' The petitioners, claiming themselves to be the shares-holders of the respondent-Company, have filed this petition under section 290 of the Companies Ordinance, 1984, against the said Company and other share-holders of the same thereby praying that the affairs of the respondent-Company need to be regulated or in the alternative the respondents Nos.2 to 5 be directed to purchase the 8,000 shares of the petitioners.
2. The petition is grounded on the plea that respondent No,1 is a private limited Company and the petitioners and respondents Nos.2 to 5 are its share-holders. It is submitted that the petitioners own 2000 shares each out of the total issued capital of 17,800 shares while respondents Nos.2 to 4 are the Directors of respondent No, 1 . It is the case of the petitioners that in July, 1990, respondents Nos.2 to 5 offered the shares of respondent-Company to the petitioners at par value which was accepted by the petitioners who paid Rs,8,00,000 in cash for which they were issued 8,000 shares but eversince the purchase afore noted, the petitioners were neither allowed a hand in the management nor they were inducted on the Board of Directors. It was added that the petitioners being owners of 42.32% of the issued share capital were entitled to have two of their nominees on the Board. It was, however, submitted that respondents Nos.2 to 5 did not perform their legal obligations inasmuch as they had not even filed requisite forms in the Registrar's office nor any general meeting was held for the last two years before the filing of this petition and even otherwise the respondents Nos,2 to 5 have committed act of misfeasance and misconducted themselves in not declaring any dividend during the two years preceding the filing of the application. It was lastly submitted that the petitioners were not allowed to participate in the management, therefore, they are absolutely unaware of the Company's working, hence the plea of minority oppression.
3. The application was resisted primarily on the plea that the requirement of section 86 of the Companies Ordinance, 1984, does not appear to have been followed thereby rendering any such share or shares void or voidable. It was also submitted that no consideration for the shares was ever paid, therefore, the shares, if any, do not create any right in the petitioners. However, the fact that the shares were issued was admitted but with the rider that no consideration was paid therefore. In answer to para. 6 wherein the petitioners had asserted in regard to the information of the issuance of shares to the Registrar, it was with assertion that the petitioners had no locus standi to complain in this respect. By and large, the total plea, as incorporated in the petition, was denied on the ground that no consideration for the shares was ever paid, therefore, it was prayed that the petition be dismissed.
4. The Corporate Law Authority was also called upon to submit reply to the petition which has since been filed. It is admitted therein that according to the record available with them, the petitioners own 2000 shares each out of the total of 20,000 shares of Rs,100 each and that the management of the Company has not filed Form 'A' and Form '29' (holding of annual general meetings, election of Directors and appointment of auditors) in terms of sections 156, 158, 205 and 252 of the Companies Ordinance, 1984 in spite of issuing a number of letters/demand notices. It has thus failed in its legal obligations.
5. The petitioners being in possession of the share certificates of the value of Rs,2,000 each had produced photostat copies thereof alongwith the petition. It is discernible from the said copies that they were signed by the Chief Executive or the Directors. Needles to add that even the respondent- Company had not denied in their written-statement that the certificates were issued to the petitioners. The admission was of course subject to a rider that no consideration was paid therefor.
It is really strange that the share certificates were issued in December, 1990, and the plea of non- payment of the consideration was raised only in defence of an application under section 290 of the Companies Ordinance, 1984 filed in April, 1992. Again, it would be noted that in spite of taking this plea in the year 1994, no proceedings were taken or filed for the recovery of consideration of share certificates already issued to the petitioners. I specifically directed the Registrar of Companies vide my order, dated 10-11-1999 to supply the copy of the documents to ascertain as to whether the information in regard to the issuance of 2000 shares was at all sent to the said Registrar. In compliance therewith, Form-III, duly attested by the Registrar of Companies, was obtained by the learned counsel for the petitioners and placed on the record. Confronted therewith, learned counsel for the respondents sought time to obtain instructions which time was again extended on the request of the learned counsel for the respondents but the result remained the same. Learned counsel for the respondents, however, submitted on the adjourned date i,e, 26-4-2000 that he has filed an application thereby challenging the genuineness of the Form-III and that the same is to be listed before the Bench. It would be noted that originally, the application was sought to be contested on the ground that the petitioners' claim of being shares-holders is not sustainable for the requirements under section 86 of the Companies Ordinance, 1984 were not followed, therefore, the said shares were held to be voidable. In the alternative, it was submitted that no consideration was paid, therefore, the share certificates are void or voidable and when the matter was finally certified by the Registrar of Companies that an intimation was received in the shape of Form-III, duly signed by the Chief Executive. The said intimation, as contained in Form-III was sought to be challenged on the ground that it has not been so signed and is a forged document. The shifting stands of the respondents speaks a volume about their conduct. It seems that they were trying to run away from the liability. The long silence of four years on the part of the respondents is a factor which leads me to believe that the share certificates were issued to the petitioners and the consideration thereof was paid by them at the relevant time.
6. This brings me to the last question as to what is the effect of non-compliance of the provision of section 86 of the Companies Ordinance, 1984. The said section primarily deals with the further issue of capital whereby it is ordained that the offer, in the first instance, shall be made to the existing shareholders in proportion to their share holdings and on their refusal, it could be offered to a third party. This section in fact enable the existing share-holders to raise objections to further issue of capital to the third party without first issuing the same to the existing share-holders. In the instant case, no existing share-holder has come forward to object to the same while respondents Nos.2 to 5 have admitted that the shares were issued in favour of the petitioners but no consideration was paid therefor. The question as to payment of consideration has already been held against the respondents particularly in view of the information sent to the Registrar of Companies as contained in Form-III. Needless to add that the plea as to the form being bogus has also been rejected so, therefore, nothing turns on this objection as well.
7. In the circumstances, it would be neither just nor proper to thrust the petitioners on unwilling respondents Nos.2 to 5 because of the manifest distrust as aforenoted, therefore, I would grant the alternative relief as prayed for, resultantly, the respondents are directed to buy the shares of the petitioners at par value. The petitioners shall of course be not entitled to any dividend. The first prayer in the petitioner in regard to the regulation of affairs of the Company is disallowed. This petition is accepted with costs.