' This petition under sections 161(8), 179, 290 of the Companies Ordinance, 1984 primarily calls in question the election of respondents Nos.2 to 5 as directors of the company allegedly held in an extraordinary general meeting on 12-2-1998 with the ancillary prayer that the said respondents be restrained from interfering in the management and administration of the company.
2. The dispute in this case relates to management of the affairs of Messrs Yasmin Weaving Mills Limited, a public limited company which had its share capital of Rs,35 million as on 10-12-1996. It is stated that since the company was in dire need of further capital, therefore, a share purchase agreement was entered into with respondent No,6 on the said date, and according to the terms of the agreement shares of the value of Rs,35 million were allotted to respondent No,6 whose nominee Mr. Rahat Yar Khan was accepted on the Board and has been arrayed as respondent No,5 in the present petition. The respondent No,6 agreed to arrange further finance facility of Rs,40 million, but could not arrange the same, therefore, the company had to issue further shares for the capital of Rs,20 million. The further issue of share capital was offered to the existing share holders and on the refusal of some of them, the same were offered to fresh investors with the result that the share capital of the company was raised to 90 million. It is asserted by the petitioners that their share holding along with their associates is 4.7 million which comes to 52.2 percent of the total share holding of the company whereas the respondents and their associates have 4.3 million which is 47.8 per cent. Of the total share holding of the company. According to the petitioner 8 directors were elected for a period of three years in the Annual General Meeting on 28-2-1995 and the petitioner No,1 was unanimously appointed as Chief Executive. It is maintained by the petitioners that since the date of his appointment, petitioner No,1 has been managing the affairs of the company as Chief Executive along with other elected directors and that the petitioners had come to know that respondents allegedly convened a meeting on 12-2-1998 at Avari Hotel, Lahore, wherein the petitioners were removed from the directorship of the company and respondents Nos.2 to 5 were appointed as directors in place of petitioners Nos.2 to 4 and Mr. Mujahid Khurshid.
The petitioners have proceeded to challenge the total proceedings of the meeting held on 12-2- 1998 specially the election held therein, inter alia, on the ground that the mandatory provisions contained in section 159 of the Companies Ordinance, 1984 for convening the extraordinary general meeting, have not been complied with inasmuch as petitioner No,1 who is the Chief Executive and other petitioners who are directors of the company have not been served with any notice of the schedule to the alleged meeting and that the alleged election of the directors stated to have been held in the meeting on 12-2-1998 is also illegal for no requisition as provided in section 159(2) was deposited with the company or its Secretary and according to section 159(4), the respondents were not entitled to convene the meeting till the lapse of 21 days of the deposit of the requisition with the company. It was also asserted that the minute book of the company was lying at the registered office of the company but the minutes of the meeting allegedly held on 12-2-1998 have not been recorded in the minute book as it appears that certain loose papers carrying minutes of the meeting were submitted to the Registrar of Companies and the respondents have started to obstruct the smooth functioning of the Company on the strength of illegal and bogus meeting afore-stated which has seriously jeopardised its goodwill and the customers are shy of dealing with the company. It was then asserted that according to the terms of agreement entered into with Habib Bank Limited i,e, major creditor of the Company,. No change in the Board of Directors could be made without the express permission of the said Bank, therefore, the alleged removal of the petitioners and induction of the respondents as Directors is illegal and without lawful authority. It is also submitted that the petitioners hold 52.2% of the shareholding, therefore, the petitioners Nos.2 to 4 and Mujahid Khurshid cannot, in any case, be removed from the office of the Directors. It was lastly urged that in accordance with clause 3.2 of the agreement executed between the petitioner No,1 (on behalf of sponsors) and respondent No,5 (family of respondent No,6) out of total 9 Directors, respondent No,6 i,e, Messrs Lorica (Pvt.) Limited was only entitled to nominate 4 directors to the Board of Directors whereas in the alleged meeting except petitioner No,1 all his family members have been removed from the Board of Directors. In the facts and circumstances afore- stated, the petitioners have challenged the proceedings of the extraordinary general meeting allegedly held on 12-21998.
3. The petition was resisted on the grounds inter-alia that the same is not maintainable as framed as it is beyond the scope of sections 290 and 161 of the Companies Ordinance, 1984 for the petitioners do not possess either 20% of the shares of the company or even 10%. It was further maintained that the adverse findings recorded by Messrs Riaz Ahmad and Company, Chartered Accountants concerning the financial status and the management of the affairs of the company has deliberately been suppressed while as a matter of fact, petitioners have rendered themselves liable for criminal prosecution and that because of certain acts of omission and commission and the misdeeds of the petitioners, the company facing avoidable litigation which. Had been lodged by H,B.L., Albarka Investment Bank and N.B.P. It was also asserted that the petitioners have failed to convene the annual general meeting and to present the accounts to the share holders as also to file the same with the office of Registrar of Companies for the year 1993 onward and that petitioners, in order to illegally continue their directorship, had wilfully failed to hold the election of directors on 15-2-1997 as required under section 178 of the Companies Ordinance. The plea as to affairs of the company being run in flagrant disregard of express provisions of Memorandum and Articles of Association of the company and the Companies Ordinance, 1984 was also added with the assertion that the petitioners have wilfully failed to disclose that they have pledged the substantial shares with Prime Commercial Bank, Lahore, as securities for financial facilities which, on their inability to pay, the said bank had sold and the proceeds thereof were adjusted towards the liabilities of the petitioners with the result their share holding in equity has been reduced to 7.14 per cent. Of the paid up capital of Rs,70 million. As far the merits, the plea as contained in para-I of the plaint was totally denied with the assertion that the paid up capital of the company is still 70 million. The plea as to issuance of further capital was also denied and it was submitted that the petitioners have fabricated the documents and presented the same on 10-2-1998 to the Registrar of Companies and that the respondents have already filed an application to the Registrar, Joint Stock Companies, Lahore for the withdrawal of the above said documents presented by the petitioners. As far the ratio on which the shares of the Company were held, it was submitted that the respondents own and possess more than 81 % shares of the company and the petitioners are in possession of 7.45 % shares of the company. The assertion of the petitioners that they hold 52.2 % of the total share holding of the company were admitted with the rider that it was the position available before 12-2-1998 but not hereafter and that prior to the meeting on 12-2-1998, status of directors as also that of petitioner No,1 as Chief Executive of the company was admitted. It was, however, submitted that in view of the mismanagement and losses suffered by the company as also the suits filed by various banking institutions and the special audit report conducted by Messrs Riaz Ahmad and Company Chartered Accountants, the majority of share-holders pointed out to the petitioners to mend their ways but having failed to elicit any favourable response, the majority share holders had no option except to invoke the -provisions of the Companies Ordinance, 1984, resultantly, the extraordinary general meeting was held on 12-2-1998 at Avari Hotel, Lahore after due notice to the share holders as well as to the petitioners and in that regard the documents relating to the service of notice were relied and it was submitted that the election held on 12-2-1998 is valid and intra vires of the Companies Ordinance, 1984. As far the plea that the meeting so conducted was illegal because no notice of the same was either issued or served on the petitioners, it was submitted that all. The provisions relating to holding of extraordinary general meeting were complied with and the petitioners knowing that their share holding is 7.14 opted not to attend the meeting. It was maintained that the meeting was held even in spite thereof and the concerned authorities were also intimated in that regard. As far the submission of minutes of meeting drawn on loose papers, it is submitted that since the relevant record including minute book of the company had been removed by the petitioners, therefore, there was no option left with the respondents but to record the minutes on loose papers, which were duly submitted to the Companies' Registrar and the new management started to run the affairs of the company, and at this juncture, the respondents have prayed that the contents of their Civil Miscellaneous No,366-L.
Of 1998 be read as part of written statement. The H.B.L. Being the major creditor is also stated to have accorded its approval to the change of management of the company vide its letter dated 26-2-1998. It was ultimately submitted that the removal of petitioners Nos.2 to 4 and Mujahid Khurshid and the change in the Directorship of the company was brought about in accordance with law.
4. Before taking a step further in the matter, it would be appropriate to refer to Civil Miscellaneous No,366-L of 1998 which has been filed by the respondents. A perusal thereof, however, reveals that the contents thereof are not much different than the written statement filed in the case for it is repeated therein that the paid up capital of the company is Rs,70 million not Rs,90 million as asserted; the registered office has been shifted to the factory. Premises and that the petitioners committed acts of mismanagement and misappropriation as also other irregularities as is evidenced by the audit report dated 25-2-1998 made by Messrs Riaz and Company, Chartered Accountants. The participation of Lorica (Pvt.) Limited has also been admitted with the rider that they were entitled to nominate 4 members to the Board of Directors in the company. As far the matter of enhancement of share capital of the company by Rs,20 million, it was submitted that the matter is still under process with the Registrar, Joint Stock Companies where the applicants have also moved an application for withdrawal of the letter presented in that regard. It -was maintained that in view of prevailing situation, the meeting was lawfully convened.
5. In view of the assertions made and the facts disclosed in the written statement, rejoinder was called for which was accordingly submitted by the petitioners. It was maintained therein that the petitioners hold and possess 27.98 % of the total share holding of the company which is duly reflected in the register of the, members as also in the returns .(Form "A") filed with Registrar, Joint. Stock Companies. It was then maintained that the respondents have fabricated a new register of members wherein fake entries have been inserted, therefore, the same cannot be relied upon. As far the sale of shares deposited by the petitioners with Messrs Prime Bank Limited, it was submitted that the same was illegal and violative of the Banking Companies (Recovery of loans, credits, advances, Finances) Act, 1997. The petitioners explained that the father of respondents Nos.l was the Chief Executive of the Company in the year 1992 who had deposited the aforesaid shares with Messrs Prime Commercial Bank Limited without any transfer deed having been signed by the petitioners and without their consent having been obtained. Receipt of Prime Commercial Bank Limited was attached with the rejoinder to establish that the aforesaid shares were deposited by Iftikhar A. Malik. It was also submitted that they have come to know through the written statement that their shares have been allegedly sold and that in any case the name of the purchaser has not been entered in the register of members of the company which is still in possession of petitioner No,1 in his capacity of being the Chief Executive of the company. It was explained that the registered office of the company is situated at 46-M, Gulberg-III, Lahore and the register of members of the company is available there. As far the plea that the findings recorded by Messrs Riaz Ahmad and Company, Chartered Accountants, it was submitted that the auditors of the company are regularly auditing the accounts of the company and that the matter is being attended to. As far the enhancement 'a the paid up capital of the company is concerned, the original plea was reiterated that the paid up capital of the company was enhanced by 20 million on 10-2-1998 and mandatory provisions of the Companies Ordinance, 1984 were duly complied with inasmuch as the returns in this behalf have already been filed in the office of Registrar of Joint Stock Companies. The contention of shifting of office was also denied. As far the disputed meeting is concerned, it was maintained that an extraordinary general meeting could only be convened by the Directors and if the Directors do not proceed to call the meeting within 21 days from the date of deposit of requisition, the requisitionists can themselves call the meeting within 3 months from the date of deposit of the requisition while in this case one of the Directors convened the meeting which is violative of the provisions of section 159 of the Companies Ordinance, 1984, therefore, the total proceedings of the said meeting were termed as void ab initio.
6. At the hearing, learned counsel for the petitioners did not press his petition in so far as relief under section 290 of the Companies Ordinance, 1984 is concerned, therefore, this petition is dismissed to that, extent.
7. Learned counsel for the parties was heard at quite some length wherein they reiterated their stand point with reference to law applicable thereto. Learned counsel for the respondents raised a preliminary objection thereby objecting to the maintainability and competence of this petition on two-fold grounds. It was firstly maintained that an application under section 290 of the Companies Ordinance, 1984 could only be competently filed and maintained by a "member" or "members" holding not less than 20% of the issued share capital of the company and secondly an application under subsection 8 of section 161 of the Companies Ordinance could only be maintained by "members" having not less than 10% of the voting power in the company and since the petitioners do not have 20% of the issue share capital or 10% of the voting power in the company, therefore, the petition as filed is neither competent nor maintainable. As observed earlier, learned counsel for the petitioner having chosen not to press his petition under section 290 of the Companies Ordinance, 1984, the petition to that extent had been dismissed, therefore, the first part of the objection need not be dilated upon. It would be noted that the provisions of subsection (8) of section 161 of the Companies Ordinance relate to the voting power of the members to maintain an application seeking to set aside the proceedings of a general meeting.
The voting power of a "member" or "members" is intrinsically linked with the share holding of the Company. It is, however, ordained that the decisions in the general meetings are normally taken by show of hands unless a poll is demanded. The petitioners maintained in para. 3 of the petition that the company had in all 8 directors who were elected for a period of 3 v,ars in annual general meeting held on 28-2-1995 in accordance with the procedure laid down in section 178 of the Companies Ordinance, 1984 and petitioner No,1 was unanimously appointed as the Chief Executive. The contents of this para of the petition were admitted in the words "before 12-2-1998, the position stated in para. 3 is correct". It would be seen that the objection of the respondents was based on the result of meeting allegedly held on 12-2-1998 and but for the decision taken in the meeting of 12-2-1998, the share holding and based thereon, the voting power of the petitioners were admitted to be correct. It is the case of the petitioners that they are holding 52.2% of the total shareholding of the company and in support thereof they have referred to the share scrips which are presently being held by them as also the share scrips lying with the Prime Bank with the rider that paid up capital of the company was also increased from Rs,70 million to Rs,90 million as according to them the company was in dire need of finance. It has also been brought on record that in this connection the company offered certain shares to Messrs Lorica (Pvt.) Limited i,e, respondent No,5 and in turn accepted their representative on the Board i,e, respondent No,6. According to the petitioners, Messrs Lorica had promised to raise further finance but could not fulfil his promise resultantly further capital was raised by offering further issue to the existing share holders and since they refused to buy the same in toto, it was offered to the others, thus the capital was increased from Rs,70 million to Rs,90 million. This aspect of the matter finds support from the various documents placed on the record and retrieved by the Chairperson from the comapny's record. The case of the petitioners was sought to be contested by the .Respondents on the ground that since the financial status of the company did not remain up to the mark, who failed to liquidate its liabilities, therefore, the Prime Bank sold the shares of the members pledged with them after issuing due notice to the petitioners. The said shares are stated to have been sold to one Saleem Baig of Karachi, who is not a party to these proceedings nor the Prime Bank i.e the seller is a party. Astonishingly enough, neither the petitioners tried to array them as a party nor the respondents made effort in this behalf nor the two of them came forward to file any application. The petitioners, on the other hand, very seriously objected to the sale of their shares on the ground that the share scrips were deposited by the father of respondent No,1 with the Bank for their safe custody and it is also their case that they were neither pledged nor could be sold as such by the Bank. In order to support their contention they relied on the receipt attached with the rejoinder, wherein it is mentioned that the Bank has received the share scripts from Iftikhar A Malik as a part of security package for the facilities allowed to Messrs Yasmin Weaving Mills Limited. Whatever be the terms of the deposit and whichever be the intention of the parties, it is well accepted that in order to legally transfer the shareholding of a company there is a certain procedure prescribed by the Companies Ordinance, 1984 and for that matter there must be a proper instrument of transfer duly stamped and executed by the transferor and the transferee which should be delivered to the company along with the scrips as is ordained by section 76 of the said Ordinance. Apart from the voluntary transfer as afore-referred, transfer can also be effected by operation of law but in both the cases afore-noted, the ultimate result of transfer is effected in the register of members which is prima facie evidence of the entries, which by the Companies Ordinance, 1984 is directed or authorised to be inserted therein. This is the true spirit of section 155 of the Companies Ordinance. The register of members of the company was initially not handed over to the Chairperson nominated by the Court and it was only after the same was signed by the Local Commissioner appointed by the Court that the said register was handed over to the Chairperson. A perusal thereof will reveal that no such transfer was effected in the name of purchaser. In the circumstances, the onus was very heavy on the respondents that such a transfer did take place and that it was lawful. They have failed to discharge the same for it is not shown on the record that either Salim Baig or the Prime Bank had applied for obtaining the change in the register by presenting the share scraps along with transfer deed duly stamped thereby authenticating the transfer in favour of Salim Baig. No such effort appears to have been made till date and there being presumption attached to the entries of register under section 155 of the Companies Ordinance, 1984, the same could only be displaced if the contrary was proved. As observed earlier that the voting power of the members is intrinsically linked with the share holding and that being so it is shown on the record that petitioners had 10% of the voting power and could maintain an application under subsection (8) of section 161 of the Companies Ordinance, 1984.
8. Coming to the argument that section 161 of the Companies Ordinance, 1984 deals with the proxies as is evident from the heading of the section itself, therefore, no petition for setting aside the proceedings of extraordinary general meeting could be maintained. In amplification of the above said argument it was submitted that headings prefixed to sections can be referred to in construing the intention of the legislature. In other words, it was submitted that heading can be treated as preamble to the provisions following them. Reliance was placed on Election Commissioner of Pakistan v. Asif Iqbal and others PLD 1992 SC 342 and Firdaus Cooperative Housing Society Ltd. v. Secretary Labour and Cooperative Department, Government of Sindh and 11 others 1987 CLC 1457. It would be noted that the rule of law laid down in the aforesaid judgments are not really helpful to the petitioners, for, in the case of 'Election Commissioner of Pakistan, noted supra, it was ruled:--- "Heading of section of a statute cannot control the meaning of the statute nor curtail or restrict its scope and working"--- ' It was further ruled: 'Heading of section although could be looked into for interpreting the section if its words appeared to be doubtful but it could not restrict the plain words of the section."
' Similarly in the case of Firdaus Cooperative Housing Society Ltd., noted supra, it was ruled as follows:-- "Heading prefixed to a section or sets of sections to be read along with enacting part of sections while construing them with a view to resolve any doubt as to ambiguous words but cannot be used to give a different effect to the clear words in section---word ' arbitration' as heading or title of section 54, Cooperative Societies Act, 1925, was only a marginal note---Such marginal notes now being enacted by legislature could be referred to for purpose of interpretation--- Marginal notes cannot control meaning of clear and unambiguous words used in enactment".
A careful reading of the rules noted above would show that wherever the words used in a section are explicit and clear, the heading of the sections cannot be referred to understand the meaning of the sections nor can the same control, curtail or restrict its scope and working. Even a cursory glance at subsection 8 of section 161 of the Companies Ordinance, 1984 leads one to irresistible conclusion that the provisions contained therein are explicit and unambiguous, therefore, one may not turn to the headings so as to understand the meaning of section itself. Manifestly, in the circumstances of the case application under subsection (8) of section 161 of the Companies Ordinance, 1984 is maintainable. This view of mine is further fortified by the cases reported as Haji Abdul Jabbar and others v. Haryana Asbestos Cement Industries 1987 CLC 726 and Naveed Textile Mills Ltd. Karachi and 3 others v. Central Cotton Mils Limited, S.I.T.E. Kotri, District Dadu and two others PLD 1997 Kar. 432 wherein petitions under section 161 (8) of the Companies Ordinance, 1984 were entertained and determined by the Court whereby the proceedings of a general meeting were challenged on the ground of material defects and omissions in the notice calling the general meeting and irregularities committed in holding the said meeting. It may, however, be added here that the case of Naveed Textile Mills, noted supra was decided by a Division Bench of Sindh High Court, Karachi, Learned counsel for the respondents also relied on the case of Messrs Chalna Fibre Company Limited, Khulna and 4 others v. Abdul Jabbar and 9 others PLD 1968 SC 381 and Mian Ijaz Siddique and others v. Mst. Kaneez Begum and two others 1992 CLC 1658 to canvass the proposition that in the case of challenge to the general meeting, recourse should be had to the civil Court. The judgments afore-noted are not direct on the point involved in the present case. The judgment in the case of Messrs Chalna Fibre Company Limited is distinguishable on its own facts, therefore, cannot be cited as a precedent in the present case for it was ruled therein that there being no provision in the Companies Act, 1913 under which the petitioner in that case could seek the relief, therefore, the suit filed before the civil Court was considered to be appropriate remedy. It is now well accepted that if the field is occupied by special law providing special forum for adjudication of a dispute then the civil Court shall not have the jurisdiction to decide the matter. In the instant case subsection (8) of section 161 provides a remedy in the nature of a petition to the Company Judge, therefore, it is wrong to contend that the remedy of the petitioner lies before the civil Court. The other judgment referred in this behalf is the case of Mian Ijaz Siddique supra which is a judgement for the proposition that civil Court being the Court of plenary jurisdiction could retain jurisdiction to deal with certain matters concerning affairs of the companies to the extent that they were not specifically dealt with by the Ordinance. I have already held that section 161 of the Companies Ordinance, 1984 provides a remedy to a person who is aggrieved of proceedings of meeting illegally convened and held by the directors. Obviously, the field is occupied, therefore, the rule laid down in the two judgments noted above is not attracted in the facts and circumstances of the case.
9. This brings me to the core question as to whether the proceedings of the meeting allegedly held on 12-2-1998 could be set aside on the ground of 'material defect or omission in the notice or irregularity in the proceedings of the said meeting. Learned counsel for the petitioners referred to the notice placed on the record whereby the petitioners were allegedly intimated about the holding of the meeting. A plain look at the notice afore-noted would make it abundantly clear that the same had been addressed to the petitioners jointly and not individually and that, too, at the address of the company. It was demonstrated from the record that the Accountant of the company received the same as is evident from the signatures affixed on the said notice, which were also found to be affixed on the notice allegedly issued by the Prime Bank Limited. The procedure as prescribed by section 159 of the Companies Ordinance for calling an extraordinary general meeting is as follows: "159. Calling of extraordinary general meeting.-- (1) All general meetings of a company, other than the annual general meetings referred to in section 158 and the statutory meeting mentioned in section 157, shall be called extraordinary general meetings.
(2) The directors may, at any time, call an extraordinary general meeting of the company to consider any matter which requires the approval of the company in a general meeting, and shall, on the requisition of members representing not less than one-tenth of the voting power on the date of deposit of the requisition, forthwith proceed to call an extraordinary general meeting.
(3) The requisition shall state the objects of the meeting, be signed by the requisitionists and deposited at the registered office of the company, and may consist of several documents in like form, each singed by one or more requisitionists.
(4) If the directors do not proceed within twenty-one days from the date of the requisition being so deposited to cause a meeting to be called, the requisitionists, or a majority of them in value, may themselves call the meeting, but in either case any meeting so called shall be held within three months from the date of the deposit of the requisition.
(5) Any meeting called under subsection (4) by the requisitionists shall be called in the same manner, as nearly as possible, as that in which meetings are to be called by directors.
(6) Any reasonable expense incurred by the requisitionists by reason of the failure of the directors duty to convene a meeting shall be repaid to the requisitionists by the company, and any sum so repaid shall be retained by the company out of any sum due or to become due from the company by way of fees or other remuneration for their services to such of the directors as were in default.
(7) Notice of an extraordinary general meeting shall be sent to the members at least twenty-one days before the date of the meeting, and in the case of a listed company shall also be published in the manner provided for in subsection (3) of section 158: ' Provided that, in the case of an emergency affecting the business of the company, the registrar may, on the application of the directors authorize such meeting to be held at such shorter notice as he may specify.
(8) Every officer of the company who knowingly or wilfully fails to comply with any of the provisions of this section shall be liable,
(a) if the default relates to a listed company to a fine not less than ten thousand rupees and not exceeding twenty thousand rupees and in the case of a continuing default to a further fine which may extend to two thousand rupees for everyday after the first during which the default continues; and
(b) if the default relates to any other company, to a fine which may extend to two thousand rupees and in the case of a continuing default to a further fine which may extend to two hundred rupees for everyday after the first during which the default continues."
' It is obvious from the provisions noted above that notice of the meeting is pivotal so far as affairs of the company are concerned, therefore, the legislature has prescribed the mode of service of-notice on the company and its members in section 50 which reads as follows:-- "50. .Se rv ice of n otice on m em b ers, etc.-- . (1) A notice may be given by a company to any member either personally or by sending it by post to him to his registered address or, if he has no registered address in Pakistan to the address, if any, within Pakistan supplied by him to the company for the giving of notices to him.
(2) Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, prepaying and posting a letter containing the notice and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.
(3) If a member has no registered address in Pakistan, and , has not supplied to the company an address within Pakistan for the giving of notices to him, a notice addressed to him or to the shareholders generally and advertised in a newspaper circulating in the Province or the part of Pakistan not forming part of a Province in which the registered office of the company is situated shall be deemed to be duly given to him on the day on which the advertisement appears: ' Provided that in the case of a listed company such notice in addition to its being published as aforesaid be also published at least in one issue each of a daily newspaper in English language and a daily newspaper in Urdu language having circulation in the Province in which the stock exchange on which the company is listed is situated.
(4) A notice may be given by the company to the joint-holders of a share by giving the notice to the joint-holder named first in the register in respect of the share.
(5) A notice may be given by the company to the person entitled to a share in consequence of the death or insolvency of a member by sending it through the post in a prepaid letter addressed to them by name, or by the title or representatives of the deceased, or assignees of the insolvent, or by any like description, at address, if any, in Pakistan supplied for the purpose by the person claiming to be so entitled, or until such an address has been so supplied by giving the notice in any manner in which the same might have been given if the death or insolvency had not occurred.
(6) In addition to any other mode provided by this Ordinance for notice of any general meeting, notice of every general meeting shall be given in some manner hereinbefore authorized to--
(a) every member of the company except those members who, having no registered address within Pakistan, have not supplied to the company an address within Pakistan, for the giving of notices to them;
(b) every person entitled to a share in consequence of the death or insolvency of a member who, but for his death or insolvency, would be entitled to receive, notice of the meeting; and
(c) the auditors of the company."
' It is a matter of record that the alleged notices were issued to the petitioners on the address of the company i,e, 46-M, Gulberg-III, Lahore and were shown to have been received by the Accountant who was subsequently given enormous raise in his salary but was dismissed from his service under the orders of the Court. In any case, learned counsel for the petitioners rightly referred to the notices allegedly issued by the Prime Bank which were also received by the Accountant in order to prove that the notices for the meeting were also received by him. The two signatures are so alike and identical that it can be identified by the naked eye, thus, there was no service in the eye of law. It appears that notice, if, at all issued was issued jointly which was illegal and wrong for every member was to be issued separate and independent notice which should have been issued and served on the said member individually on his address. Secondly the notice appears to have been served on the address "Care of Messrs Yasmin Weaving Mills, 46-M, Gulberg-III, Lahore, which cannot be the home address of all the members described therein. Thirdly, it appears to have been received by the Accountant of the Company which again is not lawful service of the petitioners for it is not shown that the Accountant of the company is representative of the petitioners or the company itself. It was a material defect in issuance of notice, which has the resultant effect of preventing a member or members from participating in the proceedings of a meeting. Needless to add that it was not only a defect in service of notice, but no notice appears to have been served at all on the petitioners. It would be noted that provisions as to issuance and service of notice as contained in section 50 of the Companies Ordinance, 1984 have not at all been adhered to, therefore, it could not be maintained that the meeting held on 12-2-1998 was lawful muchless the proceedings taken therein were legal and binding on the company. Similarly, the minutes of the meeting were not transcribed in the register of minutes as is evident that the same were admittedly recorded on loose papers. It would also be seen that two directors of the company having convened and held the meeting proceeded to dislodge 5 directors of the company, they were not in possession of minute book of the company, therefore, they proceeded to record the minutes of the alleged- meeting on loose papers. The minute book of the company is of great importance which contains minutes of solemn proceedings of the company, therefore, the minutes recorded on the loose papers may not be given any sanctity. Again the quorum for special general meeting as prescribed by Article 60 of the Memorandum of Association being there, the meeting as held on 12-2-1998 was illegal because it lacked quorum, therefore, no business could be transacted in the said meeting. Above all the meeting held on 12-2-1998 was also attended by Mr. Salim Baig, whose name has not been reflected in the register of members of the company, therefore, his participation in the said meeting was not backed by the register of members, hence without lawful authority.
10. In the circumstances, the proceedings of the meeting allegedly held on 12-2-1998 are declared to be illegal and quashed. The result being that the petitioners continued to be the directors of the company and would occupy the same position as were held by them on 12-2- 1998. The Chairperson shall cease to act as such on and from the decision of this C.O. But she is, however, directed to take steps in accordance with the Companies Ordinance and Memorandum and Articles of Association to call for extraordinary general meeting under her supervision. She shall not be paid any emoluments for convening and holding the said meeting.
11. There is yet another aspect of the matter i,e, the apprehension of H.B.L., the major creditor of the company for it is submitted by them that as soon as an order is passed by this Court, the successful part would go and occupy the mill premises and there is great likelihood of machinery being pilfered and removed, resultantly, the security of the bank which has already diminished a lot would further be diminished. It is submitted that the Bank has already filed a suit for recovery against the company and judgment is to be announced in the said case on 23- 11-1999. The apprehension of the bank is not all that misplaced, therefore, in order to obviate any possibility of pilferage or removal of the machinery, it is directed that a list of inventory be made at the time of delivery of possession to the petitioners by the Chairperson. The chairperson shall also join representatives of the Bank. The effort aforenoted shall be completed jointly before handing over the possession to the petitioner but within a period of three weeks from today. The Chairperson has also pointed out that she has not been given her salary since February, 1998 as also the expenses of 3 lacs. It is submitted by her that balance amount of a bill for the repair of compressor amounting to Rs,40,000 is also to be paid. The matters afore-noted shall be attended to by the petitioners.
' The petition is accepted in the terms noted above.