1. ' I intend to dispose of these petitions by common order, involving similar facts and identical questions of law, which were heard together. It may not be necessary to recapitulate the facts of each particular case as they were similar for the purpose of deciding the controversy between the parties and it might suffice, by way of explaining the factual background to refer to the contents of J.M. No, 19 of 2000.
2. ' The petitioner, a trust known as Shaheen Foundation, created under the Charitable Endowments Act for the welfare and benefit of retired and in-service personnel of Pakistan Air Force, has filed these petitions under sections 290 and 291 of Companies Ordinance. The petitioner is a minority shareholder to the extent of 25% in the paid-up capital of respondent No,1 with two nominees amongst the Directors of the respondent No,1, a Private Ltd. Company and one of the components of the Group of Companies of Javed Pasha and his local and foreign associates, Javed Pasha, respondent No,3 is one of the Directors and a shareholder to the extent of 25% in respondent No, 1.
3. The respondent No,5 is a foreign associate and owns and possesses about 50% of the shares of respondent No, I. The respondents No,2 and 5 are Directors nominated by the majority shareholders. Javed Pasha and his associates/ nominees/ representatives prepared feasibility report to establish T.V. Channels in Pakistan as well as Radio Stations on FM Bands at Islamabad/Rawalpindi, Karachi and Lahore in private sectors, thereafter detailed presentation of the feasibility of establishment of T.V. Channels and Radio Stations in private sector was held. On such representations, petition agreed to invest 25% in the equity/paid-up capital of the Group of Companies (i) Messrs Pay T.V. (Pvt.) Ltd.; (ii) Messrs FMS (Pvt.) Ltd.; (iii) Messes Capital FM (Pvt.) Ltd.;
(iv) Lahore Broadcasting Corporation (Pvt.) Ltd. And/or a purported holding company Messrs FM Hundred (Pvt.) Ltd., which was represented and supposed to own and control the three aforesaid companies. The petitioner entered into two separate joined venture agreements, one, dated 16th January, 1996, whereby the petitioner agreed, inter alia, to subscribe to 25% of the paid-up capital of Messrs Pay T.V. (Pvt.) (Now called Shaheen Pay T.V. (Pvt.) Ltd.). By second agreement, dated 4th March, 1996, the petitioner agreed, inter alia, to subscribe 25% of the paid-up capital of holding company to own and control three subsidiary companies, namely, FMS (Pvt.), Ltd., Capital FM (Pvt.)
4. Ltd. And Lahore Broadcasting Corporation (Pvt.) Ltd. Three separate licences were obtained to establish three FM Bands Radio Stations in private -sector. In Islamabad/Rawalpindi, Karachi and Lahore. Later on, it transpired that holding company viz. FM Hundred (Pvt.) Ltd. Was never established or incorporated under any law. However, in consideration of the petitioner's agreement to acquire and own 25% shares in each of the four companies above named of Javed Pasha, the petitioner allowed its name to be associated with these four companies, on mutually agreed terms as under:---
(a) The petitioner shall acquire and own 25% fully paid-up shares of each of the three companies.
(b) At least two Directors nominated by the petitioner shall be appointed as Directors of each of the three companies.
(c) The Articles of Association of three companies shall be amended to incorporate and include in the Articles some of the operative provisions of the aforesaid Joint Venture Agreement, dated 4th March, 1996 relating to the composition and functioning of the Board of Directors of each of the three companies for protection of the interest of the petitioner.
5. ' Accordingly 25% full paid-up shares of each of the said three companies were issued/transferred to the petitioner, two of the nominees were elected Directors of each of the three companies and Articles of Association of one company were amended, whereas, Articles of Association of other two companies were not amended in spite of repeated request. The agreement was duly implemented as under:---
(a) Paid-up capital of the respondent No,1 was determined at Rs,10,000,000 divided into 1,000,000 shares of Rs,10 each share. (b) The petitioner was allotted/transferred 250,000 number of fully paid-up shares of face value of Rs,10 each being 25% of the paid-up capital of respondent No,1, which was duly communicated and registered with respondent No,6. (c) The Board of Directors of respondent No,1 comprising six Directors was constituted with effect from June, 1997 including two Directors namely, AVM (R) Nafees A. Najmi and Aftab M. Khan, nominees of petitioner. Respondents Nos.2 and 4 were also elected as Directors. It is the petitioner's case that (i) not a single annual general meeting or any meeting of the Board of Directors of respondent No, 1 have ever been held, despite repeated requests and demands made by the petitioner. (ii) Neither the books of accounts have been prepared or maintained, approved, presented or filed with the Authorities as required by law. (iii) Auditors have not been appointed. (iv) The respondents have also neither intimated to Registrar regarding change in Board of Directors of respondent occurring on account of resignation tendered by Fazal kamal, nor this vacancy has been filled up. (v) The respondents have also repeatedly defaulted in filing the annual returns and other returns regularly on time in lawful manner as required by law. Some of the returns were submitted in unlawful manner without signatures of the duly authorized , and competent Chief Executive or Director. Consequently, the Registrar has refused, to accept some of such Returns, on account of serious discrepancies and objections raised by the Registrar. (vi) Neither any amount of dividend or profit has been paid to the petitioner nor the respondents ever provided any information or periodical reports about its business, affairs and accounts to the petitioner.
6. ' The petitioner has reasons to believe and apprehends that respondents may have given rise to some fictitious rights, inflated charges or may have transferred and misappropriated funds of the respondent through over invoicing, under invoicing transfer invoicing, manipulation of accounts and/or through unlawful or unauthorized transactions or entries in books of accounts with a view to deprive the petitioner or of its investment in the equity as well as lawful share in the profits earned.
7. The business and affairs of respondent No,1 is not being run in a transparent and lawful manner with mala fide motives with a view to deprive the petitioner of their lawful investment in the equity and share in the profits as well as of the rights of the petitioner to participate in the business and affairs of the respondent and with a view to cause harm and loss to the petitioner. The respondents are consistently failing and/or refusing to disclose the accounts and business and affairs of respondent No,1 and they are violating the provisions of the Articles of Association of respondent as well as the applicable laws including sections 156, 158, 196, 205, 230, 233, 234, 236, 241, 242, 252 etc. Of the Companies Ordinance. Thus are acting in an unlawful, fraudulent and oppressive manner against the interest of the petitioner and being a minority shareholder. In the interest of justice as well as for prevention of oppression, mismanagement and for regulating conduct of the business and affairs of respondent in a lawful just and fair manner, the respondents be divested of the shares, Directorships, Administration, Management and Control on the following grounds:-- A. The conduct of the business affairs of the company in an unlawful, fraudulent mala fide manner, which is oppressive to the petitioner. B. Neither books of accounts have been made nor the accounts have been audited, approved or filled with authorities nor the Annual General Meetings have been held as required by law. Meeting has been held in past several years as required under section 233 of the Companies Ordinance.
8. C. The respondents have repeatedly committed and continuing to commit act and omissions in violation of Articles of Association.
9. The following reliefs have been claimed through the petition:--
(a) Call for the record and documents relating to the respondent No,1 from the respondent No,6.
(b) Declare that business and affairs of the respondent No,1 are being conducted by the respondents Nos.2 to 5 and their nominees in an unlawful, fraudulent and oppressive manner, prejudicial to the rights and interest of the petitioner being a minority shareholder of the respondent No, 1.
(c) Grant an order divesting the respondents Nos.2 to 5 from the Directorship, Management and Control of the respondent No,1 and direct them to transfer and hand over the same to the petitioner and/or its nominees.
(d) Direct the respondents Nos.3 and 5 to sell and transfer the shares of the respondent No,1 to the petitioner on the basis of true and correct break-up value of the shares of the respondent No,1, that may be determined by an independent Chartered Accountants and Auditors after conducting through investigations into the record and books of accounts of the respondent No, 1.
(e) Grant cost to the petitioner; and
(1) Grant such other relieves as this Hon'ble Court may deem fit and proper in the interest of justice.
10. ' The petitions have been resisted by the respondents through counter-affidavit, wherein the objections on legal as well as factual plane were taken, the preliminary objections are as follows:
(1) The petition by Shaheen Foundation, a Trust, registered under the Charitable Endowments Act, is not maintainable, it can only sue in the name of treasurer or in the name of trustee or not in the name of foundation itself. The Shaheen Foundation is not a juristic person and cannot sue in its name as trust.
(2) The petitioner did not actually make any contribution to the extent of 25 per cent. In the shareholding of respondent No,1, thus do not quantify to lodge or maintain the petitions under section 290 of the Companies Ordinance.
(3) On factual plain, they maintained that the TV and Radio Channels proposed to be set up constitute media service and media professionals, obtained transmission and broadcasting licences on their own. Thereafter the petitioner showed interest in joining the business and was admitted in 1996, when transfer deed for 25000 shares was given to the petitioner, when the prospects were very good. The feasibility was correctly made as according to the conditions prevailing the feasibility was duly verified and scrutinized by the petitioner. Thereafter, the petitioner paid Rs,1,00,000 only part payment in January, 1997. They have denied that petitioner was allured to join all of the companies. They have admitted the execution of joint venture agreements whereby the petitioner agreed to subscribe to 25% equity in Pay TV (Pvt.) Limited, which subscription was not made yet 25% shares were transferred. The company was then renamed as Shaheen Pay TV Limited. It was maintained that the Foundation owes Rs,92 lacs to Pay TV, hence it shares to this extent shall be deemed to be under legal lien. They also maintained that Foundation has not acquired legal title in 25% shares of SPTV. Respondent No,1 was pressurized by the Foundation, whereupon under pressure and forcibly 25% shares were transferred to the Foundation in the other three Companies, including respondent No,1 without any consideration in July, 1996. In January, 1997, the Foundation did pay a nominal amount of Rs,1,00,000 each, which is actually contribution for 10,000 shares in each company only but shares valued 75 lacs have been transferred for Rs,3 lacs only. However, no title has been acquired by the Foundation to that extent.
11. The licence was obtained by the sponsors of respondent No,1, well before the joining of the petitioner in Pay TV Limited, which remains the property of the licensee. They have denied that Javed Pasha made inaccurate representation to the Foundation. The agreement is not a formalized arrangement and conditions mentioned in sub-paragraphs a, b and c have no legal sanctity. The petitioner was to acquire 25% shares in three companies for consideration but paid only Rs,3 lacs and obtained transfer of shares worth Rs,75 lacs. They maintained that Annual General Meetings and Board Meetings of Shaheen Pay TV Limited and respondent-company's meetings were held simultaneously as agreed and last meeting was held in London in the year 1999. The meeting for 2000 was requisitioned which could not be held since the Directors of Foundation were not available. (Annexure R-3). The commercial business and activities are being carried out on very limited basis, due to redical and changed political and financial situation in the country, the circumstances did not permit to undertake the broadcasting and telecasting in the manner and to that extent as per original plan. However, the business is just being kept alive with great difficulty and petitioner is fully aware of the fact. The entire income and expenditure is audited. The respondent-company are running FM Radio Channels which make very little profit.
12. The income and expenditure is duly reflected in the statement of accounts. Payments have been made to the Foundation in the past which the Foundation received through subsidiary namely Messrs Hawks Advertising. They have denied that the respondents have indulged in any such activity as alleged by the petitioner. The Income-tax Returns are correctly submitted. The income and expenses of companies are matter of record which is subject to statutory audit. Accounts for the years 1996, 1997, 1998 and 1999 were duly prepared and audited through Annexures R/20 to 23.
13. The petitioners have been provided all the requisite information as and when demanded by the petitioner. The Foundation has paid only Rs,1,000,000 and has received much more by way of dividends. The petitioners total financial exposure in SPTV Limited is Rs,9 lacs and in other three companies is another Rs,3 lacs, for total exposure to the extent of Rs,12 lacs. Petitioner is bent upon destroying four companies. The reputation of the Foundation is not in jeopardy because of respondents. The Foundation wants to wriggle out of its commitments. They have denied oppression or mismanagement. The company is being run with very little business and in the hope that the situation will improve to enable it to operate its business as originally conceived and planned. The companies are engaged in media service business, which is a highly specialized business and is being conducted in efficiently as the circumstances permit and maintained that the business is being conducted in a lawful and bona fide manner. The books of accounts are being maintained in due course of business and are subject to statutory audit. All the meetings have been held periodically. The accounts are audited. The respondents have not committed any violation of Article of Association nor they have violated any provision of the Companies Ordinance.
14. ' In rejoinder the petitioner maintained that any amount is not due or payable by the petitioner either to Shaheen Pay TV (Pvt.) Limited or to respondent No,1 or to any of the aforesaid companies.
15. False and fabricated plea has been raised through purported counter-affidavit for the first time as an afterthought in an hopeless attempt to mislead and prejudice the Court as well as reduced the ratio of fully paid-up shares owned and possessed by the petitioner in the equity of the respondent No,1 as well as in the equity of aforesaid three companies. Fully paid-up shares lawfully owned and possessed by the petitioner has never been in dispute. It has been acknowledged by the respondent, the record of Registrar of Companies, Karachi also confirms irrefutable fact. They maintained that all the Directors of four companies are same but the plea that summaries meeting of all the companies were held with the consent and knowledge of Shaheen Foundation is capricious and untenable in law. Each company is an independent entity. It was further maintained that the respondent No,1 has never paid or returned any amount to the petitioner at any occasion.
16. They have also denied that petition has been filed with any mala fide purpose. Motive or intention and the petition was filed without lawful authority and maintained that the Managing Director is competently authorized to sign the petition in the name and on behalf of the petitioner. They have also denied that the total financial exposure or investment of the petitioner in the equity of the respondent No,1 or that of other three companies is collectively Rs,12 lacs only.
17. ' In reply to the preliminary objection, the petitioner maintained that in exercise of the powers conferred by sub sum of Rs,30 lacs was allocated for the charitable Organization of the petitioner, which amount was initially vested in the Treasurer of Charitable Endowment for charitable purposes, by another Notification, dated 25th October, 1977 issued in exercise of the powers conferred by subsection (3) of section 10 of the Act, The Federal Government was pleased to divest the Treasurer of the said amount of Rs,30 lacs and vested the same in the Committee of Administration for Shaheen Foundation. The Committee of Administration of the petitioner through its resolution, dated 7th February, 1989 has delegated all the powers of administration to the Managing Director of the petitioner. Air Marshal Sayed Shahid Zulfiqar Ali was appointed as the Managing Director w,e,f, 3rd August 1999, he is fully competent and authorized in law to act on behalf of the petitioner and to exercise all such powers including the power to file and defend in the name and on behalf of petitioner all cases and matter in any Court or before any Authority. It was reiterated by the petitioner that petitioner own and possess 25% full paid-up shares in the equity of the respondent No,1 and is competent to file the petition under section 290.
18. ' I have heard Mr. Iqbal Haider, learned counsel for the petitioner and Mr. Muhammad Afzal Siddiqui, learned counsel for the respondents.
19. ' Before considering the petition on merits, it would be proper to dispose of the preliminary objection taken by the respondents about the maintainability of the petition. The respondents through counter-affidavit have questioned the maintainability of the petition and canvassed by learned counsel for the respondent, the following grounds:
(1) That the petitioner Messrs Shaheen Foundation, a Trust, registered under the Charitable Endowments Act, is not a juristic personality, thus can sue either in the name of Treasurer or in the name of the trustees, not in its own name.
(2) The petitioners have not acquired 25% shareholding and has paid only Rs,1 lac each which shall be deemed to the part payment of 25 lacs at the best it acquired right of 10,000 shares only. Thus do not qualify as holder of 20% or more share in the company as such it cannot lodge or file the petition under section 290 of the Companies Ordinance.
(3) The petition involving the management of the trust property, cannot be maintained except with the permission of Advocate-General in terms of section 92 of C.P.C. Thus in absence of permission, the petition is not maintainable.
20. ' Reverting to the third ground taken by the learned counsel for the respondents that the petition for want of sanction of Advocate-General under section 92 of C.P.C., is not maintainable as the petitioners' Foundation is a Trust and the proceedings involving the Trust property, the permission of Advocate-General in terms of section 92, C.P.C. Is mandatory. Learned counsel for the respondents has referred the following cases (1) Pramatha Nath Mullick v. Pradhyumma Kumar Mullick and another (AIR 1925 PC 139), (2) Janaki Bai Ammal v. Sri Triuchitrambala Vinayakar of Melman AIR 1935 Madras 825), (3) Raje Anandrao v. Shamrao (AIR 1961 SC 1206), (4) Mehbood Elahi v. KM. Idrees (PLD 1955 Lahore 242). (5) Charan Singh and another v. Darshan Singh and others (AIR 1975 SC 371).
21. ' Section 92 of C.P.C. Contemplates for filing of suit, in the nature envisaged by section 92(1) to obtain a decree for any one or more of the reliefs enumerated in clauses (a) to (h) by the Advocate-General or two or more persons having interest In the Trust with the consent in writing of the Advocate-General. The reliefs in respect of the Trust enumerated in clauses (a) to (h) of subsection (1) are (a) removal of trustee, (b) appointment of new trustee, (c) vesting of any property in trustee, (d) directing for accounts and inquiries, (e) declaration of the proportion of the trust property or of the interest therein allocated to particular object of the trust, (i) authorizing the whole or any part of the trust property to be let, sold, mortgaged or exchanged; (g) settling of a scheme; or (h) granting such further or other relief as the nature of the case may be required.
22. ' The question whether suit or proceeding falls within section 92 depends not upon the character in which the plaintiff sues, but upon the nature of relief sought. In the instant case, no doubt the petitioner, a trust, has filed the petition under section 290 of the Companies Ordinance with allegation of mismanagement and oppression of minority shareholder and the relief asked for in the present proceedings is not similar to that mentioned in clauses (a) to (h) of section 92, C.P.C.
23. Therefore, I am of the view that in case proceedings has been brought on behalf of the trust seeking relief not enumerated in above clauses would not be subject to the permission from the trust merely because the character of the petitioner/plaintiff is a Trust, thus the ground urged for want of sanction is not tenable.
24. ' The second ground taken by the respondents' counsel was that the petitioners do not qualify to be a member to bring the proceedings under section 290 of the Companies Ordinance. According to learned counsel, the petitioner is not legally holding the shares to the extent of 25%, thus the petition cannot be filed by a person, who is holding the shares less than 20%. To elaborate his contention, the respondents' counsel canvassed that no doubt the petitioner had agreed to have 25% shares in all the three companies and the respondents in good faith transferred the shares but the petitioner has paid Rs,1 lac each, by referring Annexure R/2, letter of the petitioner, dated 29-1- 1997, whereby nine demand drafts were sent to the respondent No,2 of Rs,3 lacs. On the basis of Annexure R/2, it has been contended that the petitioner would be deemed to be holder of 10,000 shares in each company, which will not bring the petitioner holder of 20% shares, as such they are not qualified to file the petition. In this regard the respondents' counsel has referred the judgment recorded by Division Bench of Allahabad High Court in Shiromani Sugar Mills Ltd. v. Debi Parasad (AIR 1950 Allahabad 508), wherein it was held that "to constitute a binding contract to take shares in a company when such a contract is based upon application and allotment, it is necessary that there should be an application or allotment, by intending shareholder an allotment by the Directors of the Companies of the shares applied for, and a communication by the Directors to the applicant of the fact of such allotment having been made".
25. ' This objection has been met by learned counsel for the petitioner by urging that the petitioner has acquired 25% shares in all three companies. The transfer of share was reported to the Registrar, Joint Stock Companies and the Registrar in his comments has submitted that the petitioner owns 25% shares of the company, thus the respondent cannot deny petitioner's holding of 25% shares.
26. He further contended that the shares were purchased from private persons namely, Amir Ansari, Nisar Aziz, Robi Durrani, Mani Begum, Nasreen Akhtar, Atif Jalil, Jameel Behari, Sumera Jameel, Samina Pirzada, till date none has challenged the petitioner's holding of 25% shares, no suit or any proceeding is pending. He contended that if any amount is payable, the same can be recovered, once the share has been transferred and registered with the Registrar, Joint Stock Companies, the right under section 290 of such member cannot be doubted or denied.
27. ' The facts of Shiromani Sugar Mills Ltd, referred by respondents' counsel were that the respondents had obtained preference shares of Rs,100 each, Rs,20 were payable on the application for the shares, Rs,30 were payable on the share being allotted and the balance of Rs,50 was payable on such call or calls as might be decided by the Directors from time to time, if money was not paid, the shares were liable to forfeiture, if the call or instalment or allotment money was not paid by the shareholder within the time fixed. Some of the respondents did not pay even the allotment money and others did not pay the first and second call moneys. Consequently their shares were forfeited through resolutions. Upon winding-up of the company, the Official Liquidator instituted the suits to recover the balance of the allotment and first and second call moneys. The suits were resisted by the respondents on the grounds (1) that the original contract for the purchase of shares was procured by the promoters of the company by fraudulent misrepresentation, (2) that the promises held out to the opposite-parties at the time of the purchase were not carried out by the company and consequently the opposite-parties were justified in not making further payment, (3) that the resolution passed by the Directors allotting the shares to the opposite-parties were invalid because the Directors, voting for the resolutions had ceased to be Directors, and (4) that the resolutions forfeiting the shares also were invalid for the same reasons. The learned Judge upheld all these contentions of the respondents and dismissed the suits. In Revisions filed by the Official Liquidator, learned Judge's findings on above four points were reversed and the revision applications were allowed.
28. The case is distinguishable as in the present case the shares stand transferred and registered in the name of the petitioner purportedly purchased from the persons named above, if full amount has not been paid, the remedy lies by way of suit, but the entitlement cannot be challenged by asserting that the petitioner has not acquired 20% shares to qualify it to move to the Court. In my view, this ground, attacking the maintainability also fails.
29. ' The third plea taken by the learned counsel for the respondents is that the Foundation is a Trust under Charitable Endowments Act. A trust is not a corporate sole, cannot sue in its own name. Case of The Sheriff of Bombay v. Hakimji Motaji & Co. AIR 1927 Bombay 521) has been referred, wherein it was held that Sheriff is not a corporate sole cannot be sued. This view was considered by Division Bench of this Court in Secretary. B & R v. Fazal All Khan (PLD 1971 Karachi 625). On this analogy, it was contended that Foundation has no right to sue or to be sued. The Treasurer or the Trustees appointed by the appropriate Government can bring a cause on behalf of the Trust in their own name.
30. ' Learned counsel for the petitioner contended that the Federal Government has established the Shaheen Foundation by approving a Scheme by the Notification, dated 8th August, 1977, a sum of Rs,30 lacs were allocated for the Charitable Organization of the petitioner. He further contended that soon thereafter by Notification, dated 25th October, 1997 in terms of subsection (3) of section 10 of the Act, 1890, the Federal Government was pleased to divest the Treasurer of the said amount and vested the same in the persons administering the trust namely "the Committee of Administration" for Shaheen Foundation and the petition has been filed by Shaheen Foundation a Trust, which can sue or be sued on its own name as the petition do not relate to the establishment of Trust or the competence or authority of the Trustees or any dispute between the Trustees or any dispute between the beneficiaries of the Trust and Trustees. He further contended that there is no provision under any law relating to trusts or endowments or under C.P.C. Or Companies Ordinance or under any other applicable law that a Trust cannot sue or be sued in its own name. He further contended that generally provisions of C.P.C. Are not applicable to the proceedings under the Companies Ordinance except few relevant sections of the Companies Ordinance so expressly provided for application of the specific provisions of C.P.C. He further contended that the other organizations such as Fauji Foundation and Behria Foundation were also established by similar notifications under the same statute and they are also being managed in an identical manner by a Committee of Administration. A number of cases have been instituted in various Courts by or against Foundations in their own name and has referred two cases: (1) Fauji Foundation v.
31. Shameem-ur-Rehman PLD 1983 SC 457; (2) Shameem-urRehman v. Fauji Foundation (1992 SCMR 1496). He further contended that the Trustees and Trust are one of the same having one identity and the description of the petitioner either in its own name or through the Committee of Administration does not in any way prejudice or cause harm to the respondents nor does it confer any undue benefit to the petitioner. The Managing Director, who has signed. Swear and filed the petition has been appointed by the Committee of Administration, delegating its powers to do so.
32. Hence description of the petitioner is inconsequential and of no relevance in law. It was further contended by him that an incorrect description or misdeclaration of the name of the petitioner is an inconsequential mistake and it does not justify rejection of the plaint or petition and such wrong description has to be ignored and referred the cases of:
(1) Muhammad Sharif v. Mahmood and another (1984 CLC 2380), (2) Secretary-cum-Chief Engineer, Irrigation Department. Government of Balochistan, Quetta and 2 others v. Ghulam Muhammad Khan and another (1986 CLC 2987).
33. ' Lastly, it has been contended by him that the respondents cannot challenge the maintainability of the petition by Foundation as they had the dealings and transactions with the Shaheen Foundation in its name including the joint venture agreement, transfer of shares, appointment of the nominees of the petitioner, amendments in the Articles of Association through special resolution, which confirmed and recognized Shaheen Foundation as a party. Thus law of estoppel will come into play as envisaged in Article 144 of Qanun-e-Shandate Order and in the regard reference has been made to the following cases; (i) Messrs Capital Farms, Islamabad v. National Development Finance Corporation (PLD 1996 Lahore 99), (ii) Habibullah v. All Muhammad (1986 CLC 1227), (iii) Ali Mohataram Naqvi v. Messrs Cogefar-Astaldi Sidmail (PLD 1986 Karachi 574).
34. ' It may be noted that Federal Government by Notifications issued on 8th August, 1977, under sections 4 and 5 of the Charitable Endowments Act, created a trust called Shaheen Foundation, in the year 1977, for the purpose to promote the welfare and benefit of serving and retired Pakistan Air Force personnel including civilians. By notification issued under section 4 of the Act, property (Rs, 30 lacs) held by the trust has been vested in the Treasurer of Charitable Endowments, while by notification a scheme for the administration of the trust has been settled and "administration committee" consisting of several persons, has been appointed as "Trustees". By separate Notification, dated 25-10-1977, under section 10, the Federal Government divested the Treasurer of the "property" (amount of Rs,30 lacs) and vested in the "Committee of Administration".
35. ' On divestment of the Treasurer, the property of the Trust, vested in the person or persons acting in the administration thereof and be deemed to be held by him or them on the same terms on which it was held by such Treasurer. So the "Committee of Administration" under the Scheme framed by the Federal Government now holds the property of the Trust for the same purpose and on the same trusts. The powers of the Committee are analogous to the powers of Treasurer with right to sue and to be sued while administering the Trust property as Trustees.
36. ' However, the question remains, whether Shaheen Foundation, a Trust can maintain a proceedings in its own name or such a proceedings should be brought in the name of the Committee of Administration, Shaheen Foundation PAF constituted under Scheme approved by the Federal Government under section 5(1) of the Act. In my view, the latter is proper description and in case of former, it may be a case of misdescription to be remedied through an application for amendment of title under Order 6, Rule 17, C. P. C .
37. ' The plea taken by the learned counsel for the petitioners that the description has no consequence or bearing is not tenable nor the law of estoppel would be available to the petitioners. On the contrary, if the proceedings would have been taken by the respondents then petitioner could have pleaded estoppel against the respondent. The "Trust" and "Trustees" are two distinct and separate identities. The former has no juristic personality, whereas, the later has the position of corporate sole. Any member or members holding not less than 20% of issued capital can bring the petition under section 290 "member" has been defined in section 2(21). "Member" means in relation to a company having share capital, a subscriber to the memorandum of the company and any "person" to whom is allotted or who becomes the holder of any share. The term person has been used in Rule 3 of Order 1, C.P.C. As well, which can be categorized (i) natural person and (ii) juristic person. The Trust has the corpus without soul. In cases referred by Mr. Iqbal Haider, the question of maintainability of the proceedings by the Trust was not raised or addressed, on the contrary. The treasurer as Trustee has filed suit for recovery in this Court, on behalf of Fauji Foundation, a Trust created under Charitable Endowments Act, the case is reported one (Treasurer of Endowments for Pakistan v. Inamur Rehman Alvi 2000 CLC 135). There is no estoppel against the law, Order 31, Rules 1 & 2 of C.P.C. Also require the filing of proceedings, on behalf of the Trust by its trustees. I am of the view that on this ground the petition is not to be dismissed without an opportunity to Trustee to ratify the mistake by leave to amend the petition within two weeks subject to decision of petition on merits.
38. ' Reverting to the merit of the petition, it would be advantageous to reproduce the provision of section 290 of the Companies Ordinance, which will facilitate the appreciation of contentions raised, which reads as follows:-
290. Application to Court.--- (1) 11 any member or members holding not less than twenty per cent.
39. Of the issued share capital of a company, or a creditor or creditors having interest equivalent in amount to not less than twenty per cent. Of the paid-up capital of the company, complains or complain, or the Registrar is of the opinion, that the affairs of the company are being conducted, or are likely to be conducted, in an unlawful or fraudulent manner, or in a manner not provided for in its memorandum, or in a manner oppressive to the member or any of the members or the creditors or any of the creditors or are being conducted in a manner prejudicial to the public interest, such member or members or, the creditor or creditors as the case may be, the Registrar may make an application to the Court by petition for an order under this section.
(2) If, on any such petition, the Court is of opinion---
(a) that the company's affairs are being conducted or are likely to be conducted, as aforesaid; and
(b) that to wind-up the company would unfairly prejudice the members or creditors; ' the Court may, with a view to bringing to an end the matters complained of, make such order as it thinks fit, whether for regulating the conduct of the company's affairs in future, or for the purchase of the shares of any members of the company by other members of the company or by the company and, in the case of purchase by the company, for, the reduction accordingly of the company's capital, or otherwise.
(3) Where an order under this section makes any alteration in, or addition to, a company's memorandum or articles, then, notwithstanding anything in any other provision of this Ordinance, the company shall not have power without the leave of the Court to make any further alteration in or addition to the memorandum or articles inconsistent with the provisions of the order; and the alterations or additions made by the order shall be of the same effect as if duly made by resolution of the company and the provisions of this Ordinance shall apply to the memorandum or articles as so modified accordingly.
(4) A copy of any order under this section altering or adding to, or giving leave to alter or add to, a company's memorandum or articles shall, within fourteen days after the making thereof, be delivered by the company to the Registrar for registration; and if the company makes default in complying with this subsection, the company and every officer of this subsection, the company and every officer of the company who is knowingly and wilfully in default shall be liable to fine which may extend to five thousand rupees and to a further fine not exceeding one hundred rupees for every day after the first during which the default continues.
(5) The provisions of this section shall not prejudice the right of any person to any other remedy or action.
40. The perusal of the provision of section 290 would show that it gives right to three class of persons to approach the Court by petition, for prevention of oppression and mismanagement. The categories are; (1) any member or members holding not less than twenty per cent. Of the issued share capital, (2) a creditor or creditors having interest equivalent in amount to not less than twenty per cent. Of the paid-up capital of the company, (3) Registrar. The grounds for such petition are (a) the affairs of the company are being conducted, or are likely to be conducted, in an unlawful or fraudulent manner, (c) or in a manner not provided for in its memorandum, (d) or in a manner oppressive to the member or any of the members or the creditors or any of the creditors,
(e) are being conducted in a manner prejudicial to the public interest.
41. ' If, on any such petition, the Court is of opinion---
(a) that the company's affairs are being conducted, or are likely to be conducted, as aforesaid; (b) that to wind up the company would unfairly prejudice the members or creditors; ' the Court may, with a view to bringing to an end the matter complained of, make such order as it thinks fit, whether for regulating the conduct of the company's affairs in future, or for the purchase of the shares of any members of the company by other members of the company or by the company and, in case of purchase by the company, for, the reduction accordingly of the company's capital or otherwise.
42. Thus the above provision gives power to Court to save a company from winding up by making a suitable order, which is an alternative remedy to the winding up.
43. ' Reverting to the allegations of mismanagement and oppression through the petition can be summarized as under:--
(1) That not a single Annual General Meeting has been held.
(2) Books of accounts were never prepared nor audited.
(3) Auditors have not been appointed since 1996.
(4) One of the Directors, namely, Fazal Kamal retired, the vacancy has not been filled by appointment of a Director to such vacancy.
(5) Dividend has not been paid.
44. ' The petitioners alleged violation of the provision of section 156 (Annual List of Members). Section 158 (Annual General Meeting), Section 196 (Powers of Director), Section 205 (Registrar of Directors, Officers etc.), section 230 (Books of Accounts to be kept by the company), section 233 (Annual Account of Balance-sheet), section 234 (contents of balance-sheet), section 236 (Director' Report), section 241 (Authentication of Balance-sheet), section 242 (Copy of Balance-sheet to be forwarded to the Registrar), section 252 (Appointment and Removation of the Auditors).
45. ' On the above premises, the petitioners claimed that failure, default, unlawful, fraudulent and oppressive conducts, acts of the respondents are jeopardizing and prejudicing the interest of the petitioner a minority shareholder.
46. ' Before adverting to the above grounds of mismanagement, it would be proper to record the scope and nature of the proceedings under section 290. So far as the nature of the proceedings are concerned, matters under Companies Ordinance are to be dealt with under summary procedure and not meant for deciding dispute requiring detailed inquiry or investigation (General Development and Housing Corporation v. Ghulam Mustafa and others 1987 MLD 413).
47. ' The scope of sections 290 and 291 of the Companies Ordinance are wide and undefined.
48. ' In National Bank of Pakistan v. Banking Tribunal No,1 and Others and 11 others, Division Bench of this Court has considered the power of the Court pertaining to the prevention of oppression and management. The observations made by the learned Division Bench are instructive and reproduced as under:--- "Sections 290 to 294 in the Companies Ordinance, 1984, occur in Part X of the statute under the title: Prevention of Oppression and Misma nagement and confer vast and undefined powers on the Court dealing with the matters visualized by the provisions. Such powers, unless the contrary is established, should include, essentially as interim but rarely as ultimate measures, jurisdiction to prohibit and proceedings against the Company, except with the leave of the Court. This would, ex facie, be necessary to prevent oppressive or mismanaged conduct of the Company's affairs; for in any other case an ill-disposed management may collude to suffer decrees in other jurisdiction effectively and unilaterally applying checks to the benevolent exercise of the Court's functions."
49. ' In Muhammad Fikree and 3 others v. Fikree Development Corporation Ltd. And 8 others (1992 MLD 668), the scope and object of the proceedings under section 290 was highlighted by Single Bench of this Court in the following words:--- "It is pertinent to point out that section 290 of the Companies Ordinance, 1984 cannot be invoked by any party for settlement of disputes between the parties inter se, but the only object behind section 290 appears to be that the affairs of the company must be conducted in a lawful manner and strictly in accordance with the Memorandum and Articles of Association of the Company."
50. ' Mr. Muhammad Afzal Siddiqui, learned counsel for the respondents maintained that scope of the proceedings under section 290 of the Companies Ordinance is restricted to the grievances enumerated in sections 410 to 415 by virtue of section 294 of the Companies Ordinance and has referred two decisions of Lahore High Court pertaining to the Taj Company; (1) Registrar of Companies, Pakistan through Joint Registrar of Companies v. Taj Company Ltd. And 8 others (1993 CLC 1413), (2) Muhammad Yousuf v. Taj Company (1994 CLC 403).
51. ' In former case, the Registrar of Companies for Pakistan filed statement of allegation against the Directors containing the allegations pertaining to misappropriation of fund to recover established liabilities and default pertaining to the statutory requirement under the Ordinance and for action against the Directors. As the allegations, pertain to violations of various other sections of Ordinance and the order to impose penalty under the relevant provision of law was solicited. It was pointed out by the learned Judge that in the proceedings under section 290 of the Ordinance only those allegations which fall within the purview of sections 410 to 415 can be examined and determined, as provided under section 294 of the Ordinance, which reads as under:--- "294. Application of certain sections to proceedings under this part.---In relation to an application under section 290, sections 410 to 415 shall mutatis mutandis apply in respect of winding up. The observation made is as follows: ' It is, therefore, apparent that violations of other provisions of law and the liabilities incurred thereunder cannot be gone into in these proceedings. It was also made clear that the Joint Registrar is free to lodge independent proceedings before the competent forums for violations not falling within the purview of sections 410 to 415 of the Ordinance'."
52. ' It may be pointed out that the provision of sections 412 to 415 pertains to the offences antecedent or in course of winding up and penalty for such offences.
53. ' In later case, it was observed that sections 410 to 415 of the Ordinance are provided for determination of liability, civil and criminal, of Directors of Company with a view to recover ascertained amount of liability, had been made applicable in relation to the application under section 290 of the Ordinance. Such determination under these sections is to be made in accordance with the procedure laid down in section 9 of the Ordinance.
54. On above ratio, to contend that the proceedings under section 290 of the Ordinance must be confined to the provisions of sections 410 to 415 would be fallacious one.
55. ' Adverting to one of the grounds of mismanagement, that non-filling of the casual vacancy due to retirement of one of the Directors namely, Fazal Kamal. Admittedly, the respondent-company is private limited company. The requirement of minimum number of Directors in private limited company is not less than two Directors in terms of provision of section 174 of the Companies Ordinance, which reads as under:- ' Section 174. Minimum number of Directors; Notwithstanding anything contained in any other law that the company being enforced every private company shall have not less than two Directors and every public company not less than seven Directors appointed and elected in the manner provided in this Ordinance.
56. ' Annexure-E (Form 29) to the petition, a list of Directors of respondent No,1 as on 30th December, 1998, showing six Directors, namely, (1) Asif Ghazal, (2) AVM (R) Nafees A. Najmi, (3) Aftab M. Khan,
(4) Javed Pasha, (5) Fazal Kamal, (6) Ghulam Abbas Haidar Rizvi. On account of retirement of Fazal Kamal, the number of Directors remains more than two, thus the non-filling of the causal vacancy would not offend the provision of Companies Ordinance, as such could not be urged a ground of mismanagement, the comments filed by the Registrar of Companies also indicate the number of Directors more than two as on 30-6-1999.
57. ' The learned counsel for the petitioner contended in support of the grievance that not a single General Body Meeting or Board of Directors have been held, the Registrar in his comments has stated that Annual General Body Meetings were held on 30-6-1996, 30-9-1997 and 30-12-1998. The respondents have taken the plea that Annual General Body Meeting and Board of Directors meeting were held periodically and regularly. Last meeting was held in London, the meeting for 2000 year requisitioned, could not be held, due to non-availability of Directors of the Foundation, and to support their plea, they have produced the petitioners' letter, dated 17-8-2000, whereby the petitioner has intimated to the respondents, about non-availability of the Directors of Foundation till 3rd week of September, 2000 owing to exigency of work. The petition was filed much before the date mentioned in the Annexure R/1.
58. ' The learned counsel for the respondents contended that the respondents have taken a clear and unambiguous plea that Annual General Meetings are being held regularly and the last meeting was held in London pertaining to the year 1999 and the Anrival General Meeting cannot be held due to non-availability of the petitioners' Director as reflected through Annexure R/3. It was further contended that the .Plea of the respondents to the extent of previous meeting up to the year 1998 is admitted by the Registrar of Companies in their comments and the petitioners have not denied the fact stated in para. 13 of the counter-affidavit in clear terms. This amounts to admission in terms of Order 8, Rule 5 and referred the Division Bench judgment of this Court in Malik Muhammad Ishaque (Represented by 9 Heirs) and 11 others v. Messrs Erose Theatre, Karachi and 26 others (PLD 1973 Karachi 52), wherein the effect of Rule 5 of Order 8 was examined and the view taken as follows: -- 'The effect of this rule is that every allegation of fact in a plaint if not denied 'shall be taken to be admitted except as against a person under disability'. Not only does the proviso to the rule confer discretion on the Court, but the rule itself shows that it is not applicable to minors."
59. ' Mr. Muhammad Afzal Siddiqui, learned counsel for the respondents also referred the following cases:--
(1) Ganga Prasad v. Prem Kumar Kohli (AIR 1949 Allahabad 173), (2) Sardar Begum v. Muhammad Aslam (1989 SCMR 704).
60. The Registrar of Companies in his comments has admitted holding of Annual General Meetings for the years 1996, 1997 and 1998. The respondents pleaded holding of 1999 meeting in London and there is no bar of holding such meeting at any other place than in town of the registered office, the respondents being a private company though in respect of the listed company (public limited company), the Annual General Meeting has to be held in the town of registered office in terms of section 158(2) of the Ordinance. The company would be deemed to be under mismanagement if fail to convene consecutive two General Meetings in terms of clause (b) of section 305.
61. ' In the present case, the factum of holding of Annual General Meeting up to the year 1998 has not been specifically denied, such meeting has been confirmed by the Registrar's comments. The respondents have pleaded holding of meeting in London in 1999. The meeting pertaining to the year 2000 could not be held, due to non-availability of the petitioner's Directors and the petitions were filed before the expiry of time for holding such meeting, as such this ground is not available to the petitioners.
62. ' The petitioner's counsel in support of the petition has canvassed before me that books of accounts were never prepared/audited even the auditors have not been appointed since 1996.
63. ' The respondents' counsel contended that in para. 17 of the counter-affidavit, the respondents have pleaded that statements of income and expenses of the companies were prepared for the years 1996, 1997, 1998 and 1999 and audited by auditors. They have also filed Annexures R/20 to R/23, the auditors' report to the members, by Rao & Company, Chartered Accountants, (1) ending June, 1996 (R/23), (20 auditors' report ending 30-6-1997 (R/22), and (3) auditors' report ending 30- 6-1998 (R/21).
64. ' The Registrar in his comments (para.13) has admitted that Messrs Rao & Company, Chartered Accountants have been shown as auditor of the company. The petitioner's case is that the accounts have not been maintained nor audited even auditors have not been appointed. This plea is not even supported by the report of the Registrar. Registrar has reported that under the law private limited company is not required to file annual accounts with the Registrar. The Annexures R/20 to R/23 are the auditors' report of Messrs Rao & Company. There is nothing on record from the side of the petitioner except the oral assertion which has been rebutted by the respondents by filing copies of auditors' report. The contention of the petitioner is not supported by the comments of the Registrar even otherwise, such fact becomes disputed one and cannot be gone into by the Company Judge as these questions require detailed inquiry. Reference can be made to the following cases:---
(1) Khurshid Ahmed Khan v. Pak. Cycle Manufacturing Ltd. (PLD 1987 Lahore 1), (2) Habib Bank Ltd. v.
65. Messrs Golden Plastic Company Ltd. (1991 MLD 124) and (3) Salahuddin Khan v. Al-Mansoor (PLD 1987 Lahore 569).
66. ' This brings me to the last allegation regarding nonpayment of the dividend. The petitioner's counsel contended that till date no dividend has been paid to the petitioner. In reply to such contention, the respondents' counsel contended that the payments have been made to the Foundation, which has been received by Foundation, in this regard reference has been made to Annexure R/5, whereby the mode of payment to Shaheen Foundation was inquired from the petitioner and in reply, the Foundation through its letter, dated 31-8-1999 asked respondents'
67. Manager Finance for monthly payment to Shaheen Foundation through Messrs Hawk Advertising Consultants, by invoice for subject payment. The contents of letter reads as follows:-- ' SF(PAF) 0757/48/Accts ' Mr. Ahmed Mateen ' Manager Finance ' FMS (Pvt.) Limited ' Plot No,43-5, /E3 ' Block 6 PECHS ' Karachi-75400 ' Fax 021-4546851 ' MONTHLY PAYMENT TO SHAHEEN FOUNDATION
(1) Further to our letter even reference, dated 18th August, 1999 regarding the subject.
(2) It is informed that Messrs Hawk Advertising and Consultants will invoice FM 100 for the subject payment agreement in the Board of Directors' meeting. The invoice will be on A/C of Consultancy Services on advertising for each month.
(3) It is requested that prompt clearance of invoices may please be ensured.
68. ' With regards ' For Shaheen Foundation, PAF (Sd.)
69. (Jamil Qureshi), ' Wing Commander (Retd.), Deputy Director Accounts.
70. ' Through Annexures R/7 to R/18 such payments were made to the petitioner.
71. ' The counsel for the petitioner contended that no doubt Messrs Hawk Advertising is subsidiary of the petitioner but the payment to Messrs Hawk Advertising was not in respect of the dividend to petitioner but it were in respect of the advertising charges.
72. ' The letter, dated 31-8-1999 (R/6) of the petitioner conveying the mode of payment to Foundation by the respondents is unambiguous. The plea taken by the petitioner's counsel is not tenable as it pertains to monthly payment to Shaheen Foundation as agreed in Board of Directors' meeting. The petitioners themselves have suggested mode of payment, they cannot take contrary plea to the contents of the Annexure R/6 by pleading that it pertains to advertising charges.
73. In Mohan Lal Chandumall and others v. Punjab Company Ltd. Bhatinda and others (AIR 1961 Punjab 485) nonpayment of dividend amount to oppression. However, oppression has not been defined and it is left to the Court to decide on the fact of each case whether there is such oppression as calls for action under this section 290. The question in each case is whether the conduct of the affairs of a company by the majority shareholders was oppressive to the minority shareholders and that depends upon the facts proved in a particular case. It is not enough to show that there is just and equitable cause for order under section 290. Mere loss of confidence between groups of shareholders would not come within the mischief of 290 unless it is shown that this lack of confidence sprang from a desire to oppress the minority in the management of the company's affairs and that there was at least an element or lack of probity and fair dealing to a member in the matter of his proprietary right as a shareholder as ruled in Shanti Prasad Jain v. Kalinga Tubes Ltd. Etc. AIR 1965 SC 1535).
74. ' Lastly, the respondents' counsel further contended that respondent No,5, a Director holds 50% share in the respondents' company is registered/resident of outside the jurisdiction of this Court, thus this Court has no jurisdiction over said Director and referred the case of Dishadendu Gupta v.
75. H. Langham Reed and others (AIR 1937 Patna 196), wherein some of the Directors of the company were residing in England and one residing in British India but in different province during the pendency of application under section 235 of Companies Act, 1913. It was held that Court has no jurisdiction over the persons residing in England but had jurisdiction over the person residing in British India though in different province regarding matter connected with the company and its asset. Therefore, I am of the view that the petition is maintainable against the Directors, who are residing in Pakistan.
76. It may be stated that Registrar in para. 14 of the comments has stated that some of the returns filed by the respondents were not properly filled and were not accepted, deficiencies were not removed. I am of the view that this vague statement could hardly be sufficient material to form an opinion that the affairs of the company are being mismanaged.
77. ' In the light of above discussions, I am of the view that petitioner has failed to bring on record the material to form an opinion by this Court that the affairs of the respondent No,1 are being mismanaged and/or is oppression to the minority shareholders, consequently, the petitions are dismissed, however, with no order as to costs.