section 6-A of amending Ordinance, Act (VI of 1974) by virtue of which amendments were made in the Foreign Exchange (Prevention of Payments) Act, 1972.
35. ' The brief resume of facts of the cited case amply demonstrates that the facts of the cited case are distinguishable from those of this case and as such in my view the cited case is not applicable to the facts of the case in hand.
36. ' In the case of Paras Commercial Company and 4 others v. Commissioner of Income Tax, Central Zone-A reported in 1993 SCMR 2171, interpretation of section 138 of the Income Tax Ordinance, 1979 has been made by the Honourable Supreme Court of Pakistan and in my view the said case is distinguishable.
37. ' On the other hand Mr. Iqbal Bawani, learned counsel for the defendant No,1 has cited the following cases in support of his contention to the effect that after having withdrawn a Constitutional Petition involving same facts and law, the present suit is barred under the Law; Jafer Khan and another v.
38. Vice-Chancellor, Islamia University Bahawalpur and 28 others 1993 MLD 1083'
2. Rahimyar Khan College of Education v. Islamia University, Bahawalpur 1996 CLC 64.
3. Achar and another v. Abu Baker Modi and another, 1995 CLC 465.
39. ' In all the aforesaid three cases it has been held that after unconditional withdrawal of earlier Constitutional Petition/Suit, the petitioner/plaintiff having not reserved the right to bring a fresh Constitutional petition/suit and/or having not obtained permission to bring fresh petition/suit from the Court, the subsequent petition/suit is barred and as such not maintainable.
40. ' In the case in hand, it has been averred by the defendant No,1 in its counter-affidavit that a Constitutional petition involving the same subject-matter was filed and was withdrawn unconditionally by the plaintiff. The plaintiff in its affidavit-in-rejoinder has not controverted the factum of withdrawal of Constitutional petition but it has been asserted that as no decision on merits was given by the Court this suit is not barred and is maintainable. It may be sated here that none of the parties have filed the memo. Of petition, withdrawal application and order passed thereon in respect of withdrawal of the Constitutional petition said to have been filed by the plaintiff. In absence of the same, I am unable to. Record my finding as to the maintainability of this suit at this stage.
41. ' In the case of Muhammad Asdullah Khan v. Chairman Department of Computer Sciences, Quaid- e-Azam University, Islamabad and 3 others, reported in PLD 1994 Lahore 9, it was asserted by the petitioner that Regulation 4-B of the Regulations of 1992 framed under the Quaid-e-Azam University Act of 1973 were unreasonable, unjust and harsh and the said regulations have been so framed that students are treated like chattels, criminals, or suspects. It was, therefore, urged by the petitioner that under Article 25 of the Constitution of Islamic Republic of Pakistan, 1973, the petitioner is entitled to a fair treatment and soft attitude by the University Authorities. The said Regulations were assailed on the ground of same being violative of Article 25 of the Constitution.
42. ' In the background of the aforestated facts it was held, in the cited case, that the said regulations were-not violative of Article 25 of the Constitution as the same were applicable to all the students and the petitioner has not been dealt with in discriminatory or arbitrary manner. It was further held that the said regulations have been framed with lawful authority.
43. ' Having discussed the case law cited by the learned counsel for the plaintiff and defendant No,1, I would now revert to the provisions of section 249 of the Companies Ordinance, 1984, sections 2(m), 17,18 and 34 of Ordinance No,XVII of 1969 and so also Regulation 32(1)(a) and (b) of the Listing Regulations of Karachi Stock Exchange (Guarantee) Limited.
44. ' It may be stated that the language used in section 249 of the Companies Ordinance, 1984, does not leave any room for doubt that dividend cannot be paid by a company otherwise than out of its profits but in my view provisions contained in section 249 of the Companies Ordinance, 1984, do not override and cannot be interpreted to be in derogation with the Listing Regulations framed under the Ordinance No,XVII of 1969 as both the enactments cover separate and distinct spheres.
45. The Companies Ordinance, 1984, has been enacted primarily for the purposes of healthy growth of corporations, enterprises protection or investors and creditors, promotion of investment and development of economy and matters arising out of or connected therewith whereas the primary object of the legislature in enacting the Ordinance No,XVII of 1969, as is manifest from its preamble, is protection of investors and regulation of markets dealing in securities. I am, therefore, of the considered view that Listing Regulation No,32(1),(a) and (b) is not repugnant to section 249 of the Companies Ordinance, 1984.
46. ' It is no doubt true that a company can only declare or pay dividend from its profits. Ordinance XVII of 1969 or the Regulation framed thereunder, however, do not compel a company to pay divident if it is not making profits. They do not contemplate that a company shall cease to carry on business in the event of non-payment of dividend. In fact section 9(1) of the Ordinance demonstrate that enlistment/registration with stock exchange for the limited company is optional unless the Federal Government having regard to the nature of the dealings in any security, is of the opinion that it is necessary to do so for the public interest as contemplated by section 10. All that the Listing Regulation No, 32 provides is that if, for any reason, a company is unable to declare dividends for five consecutive years it may be initially placed on defaulters counter and ultimately be delisted from the stock exchange. The object is to protect unweary investers from investing their money in companies which are not financially viable. There may be a company which is in the control of certain unscrupulous persons who do not wish to share profits with ordinary shareholders or the management is in the hands of inefficient persons causing consistent losses. Such company must obviously put its own house in order before inviting investment from the general public. Even if losses are sustained for reasons beyond the control of management a company cannot demand investment from people who wish to invest their money in profit bearing securities. Therefore, Regulation No,32 appears to have been made in the public interest and I find no inconsistency between its provisions and those of section 249 of the Companies Ordinance, 1984.
47. ' Stock Exchange is defined in section 2(m) of the Ordinance of 1969 to mean any person who maintains or provides market place or facilities for bringing together buyers and sellers of securities or otherwise performing, with respect to securities, the functions commonly performed by a stock exchange, as that term is generally understood, and includes such market-place. In other words, a stock exchange means a place where buying and selling of securities/shares of a listed company takes place.
48. ' Section 17 of Ordinance No,XVII of 1969 deals with prohibition of fraudulent acts for the purposes of inducing, dissuading, effect, preventing or in any manner influencing or turning to his advantage, the sale or purchase of any security/share by any person directly or indirectly. Section 18 of the Ordinance or 1969 prohibits false statements etc. By any person.
49. ' I now proceed to examine as to whether the Listing Regulations are violative of sections 17 and 18 of the Ordinance No,XVII of 1969. A bare perusal of section 17 reflects that it is intended to prohibit a person from inducing, dissuading and in any manner influencing others to sell or purchase any security listed on the stock exchange. Section 18 of the Ordinance No, XVII of 1969 prohibits false documents and statement etc. With the stock exchange by a person under the Ordinance. From perusal of provision of sections 17 and 18 of Ordinance No,XVII of 1969 it cannot, by any stretch of imagination, be said that Listing/Regulation No,32 is violative of sections 17 and 18 of the Ordinance No, XVII of 1969.
50. ' It may further be stated that defendant No,1, with the prior approval of Federal Government, amended Listing Regulation No,32 in the year 1997 and prior to such amendment there was no provision for placement of a company of defaulter's counter and defaulting company had to be outrightly delisted. The amendment made in Regulation No,32 in the year 1997 provides an opportunity to the defaulting company to show improvements in its working before ultimate delisting. It may be stated that such amendment has in fact been made for the benefit of a defaulting company and as such the same cannot be termed as unjust, unreasonable; a tool of oppression in the hands of stock exchange and against public policy.
51. It is by now a well-settled principle of law that in order to succeed in obtaining an order of injunction under Order 39, Rules 1 and 2 C.P.C., the plaintiff is required to demonstrate existence of a good prima facie case in his favour, the balance of convenience must also be in favour of the plaintiff and in case of refusal to grant injunction the plaintiff be likely to suffer irreparable loss and injury. Unless all the aforesaid three conditions of grant of injunction exist, no order of injunction can be granted by the Court. In view of what is stated E hereinabove, I am of the considered view that the plaintiff has failed to make out a case for grant of injunction in its favour. Consequently, C.M.A.
52. No,5127 of 1997 is dismissed and interim order passed earlier is re-called.