S. AHMED SARWANA, J.--- The brief facts culled from the documents filed with the appeal are that Hussain, the appellant (hereinafter referred to as "petitioner") was allegedly a share-holder and a Director of a Private Limited Company by the name of Dawood Flour Mills (Pvt.) Ltd., respondent No. 1 (hereinafter referred to as "the Company"). The shareholding of the Company changed from time to time. Accordingly Form "A" filed by the Company on or about 20.8.1991, its shares of the value of Rs.100/- each were owned by the following persons:-
(a) Haji Muhammad Shafi, father1,480 shares
(b) Muhammad Hussain, son 1,920 shares
(c) Muhammad Yasin, son 1,050 shares
(d) Muhammad Yousuf, son 890 shares
(e) Muhammad Hanif, son 880 shares
(f) Muhammad Latif, son 890 shares
(g) Muhammad Younis, son 900 shares
(h) Mst. Hajra Bibi, mother 890 shares Total 8,900 shares
2. Certain family disputes arose among the aforesaid sharer-holders and on 9.8.1992. Hussain wrote a letter to the Deputy Registrar, Joint Stock Companies, Karachi cautioning him, inter alia, that he has an apprehension that his 1,920 shares of which he is the rightful owner may be transferred in connivance with the Company Auditor, Mian Habib Ajam, Chartered Accountant (respondent No. 3) in favour of some other persons and asked the Deputy Registrar, inter alia, not to transfer his 1,920 shares or any part thereof in the name of any other person, body of persons or any company without his personal appearance in the Registrar's Office to authenticate and admit the genuineness of any signature not to effect any change of the structure of the Company and his status as a director and to take appropriate disciplinary action against Mian Habib Alam for the acts of professional misconduct as elaborated by him in the said letter. On or about 19.9.1992, Hussain also addressed telegrams to respondent No. 3, Deputy Registrar and Chairman, institute of Chartered Accountants of Pakistan complaining about the improper conduct of respondent No. 3 and his apprehension of fraudulent transfer of his 1,920 shares by respondent No. 3. Extensive correspondence took place between Hussain, Deputy Registrar and the Company which includes Hussain's letter dated 7.11.1992 to the Deputy Registrar wherein he stated that all documents relating to the transfer of his shares were forged and fabricated which he had not executed and prayed that the alleged transaction should not be acted upon and the Department should get a criminal case registered against all concerned so that they may be dealt with severely in accordance with law. Finally, in response to Hussain's telegram dated 11.1.1993 Deputy Registrar by his letter dated 16.1.1992 (apparently a typing error which should be read as 19.1.1993) informed him that his office does not have jurisdiction to deal with his complaint under Section 152 of the Companies Ordinance, 1984.
3. On 21.9.1994 Hussain filed a Petition (J. Misc. No. 257/1994) in the High Court against (i) the Company, Haji Muhammad Shafi, (ii) his father and (iii) Mian Habib Alam, Chartered Accountant, under Sections 290 and 305 of the Companies Ordinance, 1984 for winding-up of the Company and in the alternative for such other relief as the Court may deem fit, proper and expedient under the provisions of Sections 290; 305 and 314 of the Companies Ordinance, 1984 including orders for regulating the affairs of the Company in future, a change in its management to give Hussain full and effective voice in the business for ensuring a proper and just return to him and rendition of proper accounts of the Company etc.
4. The respondents filed their replies to the Petition while the Deputy Registrar filed Parawise Comments to the Petition and after hearing all the parties, a learned single Judge of this Court by Order dated 21.5.1998 dismissed the Petition as not maintainable primarily on the ground that Hussain's remedy for redress of his grievance was under Section 152 of the Companies Ordinance, 1984.
5. Being aggrieved by the Order dated 21.5.1998 passed by a leaned Single Judge in J. Misc.
257/1994 dismissing the Winding-up Petition, appellant has filed this High Court Appeal under Section 15 of the Ordinance X of 1980.
6. Mr. Ismail Kassim, learned counsel for the appellant contended as follows:-
(i) Being a member holding not less than 20 per cent of the issued share capital of the Company on 9.8.1992 Hussain filed a representation under Section 290 of the Companies Ordinance, 1 984 with the Deputy Registrar, Joint Stock Companies, Karachi complaining about the Company's mismanagement and the refusal of respondent No. 3 to deliver his 1,920 shares in the Company and his apprehension that respondent No. 3 in connivance with other interested parties was likely to deprive him of his shares, his legal status as a Director of the Company and cautioned the Deputy Registrar not to allow transfer of his 1,920 shares in the name of any other person. In view of the above allegations, it was incumbent upon the Deputy Registrar to refer the matter to the High Court for appropriate action as the Company was being run in an oppressive, unlawful and fraudulent manner inasmuch as Hussain was being deprived of his shares.
(ii) The Deputy Registrar failed/declined to refer the matter to the High Court for appropriate action under Sections 290 as a result of which Hussain was constrained to file on 21.9.1994 the petition bearing number J. Misc. 257/1994 under Sections 290 and 305 of the Companies Ordinance, 1984 for winding-up of the Company and for ancillary appropriate or less under the said sections. He added that Hussain provided all material in support of the mismanagement of the Company which was ignored by the learned Single Judge.
(iii) As a member concerned with the formation and promotion of the Company. Hussain had the legal right to file an Application for winding-up of the Company as it was being run in a manner which was oppressive to Hussain as the management of the Company had not only reduced the proportion of his shareholding by increasing the share capital without notice to him by passing a resolution in this behalf on 22.6.1993 but lateron the other directors in collusion with respondent No. 3 transferred his shares to other persons reducing his holding to. Zero. In support of his legal rights he referred to Section 305(f)(iii) of the Companies Ordinance, 1984.
(iv) That in the circumstances of the case the learned Single Judge should have exercised his powers under Section 291. As Hussain had made out a case for oppression and mismanagement under Section 290 of the Companies Ordinance.
(v) Hussain's Petition under Section 305 of the Companies Ordinance (J. Misc. 257/1994) was a continuation of the proceedings filed by Hussain under Section 290 before the Deputy Registrar as he was holding not less than 20 per cent shares in the Company and consequently, the learned Single Judge should have taken appropriate action as provided under Section 290 and 305 of the Companies Ordinance, 1984.
7. In reply to the aforesaid arguments, Mr. Lqbal Haider, learned counsel for respondent No. 1 submitted as follows:-
(i) The primary grievance of the petitioner was that his 1,920 shares in the Company had been fraudulently transferred in favour of other persons as a result of which his name was removed from the Registrar of the Company for which his remedy was to apply to the Court for rectification of the register under Section 152 of the Companies Ordinance.
(ii) The Representation by Hussain to the Deputy Registrar was incompetent as the latter has no power to rectify the register.
(iii) Prayer Nos. (i) and (ii) of appellant's Petition was in the nature of rectification of the register which is covered under Section 152 and are not complaints envisaged in Section 290 of the Companies Ordinance.
(iv) Hussain was guilty of lathes in asmuch as the cause of action in his favour allegedly arose on or about on 9.8.1982 when he filed the representation under Section 290 while the Petition for winding-up was filed on 21.9.1994 i.e. After a lapse of more than two years.
(v) Special provision prevail over general provisions in an Act. The redress of the grievance of Husain of removal/deletion of his name from the Register of Members is specifically provided by Section 152 of the Companies Ordinance and consequently Sections 290 and 305 of the Companies Ordinance are not applicable. Consequently the learned Single Judge was justified in holding that Hussain's Petition was not maintainable.
(vi) According to Hussain's own admission he did not own a single share on the day he filed the winding-up petition and as such his Petition was not maintainable under Section 305(f)(iii) of the Companies Ordinance, 1984.
(vii) J. Misc. 257/1994 cannot be regarded as continuation of the representation under Section 290 as the prayers of both are totally different.
Mr. K.B. Bhutto, learned counsel for respondents Nos. 2 and 3 adopted the arguments of Mr. Haider and submitted that the Appeal was mala fide which should be dismissed with special costs.
8. We have heard the arguments of Mr. Kassim, learned counsel for the appellant for allowing the Appeal and Mr. Iqbal Haider, learned counsel for respondent No. 1 and Mr. K.B. Bhutto, learned counsel for respondents Nos. 2 and 3 in opposition thereto and have .Considered the same in light of the relevant provisions of the Companies Ordinance, 1984.
9. It is admitted by the petitioner that on 22.6.1993 by a Special Resolution, the authorized capital of the Company was increased from Rs. 10,00,000/- to Rs. 30,00,000/- and the Board of Directors passed a Resolution was passed to allot shares of the Company to the following members:- Muhammad Hanif 1,000 shares Muhammad Yasin 1,000 shares Muhammad Younas 1,000 shares Mst. Hajra Bibi 5,000 shares Muhammad Yousuf 1,000 shares Muhammad Shafi 1,100 shares Muhammad Latif 1,000 shares Total 11,100 shares Consequently, with the amendment the Paid-up capital of the Company stood increased to , Rs.
20,00,000/- consisting of 20,000 shares. After issue of the aforesaid 11,100 shares, the shareholding of the petitioner became less than 10% of the paid-up capital of the Company assuming that he still held 1920 shares in the Company.
10. The "Subject" of the Representation filed by Hussain with the Deputy Registrar on 9.8.1992 allegedly under Section 290 of the Companies Ordinance reads as follows:- "Subject: MAKING OF CAUTION IN CONNECTION WITH THE FRAUDULENT TRANSFER OF SHARES OF THE UNDERSIGNED WITH REGARD TO DAWOOD FLOUR MILLS (PVT.) LIMITED, SARGODHA ROAD, FAISALABAD.'
The Representation as the subject mentioned basically related to the conduct 'of respondent No. 3, (Mian Habib Alam, Chartered Accountant) about delivery of 1,920 shares to Hussain and the Deputy Registrar was requested to take action in relation thereto. In this connection it would be appropriate to reproduce below a few paragraphs from the said Representation.
"5. That the attitude and the BARE denial/refusal of the said Chartered Accountant to deliver the 1920 shares-Certfficates to the RIGHTFUL OWNER for his personal wrongful gains and to cause wrongful loss to the true owner indicates his mala fides intention which is against all cannon of professional ethics. The said attitude is not warranted on any score or ground.....
9. That you are hereby expressly intimated and called upon:-
(i) Not to accept any document or act upon the same unless and until the undersigned appears in person and authenticate the genuineness of the contents thereof or admit the signatures on the said documents physically by appearing in your office in person.
(ii) Not to transfer and allow to be transferred the said 1920 shares or any part thereof in the name of any other person, body of persons of any Company without any personal appearance in your office before the competent concerned authorities to authenticate and admit the genuineness of any such signatures.
(iii) To mark caution in the relevant record of your office particularly the record regarding the transfer of share that the shares presently lying in the name of the undersigned as detailed above or not transfer in any manner whatsoever except in the physical presence of the undersigned.
(iv) Not to effect any change in the structure of the said Company and the status of the undersigned as the Director of the said Company.
(v) To take or arrange to be taken appropriate disciplinary action against the said Mian Habib Alam Chartered Accountant for the said acts of professional misconduct as detailed above and there is ample proof of the same and the undersigned be granted an opportunity to be heard in person in this respect at any time which is convenient to your good self".
11. From a perusal of the above, it is clear that Hussain was mainly concerned and worried about his 1,920 shares in the Company which he apprehended would be transferred to some. Other person.
Section 290 pursuant to which the above Representation dated 9.8.1992 appears to have been made to the Deputy Registrar reads as follows:- "290. Application to Court.-- (i) If any member or members holding not less than twenty per cent 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 members 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)
( 4) ........ A reading of the above section, indicates that it relates to a situation where a member/members or a creditor/creditors of a company owing not less than 20 per cent of the paid capital of the company has/have the right to file a complaint with the Deputy Registrar, inter alia, about the unlawful or fundamental manner in which the company's affairs are being conducted or that the manner of running the affairs of the company is oppressive to the members or creditors of the company. The section does not deal with a situation where a member of a company apprehends that his shares may be or have been transferred in an unlawful or fraudulent manner in favour of another person. The alleged Representation dated 9.8.1992 filed by Hussain does not appear to fall within the ambit of Section 290 of the Companies Ordinance.
12. On 21.9.1994 Hussain filed an Application under Section 305 for winding-up of the Company (J.M.
No. 257/94) when admittedly his share-holding after additional issue of 11,100 shares had fallen below 10% of the share capital of the company and after the alleged improper transfer of his 1,920 shares without consideration to some other transferee his share-holding had become zero. He based his right to file the application under Section 305(f)(iii) of the Companies Ordinance which reads as follows:-
305. Circumstances in which company may be wound-up by the Court.-- A company may be wound up by the Court--
(a) ........ (b).......... (f) if the company is--
(i) conceived or brought forth for, or is or has been carrying on, unlawful or fraudulent activities; .....
(iii) conducting its business in a manner oppressive to any of the members or persons concerned with the formation of or promotion of the company or the minority share-holders;
(iv) (v) (g)
(h) if the Court is of opinion that it is just and equitable that the company should be wound-up".
The argument of Hussain that he was a member concerned with the formation or promotion of the Company and as such Section 305(f)(iii) was applicable to his case does not appear to be a reasonable interpretation of the provision. No doubt, Hussain was a member concerned with the formation and promotion of the Company but he was not a member of the Company on the day he filed the application. The term "member" used in the provision refers to a person who is a member on the day he files the application meaning that the person owns at-least one share of the company and his name appears in the Register of Share-holders of the Company but it does not refer to a person whose name was borne on the Register sometimes in the past prior to the date of the filing of the application. Admittedly, Hussain did not own a single share in the Company on the day he filed the Application. The Application was therefore not maintainable in law.
13. The aforesaid Section also states that the application may be filed by minority share-holders for winding-up of the Company. The Explanation-II to the said section clearly states that "minority share-holders means share-holders together holding not less than 20 per cent of the equity share capital of the Company". Even assuming for the sake of argument that Hussain was the owner of 1.920 shares on 21.9.1994, the application was still not maintainable on the said date as the paid-up share capital of the Company had been increased to Rs. 20,00,000/- and consequently Hussain's 1,920 shares of Rs.100/- each would not qualify him to call himself a minority share-holder as defined in Section 305 of the Companies Ordinance and consequently his application was not maintainable in law on this score also and liable to be dismissed.
14. The learned Single Judge dismissed the Hussain's Application on the ground that it was a case of rectification of the Register of Members of the Company and the Company could not be ordered to be wound-up for the reason that the shares registered in the name of Hussain's had been fraudulently or without sufficient cause removed from the Register of Members. On perusal of Hussain's Representation dated 9.8.1992 made to the Deputy Registrar and the Petition for Winding-up of the Company filed in the High Court, it is apparent that the principal grievance of Hussain was that he had been deprived of his shares which had been allegedly transferred fraudulently and without consideration in the name of third parties in collusion with respondent No. 3. Section 152 of the Companies Ordinance, 1984 which relates to rectification of register reads as follows:- "
152. Power of the Court to rectify register.-- (1) If--
(a) the name of any person is fraudulently or without sufficient cause entered in or omitted from the register of members or register of debenture-holders of a company; or
(b) default is made or unnecessary delay takes place in entering on the register of members or register of debenture-holders the fact of the person having become or ceased to be a member or debenture-holder; the person aggrieved, or any member or debenture-holder of the company, or the company, may apply to the Court for rectification of the register.
(2) The Court may either refuse the application or may order rectification of the register on payment by the company of any damages sustained by any party aggrieved, and may make such order as to costs as it in its discretion think; fit.
(3) On any application under sub-section (1) the Court may decide any question relating to the title of any person who is a party to the application to have his name entered in or omitted from the register, whether the question arises between members or debenture-holders or alleged members or debenture-holders, or between .Members or alleged members, or debenture-holders or alleged debenture-holders, on the one hand and the company on the other hand; and generally may decide any question which it is necessary or expedient to decide for rectification of the register.
(4) An appeal from a decision on an application under sub-section (1), or on an issue raised in any such application and tried separately, shall lie on the ground mentioned in Section 100 of the Code of Civil Procedure, 1908 (Act V of 1908)--
(a) if the decision is that of a Civil Court subordinate to a High Court, to the High Court; and
(b) if the decision is that of a Company Bench consisting of a Single Judge, to a Bench consisting of two or more Judges of the High Court."
15. From a reading of the above Section it is apparent that if the name of any person is fraudulent or without sufficient cause entered in or omitted from the register of members, the aggrieved person may apply to the Court for rectification of the register and the Court after inquiring into the matter may order rectification of the register if it is satisfied that the aggrieved person is entitled to such relief. In the instant case, Hussain should have filed an Application before a Court for rectification of the register as allegedly his name had been fraudulently and without sufficient cause removed from the register of members. Instead of doing so, he filed an application for winding-up of the Company which patently was not maintainable in law.
16. Having arrived at the above conclusion, it is not necessary to discuss the other arguments advanced by both learned counsel.
17. In view of the above discussion, we are satisfied that the Order dated 21.6.1998 passed by the learned Single Judge dismissing the Application for winding-up of the Company on the ground that the remedy of the petitioner was to file an application under Section 152 of the Companies Ordinance for rectification of the register of members is in accordance with law and does not suffer from any illegality and that the application for Winding-Up of the Company was not maintainable in the circumstances of the case. The Order of dismissal of the Winding-up Petition is accordingly upheld and the Appeal is dismissed with costs.