1. (C.M.A. No. 1649/2003)
2. ZIA PERWEZ, J.--- Through this application under Rule 110 of the Sindh Chief Court Rules, it is prayed that the application under Order 1, Rule 10, CPC, be treated as urgent motion and may be heard today, i.e. 13.8.2003. This application is granted as prayed.
3. C.M.A. No. 1650/2003 Through this application under Order 1, Rule 10, CPC, it is prayed that the Intervenor may be joined as petitioner No. .4 and his claim as 25% share-holder of the respondent Company may be considered by the Official Liquidator.
4. Both Mr.. Bashir Ahmed Khan and Mr. Nadeem Azhar Siddiqui, oppose this application. The question of shareholding of the Company is to be decided according to the Register of the share-holders maintained by the Company. However, in case of any dispute, the same may be decided before the appropriate forum according to law.
5. Main Application Through this application, J. Misc. No. 38 of 2002, the petitioners seek winding-up of the respondent Company and other ancillary orders.
6. The facts of the case are that the respondent Company is a private limited company, carrying on the business of export, manufacturing, procuring, importing, buying, selling, distributing and dealing in carpets, yarns, dies, chemical and other material required in connection with the business of manufacturing of carpets. The Company is equally owned by three groups, namely, (I)
7. Sohail Mahmood Butt group, (II) Adil Masood Butt group and (III) Muhammad lnayat Butt group. In the year 1993-94 Group I and Group III joined hands and the Directors of Group II were ousted from the management of the Company and a dead-lock in the management of the Company has arisen. It is alleged that the aforesaid two Groups have siphoned huge amount of money through off the record transactions. It is also alleged that though the Company was a running concern and huge stock of finished goods as well as raw material were lying in the godowns, no dividends have been declared.. For these reasons, it was prayed that it is just and equitable that the respondent Company be wound-up.
8. On 24.12.2002. Muhammad lnayat Butt, Chief Executive of the respondent Company filed his Counter-, Affidavit. In para 17 thereof he categorically stated that "it is submitted that due to misdeeds of the petitioners and their non cooperation behaviour (sic) the company suffered financial losses and the business remanded suspended for last several years."
9. Mr. Bashir Ahmed Khan, learned counsel for the petitioners, states that the provisions of Section 305(c) of the Companies Ordinance, 1984 are attracted even in a case where a company suspends its business for a period of one year while in the instant case the business of the Company has been suspended for more than the prescribed period.
10. Learned counsel for the petitioners' relied on the following cases:-
(1) Punjab National Silk Mills Ltd. v. National Bank of Pakistan and another (1986 SCM R 1126).
(2) In re: Synthetic Chemicals Co. Ltd. (PLD 1985 Kar. 193).
(3) Investment Corporation of Pakistan, etc. v. American Marble Products Ltd. (197 CLJ 522).
(4) Pakistan State Oil Company Ltd. v. Pakistan Oil Pipelines Limited and others (PLD 1993 Kar. 322).
(5) Qamar Loan and others v. Kashmirian (Pvt.) Ltd. And others (PLD 1997 Kar. 376).
(6) Sh. Maqbool Ellahi and others v. Basul and Co. And others (PLD 1970 Lah. 539), and Mrs. Sabiha Shahid Raza v. Ahmed Construction Company (Pvt.) Ltd. (PLD 1990 Kar. 191).
11. Mr. Nadeem Azhar, learned counsel for the respondent Company, vehemently oppose the contention. He contended that since other remedies are available to the petitioners, winding-up of the company on the ground it is "just and equitable" is not called for. Reliance was placed on the case of Mirza A. Rustom v. Karim Silk Mills Ltd. (PLD 1975 Kar. 40). He also submitted that the Court was not bound in 'each and every case to wind-up a defaulting company as it has discretion either to order, or refuse, winding-up of a company. He relied on the case of All Women Mills Ltd. v. LD.R.P.
12. (PLD 1990 SC 763).
13. However, the learned counsel for the respondent Company was not able to cite a single case where application for winding-up of a company has been refused in a case where the company has remained out of business for a period of several years.
14. Be that as it may, the statutory ground of suspension of business by a company for more than a year, and continuous incurring of liability, is a sufficient ground for passing of a winding-up order in respect of such a company. In the present case, the Company, admittedly, is not doing any business for the last about five years.
15. The case-law relief upon by the learned counsel for the respondent does not support the case of the respondent Company. On the contrary, it calls for winding-up of a company as in the case of All Woolen Mills (supra) it has been held that if a company is not commercially solvent nor is there any reasonable chance of its doing business in the near future at a profit then it is just and proper to wind-up the company . Since the Mill of the Company was closed for about six years prior to the presentation of winding-up petition, the company was held to be commercially insolvent and order of the winding-up of the company was maintained and leave to appeal was refused by the Hon'ble Supreme Court.
16. "Surely the expression "just and equitable" must have reference to the legitimate interests of persons concerned in the matter which would presumable be, in general, the shareholders and/or the creditors of the company."
17. "Taking an overall view of the case, in particular, the prolonged non-functioning of the company, its mounting liabilities both secured and unsecured, disputed and undisputed and the conduct of the Managing Director, all justified the conclusion of the High Court that Company is in a morbid state with little or no chance of its recovery and rehabilitation and a winding up order was eminently a just and proper order".
18. Admittedly, in the case in hand, the business of the Company is suspended for the last many years and it suffered financial losses and there is no possibility of carrying on the business of the company except in losses as it has been stated at the bar that the company is engaged in the business o carpets manufacture and exports which is at a standstill for the last many years., However, this ground alone is not the turning point in this case. It is admitted that the various groups of the share-holders are not enjoying good relations with each other creating a dead-lock in the affairs of the company. It is alleged that one group of directors are not allowed to participate in the affairs of the company.
19. I have carefully gone through the averments in the pleadings of the parties and examined the reports filed by the counsel for the respondent company as well as the arguments advanced before me. It is clear that the relationship between the parties are estranged thereby causing a dead-lock in the management of the company, the company has suspended its business for the last five years, there is no possibility to carry, on the business of the company except at a loss, thus, it is just and proper to pass a winding-up order in this case. .