AMIR ALAM KHAN, J. - M/s. Pakistan Industrial Credit & Investment Corporation Ltd (PICIC), the petitioner herein has filed this petition under Sections 305 and 306 of the Companies Ordinance, 1984 seeking winding up of the respondent company on the grounds of its inability to pay its debts; it has suspended its business for over a period of three years and that it is just and equitable to wind up the respondent company.
2. The petition afore-noted proceeded on the grounds that the respondent is a public limited company having authorised capital of Rs. 2,00,00,000/- divided in 20 lac shares of the face value of Rs. 10/- each while the paid-up capital thereof was Rs. 1,35,00,000/- divided into 13,50,000/- ordinary shares issued by the company, it was maintained that on the application of the respondent company for establishing a new soft drink manufacturing unit with a rated capacity of 48 million bottles per annum that the petitioner sanctioned a loan in foreign as well as local currency to the tune of D.M. 686,950/- for the import of machines and equipments and local currency loan of Rs. 6,805,000/- on terms and conditions as incorporated in the agreement dated 13/19th July, 1985. The respondent company executed following documents in acknowledgment of its loan liability as also to secure borrowings from the petitioner:-
(i) Demand Promissory Note for Pakistan Rupees equivalent to DM 686,950/- with interest at the rate of 14% per annum.
(ii) Demand Promissory Note for Rs. 6.805 million with interest at the rate of 9% per annum.
(iii) Letter of Hypothecation dated 13.7.1985.
(iv) Deed of Floating Charge dated 13.7.1985.
(v) Irrevocable General Power of Attorney dated 13.7.1985.
(vi) Memorandum of deposit of Title Deeds dated 13.7.1985 confirming and recording deposit with PICIC the document of title to create Equitable Mortgage upon profits set out therein.
The loan facility afore-noted was disbursed by the petitioner from time to time which was availed by the respondent who did not adhered to the schedule of repayment as agreed by them for it was agreed that the foreign currency loan would be paid in 20 consecutive semi annual instalments commencing from 1.7.1987 and the local currency loan in 10 consecutive semi annual instalments commencing from even date. The respondent company did not pay any heed to the repayment schedule even in spite of the fact that the loan was rescheduled vide letter dated 14.3.1988 and letter dated 26.12.1991. it is stated that the respondent company obtained another loan of Rs. 35 million from NDFC but despite the financing assistance as rendered by the NDFC, the loan of the petitioner remained unpaid and, thus, an amount of Rs. 3,55,76,060.09 became outstanding against the respondent company, it was maintained that in addition to non-servicing of the loans, the respondent company totally neglected the project and as a sequal of mismanagement and inefficiency of the company, the project was abandoned and the business thereof had been suspended for a period of over two years, in the circumstances, the petitioner served a notice dated 15.1.1994 under Section 306 of the Companies Ordinance, 1984 calling upon the respondent company to liquidate its liability to the tune of Rs. 31,584,037.40 as on 31.10.1993. The above-said notice was responded by the respondent company vide their reply dated 26.2.1994 whereby they requested the PICIC authorities to restructure/reschedule the loan till 31.12.1995. in another letter dated 1st of March, 1994, the company having asked for restructuring of the loan simultaneously regretted its inability to commence the production.
3. Despite various opportunities granted to the respondent company to file written statement, the same was no filed with the result that last opportunity was granted to the respondent company vide order dated 2.11.1998 and it was observed that written statement is required in the case and adjournment is granted subject to payment of costs of Rs. 1,000/-. The case was adjourned to 11.11.1998, but still no written statement was filed on the said date nor costs were paid, therefore, the defence of the respondent company was struck off and the matter was adjourned for hearing arguments on the petition for winding up. On the adjourned date of hearing, an application for review of order dated 11.11.1998 was filed which was also not pursued because the same was dismissed for non-prosecution today.
4. The averments contained in the petition has remained un-controverted and un-rebutted on the record for the defence of the respondent had been struck off. The loan granted to the respondent company stands admitted in various documents placed on the record such as Form No. XVIH wherein particulars of mortgage and charge created by the company had been mentioned along with the amount secured for the same i.e.. D.M. 686,950 in foreign currency and Rs. 6,805,000/- in Pak currency. The form under Section 12 of the Companies Ordinance, 1984 thereby intimating the charge to the Registrar of Companies is another document wherein the amount of loan has been mentioned to be Rs. 6,805,000/- along with the date on which the document had been executed in lieu thereof such as Memorandum of deposit of title deed dated 13.7.1985, Letter of Hypothecation dated 13.7.1985, Deed of Floating Charge dated 13.7.1985. The Auditor's report of M.A. Chaudhary and Company, Chartered Accountants, is another document reflecting the loan amount along with the mark-up prices for the year 1988-89 as under:- PICIC LOANS: Mark-up 1989 Rs. 1988 Rs.
Prices Rs.
Foreign Currency 6,781 6,781,774 6,781,774 Local Currency 6,805 6,805,000 6,805,000 34,886,7874 29,886,774 Rs.6,781,774 6.805.000 29.886.774 Similarly, in the audit report of M/s. M.A. Chaudhary and Company, Chartered Accountants, the amount of loan mentioned for the year 1989-90 along with mark-up prices is as follows:- Loans from PICIC: Mark-up 1989 Rs. 1988 Rs.
Prices Rs.
Foreign Currency 8,633 6,781,774 Local Currency 8,548 6,805,000 13.586.,774 23.386,774 Loss current portion 7,358,354 16,028,420 6.781.774 6,805,000 6,805,000 13.586.774 23.386.774 Above all in reply to the notice under Section 306 of the Companies Ordinance, 1984, the Company having not proceeded to deny the liability had in turn asked for restructuring of the loan facility.
Since the liability has not been denied and no reason therefor is disclosed on the record, therefore, it is obvious that the respondent company is unable to pay its debts, it is also admitted in the said notice that the project of the company had not started and manifestly it remained suspended for a period of more than 2/3 years. The non-payment of the loan by the respondent company as also the fact that the project has remained suspended for over a period of 2/3 years is enough to conclude that substratum of the company has vanished, therefore, it is just and equitable to wind up the same.
5. In the circumstances, the respondent company is ordered to be compulsorily wound up. M/s. Muhammad Hamid Khan, Advocate, 1-Mozang Road, Lahore and Shahid Hussain, Advocate, Shah Chiragh Chamber, Lahore are appointed as JOLs, who shall assume the charge of the company and proceed with the winding up thereof. The petitioners are directed to deposit sum of Rs.
1,00,000/- in the liquidation account so as to facilitate the JOLs to take steps for the liquidation of the company. Now to come up for their report on 17.12.1999. The remuneration of the JOLs will be determined on the said date.