JUDGMENT MUHAMMAD GHANI, J.-- International Multi Leasing Corporation Limited (hereinafter referred to as the appellant-company) has authorized share capital of Rs. 100,000,000.00 divided into 10,000,000 ordinary shares of Rs. 10/- each, whereas its paid-up share capita! Is Rs.
54,000,000.00. Capital Assets Leasing Corporation Limited (henceforth called the respondent- company) has authorized share capital of Rs.
200,0, 000.00 divided into 20,000,000 ordinary shares of Rs. 10/- each whereas its paid-up capital is Rs. 77,831,410.00. On 31st of March, 2002 the assets of the appellant-company were valued at Rs.
65.661.084.0 whereas its liabilities were Rs.
13.814.091.0 while assets of the respondent- company were to the tune of Rs. 117,415,367.00 and its liabilities amounted to Rs. 107,080,563.00. Both the companies are public limited companies, and are listed on the Lahore Stock Exchange.
2. 0n 19.10.2002, a petition (C.O. No. 95 of 2002) under Section 284 read with Sections 285 to 288 of the Companies Ordinance, 1984, was filed jointly by the two companies through M/s. Muhammad Rafiq and Fazal H. Rizwan, respectively the Chief Executive and the Company Secretary of the appellant- company and Mr. Salman Qureshi, Chairman of the respondent-company with the prayer that the Court may make:-- "(a) an order under Section 284(1) of the Companies Ordinance, 1984 for a meeting of the members of petitioner No. 1 and petitioner 2 to approve the Scheme of Amalgamation;
(b) an order under Section 284(2) of the Companies Ordinance, 1984 sanctioning the Scheme of Arrangement attached as Annexure "L" hereto so as to make the said Scheme of Arrangement binding on the petitioner, their, respective creditors and members;
(c) the following orders under Section 287 of the Companies Ordinance, 1984:
(i) an order under Section 287(1) of the Companies Ordinance, 1984 for the transfer to and vesting in petitioner No. 12 of the whole of the undertaking and business of petitioner No. 2 together with all of the assets, properties, rights, liabilities and obligations of every description of petitioner No. 2, more particularly described in the Scheme of Arrangement attached as Annexure "L" hereto 'with effect from the.Effective date, as defined - in the said Scheme of arrangement;
(ii) an order under Section 287(1 )(a) of the Companies Ordinance, 1984 for the transfer to and vesting in petitioner No. 1 of the assets of petitioner No. 2 including properties of all kinds whether movable or immovable, tangible or intangible, stock-in- trade, inventory, rights in leases, . Leasehold properties, actionable claims, book debts, advances deposits, prepayments and other receivables, loans made, investments, cash and bank balances; (i.e) an order under Section 287(1)(a) of the Companies Ordinance, 1984 for the transfer to and vesting in petitioner No. 1 of the rights, powers, authorities and privileges of petitioner No. 2 (including all registrations, licenses, permissions and approvals under the Leasing Companies (Establishment and Regulation) Rules, 2000, all other registration, licenses, permits, categories, entitlements, sanctions and permissions relating to trading, imports and exports or otherwise concerning the investment in or carrying on of any business by petitioner No. 2;
(iv) an order under Section 287(1 )(b) of the Companies Ordinance, 1984 approving the issuance at par and allotment of 5400,000 new ordinary shares of petitioner No. 1 credited as fully paid-up shares to every registered holder of the shares of petitioner No. 2 within 30 days from the completion date (as defined in the Scheme of Arrangement) on the basis of a swap ratio of 1:1, that is, for every one ordinary share of Rs. 10/- each of petitioner No. 2 held by a registered shareholder of petitioner No. 2, 1(one) ordinary share of Rs. 10/- each of petitioner No. 1 shall be issued in the name of such registered shareholder.
(v) An order under Section 287(1 )(c) of the Companies Ordinance, 1984 directing that all suits, appeals and other legal proceedings instituted by or against petitioner No. 2 and pending immediately before the effective date (as defined in the Scheme of Arrangement) to be treated as suits, appeals and legal proceedings by or against petitioner No. And may be continued, prosecuted and enforced by or against petitioner No. 1 accordingly.
(vi) An order under Section 287(1 )(c) of the Companies Ordinance, 1984 directing the dissolution, without winding up, of petitioner No. 2 on the date on Which the ordinary shares of petitioner No. 1 are allotted to the registered holders of the ordinary shares of petitioner No. 2 or on such later date as the Hon'ble Court may prescribe;
(vii) An order under Section 287(1 )(d) of the Companies Ordinance, 1984 directing that all contracts, agreements, trusts, leases, conveyances, grants and instruments of transfer entered into by or subsisting in favour of petitioner No. 2 upon being transferred to and vested in petitioner No. 1 shall remain in full force and effect as if originally entered into by or granted in favour of petitioner No. 1 instead of petitioner No. 2, as the case may be, and that petitioner No. 1 may enforce all rights and shall perform all obligations and discharge all liabilities arising thereunder accordingly;
(viii) An order under! Section 287(1 )(c) of the Companies Ordinance, 1984 directing that with effect from completion date (as defined in the Scheme of Arrangement) the name of petitioners Nos. 1 and 2 shall be changed to "CALCORP Multi Leasing Limited".
(ix) Such further order or orders as may be deemed to be just and proper to this Hon'ble Court to secure that the amalgamation of petitioners 1 and 2 is fully and effectively carried out as proposed in the said Scheme of Arrangement.
(ix) Such further order or orders as may be deemed to be just and proper to this Hon'ble Court to secure that the amalgamation of petitioners 1 and 2 is fully and effectively carried out as proposed in the said Scheme of Arrangement."
Since it was a joint petition, both the parties were represented by the same counsel, in the "SCHEME OF ARRANGEMENT" filed as Annex "L" with the petition the principal object of the scheme of merger, as stated, was to effect an amalgamation between the two companies, through the transfer to and vesting in the respondent-company of the whole of the undertaking and business of the appellant-company, together with all of its assets, property, rights, liabilities and obligations of every description, against allotment of fully paid-up ordinary shares of the respondent- company to the registered Share-holders of the appellant-company in lieu of shares held by them, and to dissolve the appellant-company, without winding up, in accordance with the provisions of Sections 284 to 288 of the Companies Ordinance, 1984. With effect from the completion date, respondent- company was to be re-named as "CALCORP MULTI LEASING LIMITED". The scheme of arrangement was drawn up on 17th of June, 2002 and bears signatures of Mr. Muhammad Rafique, Chief Executive of the appellant-company and of Mr. Salman Qureshi, Chairman of the respondent- company. The petition was accompanied by the Resolutions of the Board of Directors of the two companies.
3. When' the petition came up for hearing on 21.10.2002, notices were issued to the Security and Exchange Commission of Pakistan, and Members and Contributions of the two companies, in order to give were publicity, notices were directed to be published in the'Daily "The News" and the Daily "Nawa-i-Waqt". At the same time, learned counsel who appeared to prosecute the petition was directed to file, within three days, list of creditors of both the companies, which order was duly complied with. From the order, dated 24.1.2003 passed by the learned Judge seized of the petition, it appears, direction was then sought by both the companies for holding of their Extraordinary General Meetings so that the scheme of arrangement for merger of the two companies, already approved by their Boards of Directors, could be presented before their respective members/share-holders to obtain approval. The request was allowed vide order, dated 24.1.2003 and Mr. Zia- ud-Din, Advocate, was appointed to chair meetings of both the companies in order to find out genuineness and bona fides of the scheme of arrangement for merger. Notices were also ordered to be issued to the Registrar of Companies and to the creditors of the two companies, which were also published in both the Newspapers already mentioned. Consequently, separate meetings of both the companies were held on 21.2.2003. Mr. Zia-ud-Din, who had chaired separate meetings of both the companies submitted his Reports on 24.2.2003. It was in this backdrop of events that the learned Judge allowed the petition vide order, dated 4.3.2003, operative part of which reads as follows:- "In this view of the matter there appears to be no legal impediment in granting the prayer made by the petitioner. I, therefore, grant this ed for and sanction the scheme marked as "Annex-I," which > part of this order and binding on petitioner, their members and creditors, it is directed that the Joint Registrar of Companies, Lahore shall place all documents relating to petitioner No. 1 and registered with him on the file maintained in relation to petitioner No. 2 and the files relating to petitioners Nos. 2 and 1 shall be consolidated accordingly.
The parties to the arrangement or other persons interested shall be at liberty to apply to this Court for any direction that may be necessary in regard to the working of the arrangement. A copy of this order shall be sent to Joint Registrar Companies, Lahore."
4. 0n 31st of March, 2003 an application (C.M. No. 225-L of 2003) "under Section 151, CPC read with all other enabling provisions of law" was filed by the appellant-company for recall of the order, dated 4.3.2003. In the meantime, another application (C.M. No. 215-L of 2003) was filed on 27.3.2003 on behalf of the two companies by the same learned counsel who had earlier filed C.O. No. 95 of J2003, though this application bears signatures only of Mr. Salman Qureshi, on behalf of the respondent-company. Essentially, therefore, the application was on behalf of the respondent- company, in the second application, the grievance voiced against the appellant-company was that implementation of the agreed scheme was being obstructed by the appellant-company and accordingly, certain directions were sought for implementation of the agreed scheme of merger.
5. Notices of the two applications were given to the opposite side ^nd, after hearing the parties, application (C.M. No. 225-L of 2003) was dismissed by the learned Judge vide the impugned order, dated 12.6.2003. However, the learned Judge simultaneously disposed of the other application (C.M. No. 215-L of 2003) of the respondent-company by giving the following further directions in conjunction with the directions, dated 4.3.2003, reproduced above:-
(i) "As consideration for the transfer to and vesting in CALCORP of the IML Undertaking, CALCORP shall issue at par and allot 5,400,0 new ordinary shares of CALCORP credited as fully paid-up shares to be allotted to every registered holders of the shares of IML on the basis of a swap ratio of one:one, that is, for every one
(1) ordinary shares of Rs. 10 each of IML held by a registered shareholder of IML, 1 (one) ordinary share of Rs. 10 each of CALCORP shall be issued in the name of such registered share-holder. The aforesaid issuance and allotment of the shares shall be made by CALCORP within 30 days commencing June 20, 2003. CALCORP shall consolidate all fractional shares, sell the same on the Stock Exchange and make payment of the proportionate amounts of the sale consideration so received to the members entitled thereto. The Board of Directors of CALCORP shall comprise of seven Directors in the ratio of 4 (CALCORP) and 3 (IML) to be elected in accordance with the provisions of the Companies Ordinance, 1984 as soon as possible. As interim measure all bank accounts of CALCORP and IML shall be operated by the existing Directors of CALCORP. In future ail decisions shall be taken by the Board of Directors elected as directed above.
(ii) All members whose names shall appear in the Register of Members of IML on November 15, 2002, maintained by SECP shall surrender their share certificates for cancellation thereof to CALCORP. In default* upon the new shares in the CALCORP being fssued and allotted by it to the members of IML whose name shall appear on the REGISTER of members of IML on the date, as aforesaid, the share certificates in relation to the shares held by them in IML shall be deemed to have been cancelled.
(i.e) All contracts, agreements, trusts, leases, conveyance, grants and instruments of transfer entered into by or subsisting in favour of IML upon being transferred to and vested in CALCORP shall remain in full force and effect as if originally entered into by or granted in favour of CALCORP instead of IML, as the case may be, CALCORP may enforce all rights and shall perform all obligations and discharge all liabilities arising thereunder accordingly.
(iv) The debts, liabilities, claims against and the obligations of IML upon being transferred to and vested in CALCORP shall be treated as the debts, liabilities and claims against and the obligations of CALCORP as if originally incurred by CALCORP instead of IML, CALCORP shall pay and discharge all such debts and liabilities, shall satisfy all such claims and shall perform all such obligations accordingly.
(v) CALCORP shall take in employment all such employees of IML who have accepted employment with CALCORP in lieu of their employment with IML on the terms and conditions applicable to such employees at IML immediately preceding the Completion Date including the terms relating to entitlement upon termination of employment, that is, provident, gratuity and pension funds with the benefit of past employment in IML.
(vi) All suits, appeals and other legal proceedings instituted by or against IML and pending immediately before the completion date shall be treated as suits, appeals and legal proceedings by or against CALCORP and may be continued, prosecuted and enforced by or against CALCORP accordingly.
(vii) The IML shall dissolved without winding up on the date on which the ordinary shares of CALCORP are allotted to the holders of the ordinary shares of IML in accordance with the scheme of amalgamation/merger.
(viii) The entire undertaking of IML including all assets, properties, rights, the privileges, bank accounts, trade marks, patents and licenses of IML are transferred to and stand vested in CALCORP." it was further observed that the parties to the arrangement or other persons interested shall be at liberty to apply to the Court for further directions if need arises for working of the arrangement, it is in this background that the appellant-company has filed this Intra-Court Appeal.
6. At the very outset, Mr. Munawwar-us-Salam, learned counsel for respondent-company has raised multi-dimensional preliminary objections i.e. That the appeal against the original order, dated 4.3.2003 having been filed on 21.6.2003 was barred by 88 days and there is no application for condonation of the delay; that the subsequent order, dated 12.6.2003, passed, as it is, on an application under Section 151, CPC, is not appealable; that even if the application, dated 31.3.2003 (C.M. No. 225-L of 2003) is treated as a review petition under Order XLVII, rule 1, CPC, no Intra- Court Appeal is competent against the order, dated 12.6.2003, whereby said application was dismissed; that the instant Intra-Court Appeal filed, as it is "under Section 10(3) of the Companies Ordinance, 1984 read with all other enabling provisions of law against the order, dated 12.6.2003" is not, at all, competent; that there is no provision in the Companies Ordinance, for "recall" of an order sanctioning an arrangement for merger/amalgamation of two companies; that where the Legislature had so intended, it has specifically made a provision to that effect in the Ordinance itself, reference to Section 319 being in point; that even if C.M. No. 225-L of 2003 is treated as an application under Section 12(2), CPC, the impugned order, dated 12.6.2003 passed thereon is not appealable; that the order, dated 4.3.2003 havir j been obtained by the two companies themselves, th^ same is a consent order and, therefore, not open to impeachment collaterally, let alone through a miscellaneous application; that the proper remedy for the party considering aggrieved of the same was to have assailed the original order, in appropriate proceedings; that the principle of estoppel being also attracted with full force to the facts and circumstances of the present case, the appellant cannot be allowed to approbate and reprobate; that the application (C.M. No. 225-L of 2003) having been filed by a wholly unauthorized persdn, was not maintainable; that once the scheme for amalgamation was approved, by the statutory majority, neither any member/share- holder/creditor nor the company itself could have challenged the same, and that once the scheme had been sanctioned by the Court, it assumed finality, became a statutory instrument and was immune fr^rn challenge in any manner whatsoever, in support of his submissions, learned counsel for the respondent- company made extensive reference to case-law mainly from Indian jurisdiction, and also the law laid down by our on Superior Courts, to which we shall advert while dealing with his respective submissions.
7. In reply, Mr. M. Saleem Sahgal, learned counsel for the appellant relying on Piao Gul vs. The State (PLD 1960 SC 307) and Pakistan Fisheries Ltd., Karachi and others Vs. United Bank Ltd. (PLD 1993 SC 109) contended that a party cannot be non-suited on the ground that the provision of law under which the proceedings have been instituted has been inadvertently misquoted; that when the application (C.M. No. 225-L of 2003) was entertained by the Court, no objection was raised to its maintainability; that by the impugned order, dated 12.6.2003, the scheme already sanctioned has been modified, specific reference having been made to clauses (iv) and (v) of the original scheme and directions at serial Nos. (i) and (ii) in the impugned order to say that the original scheme was modified; that since the original scheme could be modified only under Section 285 of the Ordinance, C.M. No. 225-L of 2003, should have been treated and tried as a fresh application under Section 284 and the decision thereon could be taken only after complying with the entire gamut of procedure. Reliance in support of the last contention was placed on in re: Comrade Bank Ltd. (PLD 1957 Dacca 554). Learned counsel for the appellant, by referring to Section 107 read with Order XL1, rule 33, C.P.C, further argued that the appeal is a vested right; it is continuation of original proceedings and the Appellate Court has the same powers which the Court of first instance possesses. On these premises, he submitted that irrespective of any technical impediment in our way, we can grant him the same relief which the learned Judge could have granted. Learned counsel for the appellant also submitted that the scheme of merger/amalgamation of the two distinct companies, members of one not being the members of the other, was beyond the pale of jurisdiction which the Court had under Part IX of the Ordinance and, therefore, the petition (C.O. No. 95 of 2002) and the consequent order passed thereon, on 4.3.2003, being wholly without jurisdiction, was nonexistent and has to be ignored altogether, that even if it be assumed that before' 15th of November, 2002 the petition for sanctioning of a scheme for merger/amalgamation coald lawfully be instituted before the Company Judge of this Court, jurisdiction of this Court was taken away as from the said date, by Ordinance No. CXXIII of 2002, whereby Securities and Exchange Commission of Pakistan (SECP) had been invested with the exclusive power to entertain such a petition, pertaining to Leasing Companies, and that the Court simultaneously stood stripped of its jurisdiction to proceed further with the petition; that in any case, the order, dated 4.3.2003 having been obtained by concealment of material facts tantamounting to fraud and misrepresentation, it stood vitiated, and neither the bar of limitation nor the principle of estoppel, for any reason and on any ground whatsoever, could be pressed into service to save it from being challenged directly as well as collaterally.
8. In support of his submissions, learned counsel for the appellant placed reliance on Abdul Majid Ahmed Bawany v. IIIrd Sindh Labour Court (PLD 1979 Karachi 549) in which the view taken was that an appeal is only a step in the proceedings which is not a matter of mere procedure, but a substantive right which has to be presumed till the rest of the career in litigation; that the right of appeal becomes vested as soon as an action commences and further that such right can only be extinguished if the Legislature expressly so provides or the conclusion of extinction can be justified on the doctrine of necessary intendment. These propositions are well-engrafted in our case-law, but the real question in the instant case is whether the order obtained by the appellant itself could be assailed in the manner it had been done through C.M. No. 225-L of 2003 and whether the appeal against the order passed thereon would be competent, if the same had become barred by limitation against the original order, dated 4.3.2003. Learned counsel for the appellant submitted that C.M. No. 225-L of 2003 was competent since the appellant had challenged the very jurisdiction of the Court, and in support of his contention he relied on Pir Sabir Shah v.
Shad Muhammad Khan, Member, Provincial Assembly, N.W.F.P, and another (PLD 1995 Supreme Court 66) where at page 263 of the Report it was observed: "Further as was held in State v. Zia-ut- Rehman's (PLD 1973 SC 49 at 77) if there is a dispute on the point as to whether, a Court has or has not jurisdiction over a certain subject-matter it can certainly hear and determine that dispute, even if the result be that it had to hold that it has no jurisdiction". The argument of the learned counsel, in other words, is that even if it ,be assumed that the order, dated 4.3.2003 was a consent order, C.M. No. 225-L of 2003 was competent since it sought to challenge the very jurisdiction of the Court passing the order. We may observe that question here is not what the appellant thought of the order, dated 4.3.2003, but whether the said order was in fact, coram non judice. If the assumption of the appellant, howsoever innocent the same may be, is eventually found to be untenable, the question would arise whether he could take benefit of wholly incompetent proceedings to avoid the rigours of law of limitation, as has been argued by the learned counsel for the respondent-company. Mr. Sahgal further submitted that even if exception to the jurisdiction of the learned Judge was not taken before him, the appellant could still, in these proceedings, throw challenge to the same in view of the decision of the Supreme Court in Shagufta Begum v. The Income Tax Officer, Circle-XI, Zone-B, Lahore (PLD 1989 Supreme Court 360) where it was held "that a plea regarding assumption of jurisdiction by a> Tribunal or a Court is available to a litigant even when appearing before the highest Court in the country". He also relied on Muhammad Hayat v. Additional District Judge 1st, Okara and 2 others (PLD 1990 Lahore 350) where a Civil Judge, not invested with the powers of the Guardian Judge under the Guardian and Wards Act (No. VIII of 1890), had dealt with a guardianship petition, the High Court declared the order without jurisdiction by observing that in a case of total lack of jurisdiction and proceedings being coram non judice objection could be raised at any stage. Learned counsel for the appellant relied on Brother Steel Mills Ltd. And others v. Mian Ilyas Miraj and 14 others (PLD 1996 Supreme Court 543) to contend that the jurisdiction which the High Court exercises under the Companies Ordinance is original civil jurisdiction and the proceedings are of civil nature to which the Code of Civil Procedure is applicable by virtue of the provisions contained in its Section 117. In the cited case, it was inter alia held that the proceedings under the Ordinance are initiated in the High Court as a Court of first instance; that while exercising such jurisdiction it has the characteristics and attributes of original jCirisdiction; that in view of the provisions of Section 15 of Ordinance (No. X of 1980) which was an exception to Section 3(3) of the Law Reforms Ordinance, an Intra-Court Appeal against interlocutory orders made by a Single Judge of the High Court in exercise of his original civil jurisdiction was competent. On these premises, it was contended by the learned counsel for the appellant that this Intra-Court appeal was competent. There can be no cavil with the propositions of law hereinbefore mentioned, but the questions involved in this case are somewhat different, i.e. Whether the order, dated 4.3.2003 having been passed inter alia on appellant's on motion*and with its consent was appealable and, if so, whether the appeal thereagainst is not barred by limitation, the time consumed in seeking its review/recall notwithstanding.
9. Learned counsel for the appellant also argued that the original impugned order, dated 4.3.2003 passed by the learned Single Judge was illegal and without jurisdiction. Reference was made to Section 287 of the Companies Ordinance, 1984, to contend that the power of the Court to sanction the compromise or arrangement of amalgamation was not absolute, but was hedged in by the condition that the scheme of a compromise or arrangement of amalgamation proposed should be between a company and any such persons as are mentioned in Section 284 of the Ordinance viz. "between company and its creditors, or any class of them, or between the company and its members or any class of them". Learned counsel interpreted Section 284 to mean that if there are two distinct and separate companies, members of one company having no interest in the other company, the Court has no power to sanction the scheme of merger/amalgamation. According to him, his submission was fortified by the fact that since there was no provision for merger/amalgamation of two independent leasing companies, members/share-holders of one company not being members/share-holders of the other company, necessity was felt by the Legislature itself to supply the omission in the form of Ordinance No. CXXIII of 2002 whereby Chapter Vlll-A was added on 15.11.2002, according to which the power to sanction the scheme lay with the Security and Exchange Commission of Pakistan, and not with the "Court" as defined in the Companies Ordinance and, therefore, during pendency of the petition (C.O. 95 of 2002) jurisdiction of this Court stood ousted. He supplemented his argument by saying that though there exists no such provision in the Companies Ordinance for amalgamation of two distinct companies,'such provisions did exist in Sections 47 and 48 of the Banking Companies Ordinance, 1962 about Non- Banking Financial Companies (NBFCs) and that when the Legislature became conscious of this omission in the Companies Ordinance, Chapter Vlll-A was enacted by Ordinance No. CXXIII of 2002.
In nutshell, the argument of Mr. Sahgal is that the original order, dated 4.3.2003 being coram non judice, wholly void and an absolute nullity, the appellant was entitled ex debito justitiac to have it set aside through C.M. 225-L of 2003, whatever be the nature thereof and, therefore, bar of limitation could not be pressed into service so far as his appeal is concerned. Learned counsel for the appellant also argued that as shown in the application (C.M. No. 225-L of 2003), the order had been obtained by fraud and misrepresentation, and since fraud vitiates even the most solemn proceedings, the order, dated 4.3.2003, could not be held to be clothe^ with finality and, therefore, C.M. No. 225-L of 2003 as well as the instant appeal, being a continuity thereof, were competent and no question of limitation arose. The last limb of his argument was that by the sanction of the scheme of merger/amalgamation, the appellant- company and, in the ultimate analysis, its members/share- holders are suffering a continuing wrong and, therefore, on the principle of de die in diem, there can be no question of any limitation or estoppel.
10. Arguments advanced by the learned counsel for the respondent-company as to the maintainability of this appeal, and conversely the contentions raised by the learned counsel for the appellant-company cannot be adequately attended to, without going into merits of the case, in the circumstances, it will be appropriate to proceed with the appeal on merits as the question of maintainability of the appeal is inter linked with the objections raised by the learned counsel for the respondent-company.
11. In order to appreciate the afore-mentioned contentions of the learned counsel for the parties, we would like to reproduce hereunder Sections 284 and 287 of the Companies Ordinance, 1984, for facility of reference:- "284. Power to compromise with creditors and members. - (1) Where a compromise or arrangement is proposed between a company and its creditors or any class of them, or between the company and its members or any class of them, the Court may, on the application in a summary way of the company or of any creditor or member of the company or, in the case of a company being wound up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members of the company or class of members, as the case may be, to be called, held and conducted in such manner as the Court directs.
(2) If a majority in member representing three- fourths in value of the creditors or class of creditors, or members, as the case may be, present and voting either in person or, where proxies are allowed, by proxy at the meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the Court, be binding on all the creditors or the class of creditors or on all the members or class of members as the case may be, also on the company, or, in the case of a company in the course of being wound up, on the liquidator and contributories of the company: Provided that no order sanctioning any compromise or arrangement shall be made by the Court unless the Court is satisfied that the company or any other person by whom an application has been made under sub-section (1) has disclosed to the Court, by affidavit or otherwise, all material facts relating to the company, such as the latest financial position of the company, the latest auditor's report on the accounts of the company, the pendency of any investigation proceedings in relation to the company and the like.
(3) An order made under sub-section (2) shall have no effect until a certified copy of the order has been filed with the registrar within thirty days and a copy of every such order shall be annexed to every copy of the memorandum of the company issued after the order has been made and filed as aforesaid, or in the case of a company not having a memorandum to every copy so issued of the instrument constituting or defining the constitution of the company.
(4) If a company makes default in complying with sub-section (3), the company and every officer of the company who is knowingly and wilfully in default shall be liable to a fine which may extend to five hundred rupees for each copy in respect of which default is made.
(5) The Court may, at any time after an application has been made to it under this section, stay the commencement or continuation of any suit or proceeding against the company as such terms thinks fit a proper until the application is finally disposed of.
(6) in this section the expression "company" means any company liable to be wound up under this Ordinance and the expression "arrangement" includes a re-organization of the share-capital of the company by the consolidation of shares of different classes or by the division of shares or by both those methods, and for the purposes of this section unsecured creditors who may have filed or obtained decrees shall be deemed to be of the same class as other unsecured creditors."
"287. Provisions for facilitating and amalgamation of companies. - (1) Where an application is made to the Court under Section 284 for the sanctioning of a compromise or arrangement proposed between a company and any such person as are mentioned in that section, and it is shown to the Court that the compromise or arrangement has been proposed for the purposes of or in connection with a scheme for the reconstruction of any company or companies or the amalgamation of any two or more companies or the division of any company into two or more companies, and that under the scheme the whole or any part of the undertaking property or liabilities of any company concerned in the scheme (in this section referred to as a "transferor company") is to be transferred to another company (in this section referred to as "the transferee company"), the Court may, either by the order sanctioning the compromise or arrangement or by any subsequent order, make provision for all or any of the following matters, namely:-
(a) the transfer to the transferee company of the whole or any part of the undertaking and of the property or liabilities of any transferor company;
(b) the allotment or appropriation by the transferee company of any shares, debentures, policies, or other like interests in that company which under the compromise or arrangement are to be allotted or appropriated by that company to or for any person;
(c) the continuation by or against the transferee company of any legal proceedings pending by or against any transferor company;
(d) the dissolution, without winding up, of any transferor company;
(e) the provision to be made for any persons who, within such time and in such manner as the Court directs, dissent from the compromise or arrangement; and
(f) such incidental consequential and supplemental matters as are necessary to secure that the reconstruction or amalgamation is fully and effectively carried out.
(2) Where an order under this section provides for the transfer of property or liabilities, that property shall, by virtue of the order, be transferred to and vest in, and those liabilities shall, by virtue of the order, be transferred to and become the liabilities of, the transferee company, and, in the case of any property, if the order so directs, freed from any charge which, is, by virtue of the compromise or arrangement, to cease to have effect.
(3) Where an order is made under this section every company, in relation to which the order is made shall cause a certified copy thereof, to be delivered to the registrar for registration within thirty days after the making of the order, and if default is made in complying with this sub-section, the company and every officer of the company who is knowingly and wilfully in default be liable to fine which may extend to one thousand rupees.
(4) in this section the expression "property" includes property, rights and powers of every description, and the expression "liabilities" includes duties.'
(5) in this section the expression "transferee company" does not include any company other than a company within the meaning of this Ordinance, and the expression "transferor company" includes any body corporate, whether a company within the meaning of this Ordinance or not."
12. An arrangement in the nature of amalgamation is the result of an agreement between the amalgamating company and its members, as well as a corresponding agreement between the transferee- company and its members, and the result of amalgamation is the absorption of one company with another, or by merger of the two to create the third, in other words, amalgamation of a company with another or an amalgamation of two companies to form a third is brought about by two paralled schemes of arrangements entered into between one company and its members and the other company and its members and the two separate arrangements bind all the members of the companies as well as the companies themselves, when sanctioned by the Court. Amalgamation is, therefore, an absorption of one ~ company into another or merger of both to form a third, which is not a mere act of the two companies or their members but is brought about by virtue of a statutory instrument and to that extent has statutory genesis and character, and to that extent it is distinguishable from a mere bilateral arrangement to merge or join in a common endeavour, undertaking or enterprise, in the instant case, it was undoubtedly an arrangement between the transferee-company and its members, because the transferee-company is taking not only the assets and liabilities of the transferor-company, but also inducting more Share-holders. As far as the question of amalgamation is concerned, both the companies stood on the same footing because the two companies were amalgamating and forming into one company, though with a different name.
Doubtless, in view of the language employed in the afore-quoted Section 287, on the principle of legislation by reference, the words "its creditors or any class of them, or between the company and its members or any class of them" as used in Section 284(1) must be imported into Section 287(1) and substituted in place of the words "and any such person as are mentioned in that section" occurring between the word "company" and the word "and". Even after import of the said words of Section 284 into Section 287, the plain reading of Section 287 means that any scheme of compromise or arrangement for amalgamation of any two or more companies must be between the company and its creditors or any class of them, or between the company and its members or any class of them, it is cardinal principle of interpretation of statutes that if the language is clear and admits of neither any ambiguity nor more than one meeting, the same has to be given effect to without adding any words thereto or subtracting any words therefrom. The Legislature has not deemed fit to impose any limitation in terms, and we see no reason for implying any. There is inherent evidence in Sections 284 and 287, read together, to find out who can move the Court to consider a scheme of compromise or arrangement inter alia for the purpose of merger/amalgamation of two or more companies. Sub-section (1) of Section 284, in no uncertain terms, provides that an application can be made by the company or a creditor of the company, or a member of the company, or, in the case of winding up, by the liquidator. The Legislature having carefully enacted Sections 284 and 287 conferred power on specified persons to move the Court. If the Legislature wanted to disqualify two distinct companies from invoking jurisdiction of the Court under Section 287, one would have expected clear exposition of legislative intendment in Section
287. There being no ambiguity in the provisions of Section 287, nothing more can be read in it than what is stated therein. Any attempt at .Mutilating it would be tantamount to doing violence to the plain, clear and unequivocal language of Section 287. In our view, the construction put forth on, and the limitations assumed in Section 287 by Mr. Sahgal are difficult to concede because we cannot see anything in the section which justifies his submission. Therefore, the first contention of Mr. Sahgal that an application of merger/amalgamation of these two companies could not be entertained under Section 287 without meeting the requirement of Section 284, has no merit.
13. In support of his submission that the joint petition (C.O. No. 95 of 2002) filed on behalf of the two companies i.e. The transferor and the transferee companies (appellant and respondent No. 1 herein) was not competent and the assumption of jurisdiction by the learned Judge and his consequent order, dated 4.3.2003 sanctioning the scheme, in the absence of two independent petitions by the companies, was illegal and without jurisdiction, learned counsel for the appellant relied on Electro Carbonium P.
Ltd., and Electric Materials Co. P. Ltd. [(1979) 49 Comp. Cas. 825) wherein the Karnataka High Court had . Held that separate petitions by the transferor company and the transferee company must be filed. This judgment was considered by the Delhi High Court in Mohan Exports Lundai Ltd., in re: [(1999) 95 Comp. Cas. 53] and was not followed, by observing as follows:- "I have gone through the judgment and find that no reasons have been given as to why there should be separate petitions by two such companies when the subject-matter for decision is the same as to whether a particular scheme of compromise or amalgamation or arrangement ought or ought not to be sanctioned by the Court. Neither prohibits the filing of a joint petition by the two companies when the subject-matter is the same and common questions of fact and law would arise for decision.
Under Order I, rule 1 of the Code of Civil Procedure all persons may be joined in one suit as plaintiffs where any right to relief in respect of or arising out of the same act or transaction or series of acts or transactions is alleged to exist, in such persons whether jointly, severally or in the alternative and if such persons brought separate suits any common question of law or fact would arise. I may mention that the provisions of Order I, rule 1 of the Code of Civil Procedure were not considered in the case of Electro Carbonuim P. Ltd., in re: and Electric Materials Co. P. Ltd., in re: [(1 979) 49 Comp. Cas. 825 (Karnatka)] so, I hold that a joint petition is maintainable by the transferor and the transferee companies."
The objection of Mr Sahgal that a joint petition by the two companies was not competent must, therefore, fail.
14. Another argument of the learned counsel for the appellant based on addition of Chapter Vlll-A vide Ordinance No. CXXIII may be attended to. His emphasis was on Section 282-L wherein specific provisions were made "for amalgamation of NBFCs" which included leasing companies as well. He maintains that assuming, without conceding, that this Court had the jurisdiction under Sections 284 to 287 of the Ordinance to entertain a scheme for merger/amalgamation even of two leasing companies, it stood divested of its jurisdiction with the change of the forum and the SECP could alone after 15.11.2002 deal with the matter, in this context, his precise submission was that after 1 5th of November, 2002, no parallel jurisdiction could be conceived of in the Court as well as in the SECP, in support of this submission, learned counsel for the appellant relied on Chief Administrator of Auqaf, Punjab v. Allah Ditta and another (1990 CLC 821) wherein dealing wum an ouster clause in Act LVI of 1976, it was observed as follows:- "The scheme of the Act visibly demonstrates its clear intent that the remedy specified in the special legislation was exclusive and not concurrent, in view of the nature of the property and the issues involves for determination, it was thought fit to confer exclusive jurisdiction on the District Court to decide whether the property taken over was waqf or not and this matter was not left for decision by the ordinary Civil Courts. Parallel litigation in different forums was not contemplated. Term 'jurisdiction' which refers to the legal authority and the competence of the Court to administer justice is conferred by law only, it can neither be conferred nor taken away by consent of parties. Even submission shall not confer jurisdiction where it does not exist. Provisions in the Act LVI of 1956 later substituted by parallel provisions in Punjab Waqf Properties Ordinance, 1979 gave clear indication that jurisdiction of ordinary Civil Courts was expressly barred by a special remedy provided in Section 7 of the Act. In this view, it is difficult to uphold the views expressed by the Courts below about their jurisdiction over the subject-matter in dispute."
Reliance was also placed on Riazul Hassan Vs. Hidayat Ullah (PLD 1975 Lahore 841).
15. Section 282-L in Chapter Vlll-A, added by the Amending Ordinance of 2002, which is the foundation of the argument of the learned counsel for the appellant, is reproduced for facility of reference:- "282-L. Procedure for amalgamation of NBFCs. - (1) Without prejudice to the provisions contained in Part IX of this Ordinance, NBFCs may be amalgamated with each other provided a scheme containing the terms of such amalgamation has been placed in draft before the Share- holders of each of the NBFC concerned separately, and approved by a resolution passed by a majority in number representing two-thirds in value of the shareholders of each of the said NBFCs, present either in person or by proxy at a meeting called for the purpose.
(2) Notice of every such meeting as is referred to in sub-section (1) shall be given to every share- holder of each of the NBFC concerned in accordance with the relevant articles of association, indicating the time, place and object of the meeting, and shall also be published at least once a week for three consecutive weeks in not less than two newspapers which circulate in the locality or localities where the registered offices of the NBFCs concerned are situated, one of such newspapers being in a language commonly understood in the locality onlocalities.
(3) Any share-holder, who has voted against the scheme, or amalgamation at the meeting or has given notice in writing at or prior to the meeting to the NBFC concerned or the presiding officer of the meeting that he dissents from the scheme of amalgamation, shall be entitled, in the event of the scheme being sanctioned by the Commission to claim from the NBFC concerned, in respect of the shares held by him in that NBFC, their value as determined by the Commission when sanctioning the scheme and such determination by the Commission as to the value of the shares to be paid to dissenting share-holder shall be final for all purposes.
(4) If the scheme of amalgamation is approved by the requisite majority of Share-holders in accordance with the provisions of this section, it shall be submitted to the Commission for sanction and shall, if sanctioned by the Commission by an order in writing passed in this behalf be binding on the NBFCs concerned and also on all the Share-holders thereof.
(5) Where a scheme of amalgamation is sanctioned by the Commission under the provisions of this section, the remaining or resulting entity shall transmit a copy of the order sanctioning the scheme to the registrar before whom the NBFC concerned has been registered, and the Registrar shall, on receipt of any such order, strike of the name of the NBFC hereinafter in this section referred to as the amalgamated NBFC which by reason of the amalgamation will cease to function.
(6) On the sanctioning of scheme of amalgamation by the Commission, the property of the amalgamated NBFC shall, by virtue of the order of sanction, be transferred to and vest in, and the liabilities of the said NBFC shall, by virtue Of the said order be transferred to and become the liabilities of the NBFCs which under the scheme of amalgamation is to acquire the business of the amalgamated NBFC, subject in all cases to the terms of the order sanctioning the scheme."
16. The original petition (C.O. No. 95 of 2002) for sanction of scheme of merger/amalgamation was instituted in this Court on 19th of October, 20O2, well before promulgation of Ordinance CXXIII of 2002 i.e.f.
15th ' of November, 2002. It was thus a pending proceeding, in the circumstances, the question arises whether the Court stood denuded of this jurisdiction to deal with the matter as from 15th of November, 2002 and whether the petition stood transferred to the SECP. Sections 284 to 287 fall within Part IX of the Ordinance. The saving clause in Section 282-L viz. "Without prejudice to the provisions contained in Part IX of this Ordinance" is the cassene of the legislative intent and makes the expression free from any shade, obscurity or hideness. It is settled law that if the words of the statute are in themselves precise and unambiguous no more is necessary than to expound those words in their natural and ordinary sense, the words themselves in such case best declaring the intention of the Legislature. The language of a statute cannot be strained to make it apply to a case to which it does not apply. The expression "without prejudice" was considered by the Sindh High Court in Ardheshir Cowasjee and others v. K.B.C.A, and others (2001 CLR 1873). Objection to the maintainability of the petition, which was in the nature of a public interest litigation, was raised on the ground that such a petition could be filed only under Article 184(3) of the Constitution before the Hon'ble Supreme Court. Relying on the language employed in clause (3) of Article 184, viz. "Without prejudice to the provisions of Article 199" it was held that the powers available to the High Court under Article 199 were intact. We have, therefore, no doubt in our mind that the power conferred on SECP under Section 282-L is addition to, and not in derogation of the power of the "Court" under Sections 284 to 287 of the Ordinance.
17. The matter may be looked at fr6m yet another angle. Incorporation of Leasing Companies, beyond a reasonable size, had to be taken care of, firstly by the Corporate Law Authority and then by the Security and Exchange Commission of Pakistan, by framing Rules regulating their working. Section 282-L, appears-to have been enacted so that in view of the increase in the paid-up share capital of leasing Companies to Rs. 200 million, a large number of such companies may not be in a position to make good the deficiency and, per force, will have to resort to merger/amalgamation with each other to meet with the requirements of the Rules, another forum was provided. We are fortified in this view by the fact that in the Amending Ordinance, there is no provision for transfer to the SECP the proceedings pending in the Court on 15th of November, 2002 when Chapter Vlll-A, containing Section 282-L, was inserted in the Companies Ordinance.
18. There is yet another aspect of the matter. Whereas the regulatory and, if we may say so, disciplinary powers qua Non-Banking Financial Companies, including leasing companies have been entrusted to the care of SECP, the more stringent powers of winding-up of NBFCs, restoration of illegal benefits and gains derived and properties acquired by any person, being the Chairman, Director, Chief Executive, Official Liquidator or any officer of a NBFC whether in his on name or in the names of his family members, by mismanaging the affairs of the NBFC or misusing his position, and trial of offences and consequent punishment in the form of imprisonment or fine, still remain vested in the Court, particularly in view of the provisions contained in Sections 282-J(3) and 282-K( 1) and (3) of Chapter Vlll-A itself.
1 9. The next argument of the learned counsel for the appellant based on transfer of jurisdiction to the SECP has no merit in view of our finding that notwithstanding insertion of Chapter Vlll-A to the Companies Ordinance, jurisdiction of this Court remains intact. This question has recently been dealt with, rather exhaustively, by this Court in Writ Petition No. 1681 of 1999, decided on 31st of January, 2003'by observing as follows:- "The question of transfer of jurisdiction from one forum to another and the effect thereof has often been debated before the superior Courts. Broadly the consensus has been that change of forum pertains to the domain of procedure and a procedural law is retroactive in operation unless by express letter or necessary intendment a contrary intention is expressed in the said law. On the first sight it looked as if the judgment of the learned Additional District Judge, was in accordance with law and is supported by the judgment of this Court in Riaz-ul-Hassan's case (PLD 1975 Lahore 841).
However, on deeper examination of the issue I am of the view that if on the date of institution of the suit, the Civil Court had the jurisdiction, then unless expressly ousted, the Civil Court, will continue to have the jurisdiction. I have examined the Rent Ordinance but could not notice that there was any provision in the said Ordinance whereby a pending case of ejectment stood transferred to the Rent Controller, it may also be observed that change of forum where proceedings earlier taken are continued and transfer of jurisdiction which may have the effect of nullifying the proceedings pending before the competent forum have to be clearly distinguished, in case of change of forum without nullifying the proceedings already takerrthe principle that procedural law applies with retrospective effect may be accepted as a rule, because it does not cause prejudice to any party.
However, retroactive application of a procedural law which has the effect of destroying the proceedings taken by a competent forum has to be differently viewed because of its inherent vice to put the parties to another round of litigation before a new forum. All possible efforts are to be made that an interpretation which promotes public good is to be preferred so as to avoid an evil consequence.
Multiplicity of litigation is undoubtedly a vice which is not in public good. With reference to this case it may be observed, that from the order of the learned Trial Court it appears that the proceedings had concluded and the case was fixed for arguments when respondent No. 2 sought rejection of the plaint on the ground of applicability of the Rent Ordinance. The effect of the order passed by the revisional Court is that proceedings taken before the Civil Court stand nullified and the petitioner will have to initiate proceedings before the learned Rent Controller afresh. The judgment in the cast? Of Riaz-ul-Hassan relied upon by the learned revisional Court has been examined by me. In the said case, the learned Rent Controller was seized of an ejectment petition in the area which was urban. During the pendency of the said petition, the Governor of West Pakistan declared area as rural. The learned Rent Controller dismissed the ejectment petition of the landlord on the ground that the jurisdiction of the Rent Controller stood ousted. This order was interfered with by learned first Appellate Court on the basis of the observations in E. M.D. v. Mir Zaman (PLD 1960 Karachi 962). This Court came to the conclusion that the order passed by the learned Rent Controller was in accordance with law. It was observed that doctrine that the state of things existing at the time of institution of the suit is sufficient to determine the jurisdiction had no application where question is one of the jurisdiction over . I.M.L. Corpr. Ltd. V. C.A.L. Corpr. Ltd.
(Muhammad Ghani, J.j the subject-matter. Such jurisdiction must exist throughout the proceedings, it may be observed that in the said case jurisdiction of the learned Rent Controller stood ousted. Jurisdiction on a special Tribunal is conferred by a statute and could be taken away by a statute but the Civil Courts are Courts of plenary jurisdiction and if on the date cognizance of a suit is taken with jurisdiction, it could only be taken away by express letter of law or clear intendment. Therefore, Section 13 impliedly ousting the jurisdiction of the Civil Court in this case could not be applied with retrospective effect so as to undo the proceedings lawfully taken by the learned Civil Court. The question came under consideration in Kailashnath Gurtu, Applicant Vs. Harishchandra and another (AIR 1953 M.B, 13). In the said case suit for determination of fair rent was filed before the Civil Court under an existing law which was substituted by another law under which such a suit was not maintainable before the Civil Courts. The learned Civil Court returned the plaint for presentation before the proper Court and the said order was concurred by the learned first Appellate Court. The Madhya Madia Bharat High Court reserved the said orders with the observation that the relevant provisions of the latter legislation did not take away the jurisdiction of the Civil Court in a case filed before the commencement of the said Act. The judgment was based on the rule laid down in C.P. Benergy Vs. B.S. Irani (AIR 1949 Bombay 182) which in turn was based on Venugopala Vs. Krishna Sawami (AIR 1943 F.C. 24) and the observations made by the learned Bombay High Court were as follows:- "These observations of the Federal Court are enough to show that when an action has been rightly instituted in a Court which had jurisdiction to entertain it, would require strong and distinct word to defeat such vested right which has accrued to the litigant."
On the basis of the judgments of the Federal Court and the Bombay High Court the Madhya Bharat High Court made the following observations:-- "(8) There is nothing in Section 23 to show that the right to continue an action which has been rightly commenced has been taken away. Section 10 imposes two restrictions, one is that after the Act becomes operative suit for the decision of the fair rent shall be instituted in no other Court except that of the Rent Controller, second is that no decree passed after this Act comes into force, can be executed if it is contrary to or inconsistent with any decision regarding rent given under this Act. These restrictions do not take away the jurisdiction of the Civil Court to try a suit filed before the commencement of the Act. In both these sections, I find no strong and distinct words to defeat the vested right of the litigant to continue his action which has been rightly commenced; nor do I find anything in these sections which would induce me to hold that the legislature impliedly intended to take away the jurisdiction of the Civil Court in such matters."
The issue came up before this Court in National Bank of Pakistan v. Taj Muhammad (PLD 1984 Lahore 417). In the said case a suit filed before the Civil Court by the Bank was decreed ex parte on 29.6.1982, Having failed to get the ex parte decree set aside the defendant filed an appeal which was accepted and the case was remanded. After remand, the learned Civil Judge referred the case to the District Judge for disposal under the impression that District Court, Gujranwala alone had the jurisdiction in the matter on account of amendment made in the Banking Companies (Recovery of Loans) Ordinance (No. XIX of 1979) by Ordinance II of 1983. The learned Additional District Judge, dismissed the application for setting aside the ex parte decree, but modified the decree on the statement of the defendant in the suit by permitting him to repay the loan in 12 instalments and also remitted interest. The said judgment was assailed before this Court and the question before this Court was whether the learned Additional District Judge, had the jurisdiction in the matter. A Division Bench of this Court found that according to the position at the time of promulgation of Ordinance No. XIX of 1979 suits for bank loans for a sum of Rs. 1 lac or less were entertainable by a Civil Court of competent jurisdiction and appeals against their decree lay to the learned District Court or this Court depending on the jurisdictional value of the suit. However, under Ordinance II of 1983 all suits for recovery of bank loans of any amount could be heard by the learned District Judge/Additional District Judge notified as a Special Court. This Court held that the Civil Judge should have disposed of the matter to whom the case was remanded by the learned District Judge. While deciding the said case this Court was of the view that the amendment made in Ordinance XIX of 1979 by Ordinance II of 1983 regarding the change of forum could not be applied with retrospective effect and the following observations were recorded:- "The case in hand was, however, a pending case and it is to be examined whether the said amendment in law was retrospective in nature and affected the said pending case or not.
Normally procedural amendments including those purporting to transfer jurisdiction over certain causes of action operate retroactively but when the new forum makes the remedy provided inconvenient, the Courts are not inclined to treat the ^procedural amendment to be retrospective in effect. Reference in this connection is invited to Adnan Afzal v. Captain Sher Afzat (PLD 1969 SC 187) wherein it was observed by the Supreme Court that if giving of retroactive operation to procedural provisions causes inconvenience, then Courts will not even in the case of a procedural statute favour an interpretation giving retrospective effect to the Statute."
The question was also considered by a Division Bench of this Court in Muhammad Ali v. The State (PLD 1980 Lahore 195) in which it was observed that a procedural change brought about by new law is to be treated as retrospective. However, a case in which even procedural change in forum affects the existing rights of the parties, retrospective operation cannot be construed, in reaching this conclusion the following observations in Alaf Din Vs. Shaukat Ali (PLD 1969 Peshawar 62) were relied upon:- "Whenever the change of forum is in addition to dealing with purely procedure, and it also affects the existing rights of the parties, as to the continuance or culmination of certain proceedings in the existing forums, the change of forum may not be retrospective unless it is made retrospective by clear words used or clear intendment shown in the amending (underlining is mine) Act. For example, where the remedies, available in the earlier forum or, against the decisions of the earlier forum, are more substantial or are more . In number than the remedies provided in or against the decisions of the new forum, the change of forum would affect the rights of the parties. Therefore, the change of forum in such a situation, will not only be mere procedural matter but something more than that, and thus will not be retrospective."
The question also came up before the Hon'ble Supreme Court in Muhammad Bashir and 2 others Vs. Muhammad Firdous and another (PLD 1988 SC 232). In the said case ejectment petition filed by the landlord was dismissed by the learned Rent Controller on 18.7.1984. The appeal filed by the landlord before the District Court was allowed on 8.3.1985. However, before the decision of the appeal, the forum of appeal against the order passed by the Cantonment Rent Controller was changed and appeal lay before this Court by virtue of an amendment in the Cantonment Rent Restriction Act. The tenant filed a writ petition which was dismissed on merits, it was argued before the Hon'ble Supreme Court that the learned District Judge, had no jurisdiction in the matter because of the change of the forum of appeal. m The argument was repelled and the following observations of the Hon'ble Supreme Court in Adnan Afzal/'s case (PLD 1969 SC 187) was reiterated:-- "Nevertheless, it must be pointed out that if in this process any existing rights are affected or the giving of retroactive operation causes inconvenience or injustice, then the Courts will not even in the case of a procedural statute, favour an interpretation giving retrospective effect to the statute."
Although the case of Muhammad Bashir supra related to right of appeal, but right to sue, although inchoate, is a valuable right and, therefore, the provisions of Section 1 3 of the Rent Ordinance giving exclusive jurisdiction to the learned Rent Controller could not be applied retrospectively because it would result in manifest inconvenience,, injustice and bring about multiplicity of litigation."
Besides, in Malik Gul Hassan and Co. v. Allied Bank of Pakistan (NLR 1996 Civil S.C. 153) a suit for recovery of Rs. 18,45,721/- filed by the Bank before the Special Banking Court which, at that time was presided over by a Judge of the High. Court, constituted under the Banking Companies (Recovery of Loans) Ordinance, 1979, was decreed, and an appeal thereagainst was also dismissed by the High Court, in the Supreme Court, the contention raised was that the change in the jurisdiction brought about by the Banking Companies (Recovery of Loans) (Amendment) Act (No. XVII of 1992) whereby the words "ten millions" were substituted in clause (f) of Section 2 of the Ordinance in )lace of "one million" thereby enhancing the pecuniary jurisdiction of the High Court as a Special Court under :he Ordinance in respect of suits relating to bank loans and, therefore, all suits pending in the High Court in which the value of the subject-matter was less than Rs.
10.0 million could not be tried, and were to be transferred to Special Courts having jurisdiction in the matter, was procedural and operated retroactively so as to make the proceedings before the Special Court presided over by a Judge of the High Court without jurisdiction. Relying on the earlier decisions reported as Muhammad Ishaq v. The State (PLD 1956 S.C. (Pak) 256), State v. Ma.Uivi Muhammad Jamil and others (PLD 1965 S.C. 681), Abdul Rehman's v. Settlement Commissioner (PLD 1966 S.C. 362), Adnan Afzal v. Capt. Sher Afzal (PLD 1969 S.C. 187), Ch. Safdar A/l v. Malik Ikram Elahi and another (1969 SCMR 166), Hafiz Muhammad Abdullah v. Imdad AH Shah and another (1972 SCMR 173), Bashir v. Wazir AH (1987 SCMR 978), Mst. Yasmin Nighat and others v. National Bank of Pakistan and others (PLD 1988 S.C. 391), Habib Bank Ltdy v. Messrs Aulia Engineering and others (1993 CLC 154) and Office Reference No. 259 of 1974 etc. (PLD 1994 Karachi 258), it was held that the change of forum, pecuniary or otherwise, is procedural in nature and has retrospective effect unless contrary is provided expressly or impliedly or it affects the existing right or causes injustice or prejudice. The contention that although pecuniary jurisdiction had been enhanced, the High Court was competent to continue with the hearing of the case was repelled by observing that any statute, which enhances or reduced the pecuniary jurisdiction of a Court or provide a forum other than the one, where the case is pending falis within the category of "procedural law and if the new procedural statute is of such a character that is retroactive application will tend to promote justice without any consequential embarrassm ent or detriment to any of the parties concerned, it will be governed by the principles stated above, subject to the exception that if in this process any existing rights are affected or the giving of retrospective operation causes inconvenience or injustice or prejudice to a substantive right, then the Court will not even in the case of a procedural statute, favour an interpretation giving retrospective effect to the statute, in Aftabuddin Gureshi and others v. Mst. Rachel Joseph (PLD 2001 Supreme Court 482) after referring to Adnan Afzal v. Sher Afzal (PLD 1969 S.C. 187), The Colonial Sugar Refining Company Limited v. Irving (1905 A.C. 369), Joseph Suche & Company Limited [(1875) 1 Ch. D. 48] and State v. Maulvi Muhammad Jamil and others (PLD 1965 Supreme Court 681) it has been held that "when the law is altered during the pendency of an action, the rights of the parties are decided according to the law as it existed when the action was begun unless the new statute shows a clear intention to vary and rights", it was further held as follows:- "A statute cannot be said to have a retrospective operation because it applies a new mode of procedure to suits commenced before its passing, in other words, if a statute deals merely with procedure in an action and does not affect the rights of the parties, it will be held to apply prima facie to all actions pending as well as future, it is only if it be more than a mere matter of procedure, i.e. If it touches a right in existence at the passing of the new Act, that the aggrieved party would be entitled to succeed in a giving a successful challenge to the retrospective effect of the new Act. In Nabi Ahmed's case (supra), this- Court laid down the principle of law that rights of the parties arising from facts which come into existence before the passing of a statute should be presumed to be unaffected by it, unless it is expressly or by necessary implication made retrospective."
Recently, in Mst. Nasira Khatoon and another v. Mst. Aisha Bai and 12 others (2003 SCMR 1050), it has been held that:-- "The statutes relating to the remedies and jurisdiction of the Courts, Tribunals and Authorities are considered procedural in character and subject to rights of parties may take retrospective effect but if retrospectivity of a statute affects the substantive rights and causes injustice in such rign.s, the Courts by taking exception to the general rule of interpretation of statutes that the procedural law regulating the remedy Snd jurisdiction of the Courts and the authorities operates retrospectively, may not accept its retrospectivity."
20. We would, therefore, hold that in the absence of an express provision, or an obvious legislative intendment, that the proceedings already pending before Company Judge of this Court stood transferred to SECP, the petition (C.O. No. 95 of 2002) was rightly dealt with by the learned Judge, in the view of the matter we take, the contention of the learned counsel for the appellant fails and is hereby repelled.
21. The next contention of the learned counsel for the appellant is that the three-fourth majority postulated, by Section 284(2) of the Ordinance means three-fourth of the total number of members or clas of members of the company, which was lacking and, therefore, ^the approval of the scheme w^s nothin accordance with law. We cannot subscribe to this submission of the learned counsel for the appellant. Three-fourth majority of the creditors or members prescribed by sub-section
(2) of Section 284 of the Ordinance has no reference to the totals number of creditors or members, but is referable to those who are present at the meeting and are voting. Even a member who, though present at the meeting, does not vote for or against, but remains neutral, is not to be taken into consideration. While interpreting a similar language in sub-section (2) of Section 391 of Indian Companies Act of 1956, as is used in sub-section (2) of Section 284 of our Ordinance, the following view was taken in in re: Hindusthan Genera/ Electronic Corporation Ltd. (AIR 1959 Calcutta 1079):- "There can be no doubt that these words and voting have been introduced with a purpose and it appears to me that the intention of the framers of this section was that the majority of the three- fourth value must be of persons who were present and who took part in the voting. Mere presence would not be enough."
The afore-mentioned decision was appealed against and was affirmed by a Division Bench in Hindusthan Commercial Bank Ltd. v. Hindusthan Genera! Electric Corporation Ltd. (AIR 1960 Calcutta 637) by observing: "The majority required by Section 391(2) is the majority in number representing three-fourth in value of the class of members present and voting at the meeting".
22. Learned counsel for the appellant then contended that the order sanctioning a scheme - of merger/amalgamation cannot be held to be immune from challenge, since the element of dishonesty was apparent on the face of the record. Mr. Sahgal referred to a decision of Special Bench of three Judges, reported as iVladan Gopal v. Peoples Bank of Northern India Ltd. (AIR 1935 Lahore 779) wherein it was observed that it is the duty of the Courts to see that Directors and other officers of limited liability companies carry out their duties honestly and to punish them if they do not; that the rule that the opinion of the creditors and shareholders should be followed, as generally applied in England should not apply to strictly to India; that limited liability companies in India are in their infancy; that Share-holders and creditors are easily misled; and that fraudulent Directors have no difficulty in India in deceiving Share-holders and creditors. Without entering caveat to the generality of these observations, it may be observed that each case has its on merits and demerits and the applicability or otherwise of the observations., relied upon, would depend on the tacts of each particular case.
23. Having held that a joint petition for sanctioning of scheme of merger/amalgamation of the appellant and respondent No. 1 was competent and that the learned Judge had plenary power to decide the same, it falls for determination whether on the facts established on record, any element of fraud or misrepresentation can be found out, thereby vitiating the proceedings in their entirety.
The grounds, which can be spelt out from C M. No. 225-L of 2003 filed by the appellant and, on the basis of which the order, dated 4.3.2003 was sought to be avoided can be summed up as follows:-
(a) The appellant-company was led to enter into the scheme of amalgamation, dated 17.6.2002 upon representation by the respondent- company that the value of its share was equal to that of the share of the appellant-company, whereas the Share-holders had written letters to the appellant-company informing it that the net value of a share of the respondent company was only Rs. 4.00 but by concealment of material facts it had claimed its bieak-.'. : i.e at Rs. 13.07, and that the net wo n vai of a share of the appellant jinpany Rs. 13.16, consequently the share-holr .Os of the appellant company had been substantially prejudiced. There are sweeping statements in the petition to the effect that one of the Share-holders had disclosed that the respondent-company attempted to sell away its shares to Escorts Investment Bank, Lahore, and when the latter analysed the relevant factors through its Auditors, it came to know that the value of a share of the respondent-company was less than even Rs. 4/- and, therefore, the negotiations did not respondent-company were in control of it, and were managing affairs thereof according to their on whims.
(b) The shares were movable property, and the principle of caveat emptor being not attracted, the respondent-company was under obligation to have made a faithful disclosure of all the material facts affecting the value of its shares, which was not done.
(c) The persons managing the affairs of the respondent-company had either directly or indirectly interest in Johnson & Philips Pakistan Limited, and Shalimar Construction Company Limited, but this fact was not disclosed by them to the appellant-company, and its shareholders.
(d) The respondent-company had advanced a sum of Rs. 21.63 million as lease finance facility against insufficient securities worth only Rs. 8.95 million, and the chances of recovery of the amount advanced were extremely remote. Though the names of the borrowers are not mentioned, but they appear to be the companies named in the preceding paragraphs.
(e) The mark-up amounting to millions of rupees accrued upon the leasing facilities availed of by the afore-mentioned two companies had been posted in the Suspense Account rather than in the Profit and Loss Account of the respondent- company with the intention not to recover the same from the borrowing companies.
(f) A comparative study of the Balance Sheets of the two companies for the three immediate preceding years, viz. 2000, 2001 and 2002 would show that whereas the respondent- company had shown its' tax liability at Rs. 1.596 million, the appellant had shown its tax liability of Rs. 15.500 million.
24. Respondents 1 and 3 to 9 in the petition, filed a joint written statement, whereas respondent No. 2 (Securities and Exchange Commission of Pakistan) filed a separate written statement.
Maintainability of the application was objected to by respondents 1 and 3 to 9 by raising preliminary objections, viz:
(1) The order, dated 4.3.2003 having been filed with the Registrar of Companies as enjoined by sub- section (3) of Section 284 of the Companies Ordinance, 1984, it had assumed finality and, therefore, could not be re-called.
(2) Relying on Order XX, rule 3, CPC, it was pleaded that the Court having signed the order, it had become functus officio, except, of course, its power to give directions in regard to the working of the scheme.
(3) The application, filed as it was under Section 151, CPC, was even otherwise not maintainable.
(4) The scheme of merger/amalgamation having been consented to, unanimously adopted and approved by the appellant-company and its share-holders, without a single dissent, it was not open to exception.
(5) The application was based on mere bald allegations of fraud, without there being any solid proof thereof, and the same even otherwise, could not be determined in proceedings under Section 151, CPC which were summary in nature.
(6) There was no resolution of the Board of Directors, expressly authorizing the filing of the application.
(7) The applicant-company stood already merged, and haying lost its entity as a juristic person, no application on its behalf could be filed.
25. On merits, while giving lie to the allegations of the appellant, it was asserted that the appellant- company and its Share-holders had consented to the scheme of their on volition and free will, after detailed investigation into the affairs of the respondent- company, including its financial portfolio, client portfolio, balance sheets and entire corporate record. Before formulation of the scheme for merger/amalgamation of the two companies, Memorandum of Understanding, dated 27.5.2002 was drawn up by the two companies, where;n it was made absolutely clear that the appellant-company shall be merged into respondent- company in consideration of issuance of shares in the ratio of 1: f whereafter a draft scheme was prepared and Board of Directors of both the companies unanimously approved the scheme as well as the swa p ratio of 1:1. Before sanctioning the scheme, even the Court allowed sufficient time for any interested person to come forward with objections/reservations in relation to the scheme, but, at no time, any person, let alone the appellant- company, had raised any objections. The letters of share-holders filed alongwith the application were dubbed as fictitious and fabricated, and it was averred that out of 13 share- holders, whose letters had been appended with the application, nine were close relations of Sheikh Amjad Rashid, one of the sponsors and major share-holder of the applicant-company. Besides, only one of them was said to have personally participated in the Extraordinary General Meeting in which the scheme was approved eight of them were represented by the same proxy, and four even did not bother to show up. It was further pleaded that pursuant to the order of the Court, Mr. Zia-ud-Din Kasuri, Advocate, after giving due publicity, chaired the meeting of the Share-holders on 21.2.2003, and all those who attended the meeting voted in favour of scheme, without a single dissent, as is borne out from his Report, dated 24.3.2003. The allegation regarding break-up value of the shares of the two companies was specifically controverted by pleading further that the value thereof was calculated by the Chief Executive of the applicant-company himself on the basis of unaudited accounts of both the companies as on 31.3.2002 and the swap ratio of 1:1 was agreed after several meetings of the two companies and upon exchange of their respective financial records. The figures of prices of shares of the two companies, as given by the appellant-company, were specifically denied, being illusory, it was admitted that a long term finance facility in the sum of Rs. 11 million was provided to Johnson and Phillips, and of Rs. 9.5 million to Shalimar Construction Company (Pvt.) Limited, but it was asserted that the same were fully secured, through equitable mortgages. While admitting that Rs. 3.23 million and Rs. 4.22 million on account of accrued mark- up were posted in the Suspense Account, it was pleaded that it was so done in accordance with the Leasing Companies (Establishment and Regulations) Rules, 2000, and that it became a part of the client portfolio, which record was examined by the appellant- company in great details. The facilities so advanced as well as the amount receivable thereon were clearly reflected in Notes 17 and 21 to the audited balance sheets, dated 31.3.2002 filed in the Court. The allegation that the persons managing the affairs of respondent No. 1 had direct or indirect interest in the two companies to which financial facilities were advanced was specifically denied, it was also denied that the persons holding 0:2% share of the respondent- company were controlling and managing its affairs. Documents were brought on record to show that the applicant had a history of withdrawing from its commitment to merge with other leasing companies, the instance of Asian Leasing Corporation Limited was cited as a precedent. The allegations-pertaining to the posterior Jib the sanction of the scheme of merger/amalgamation were also specifically refuted and explanations for alleged freezing of Banks account were given.
26. In its written statement, the Securities and Exchange Commission of Pakistan pleaded that in order to comply with the minimum paid-up capital requirement of Rs. 200 million as prescribed in the Leasing Companies (Establishment and Regulations) Rules, 2000, the appellant company itself approached the Commission through letter No. 6687/CE.IML/2002, dated 1 7th June, 2002, informing it that a MOU dated 27th May, 2002 had been signed between the authorised representatives of the two companies for merger of the two respective corporate entities; that the swap ratio as per said MOU, was 1:1, based on audited accounts of the two companies for the period ending 31st of March, 2002; that as per the said audited accounts, the break-up value of each share of the respondent- company was Rs. 13.38 and of the appellant company was Rs. 14.30 as on 31st of March, 2002; that the applicant had informed the Commission that the said MOU had been approved by its Board of Directors in the meeting held on- 1st of June, 2002 and, therefore, requested for grant of NOC for the proposed merger of the two companies; that taking into account all these factors, the request of the appellant company was acceded to and the requisite NOC was issued subject, of course, to the consent of the Share-holders and creditors of the two companies as well as approval by the Court of the scheme of merger/amalgamation; that the NOC was issued to facilitate the appellant company to meet the minimum paid-up capital requirement of Rs. 200 million by way of merger; that it was the responsibility of the appellant-company before taking the commercial decision, to have carried out an appropriate financial and legal due diligence exercise, prior to the grant of approval to the scheme of merger in order to secure the interest of its on Share-holders. The written reply of SECP concluded with the averment that the allegations levelled by the applicant were baseless and without any supporting evidence.
27. We have considered the arguments of the learned counsel for the parties and have minutely examined the record. Alongwith the petition, Articles of Association of both the Companies were filed to show that the same did contain provisions for reconstruction etc. Duly audited accounts for the period ending 31.3.2002 of both the companies were also annexed to the petition. The following Resolution passed at the 1st meeting of the Board ,of Directors of the respondent- company held on 26.5.2002 was filed as Annex.E/1 to the petition:- "Resolved that subject to rejection of the offer by the Sponsor Share-holders of Calcorp for sale of their share-holding to Escorts Investment Bank Limited and in order to comply with the minimum and in order to comply with the minimum paid-up capital requirement imposed by the Securities & Exchange Commission of Pakistan for leasing companies, International Multi Leasing Corporation Limited (IML) merge with Capital Assets Leasing Corporation Limited (CAL.CORP).
Resolved Further that the terms of such merger shall involve dissolution of IML without winding up and vesting of assets and liabilities of IML in Calcorp and such other terms and conditions as may be agreed to by Shareholders of the Company.
Nesolved Further that the SWAP Ratio for the merger be 1:1; Resolved Further that the Accounts as on March 31st, 2002 be audited for the purpose of amalgamation and the company's Auditors M/s. Ebrahim & Company, ^ Chartered Accountant be authorized to carry out this special audit.
Resolved Further that the new merged entity be named Calcorp Multi Leasing Limited.
Resolved Further that the Chairman and/or the Chief Executive Officer be and are hereby authorized to jointly or singly take all steps required to give effect to the said merger including approaching the Securities & Exchange Commission of Pakistan to obtain approval of the same, arranging for audit, hiring of counsel and auditors to assist in the merger, finalization of the Scheme of Amalgamation to be presented *o the Court for its sanction and such other steps as the Chairman and/or the Chief Executive officer deem necessary or expedient to implement the afore-mentioned merger."
Similarly, the Resolution passed on 1.6.2002 by the Board of Directors of the appellant-company was filed as Annex. E/2 to the petition. The same reads as follows: - "Resolved that the Memorandum of Understanding (M.O.U.) signed on May 27, 2002, between the Chief Executives of IML and Calcorp to merge the operations of both the companies on the terms and conditions stated there;n be and is hereby approved.
Resolved that the draft Scheme of Arrangement to amalgamate the operations of International Multi Leasing Corporation Limited with Capital Assets Leasing Corporation Limited be and is hereby approved.
Also Resolved that the Chief Executive and Secretary of the company be and are hereby authorized to take all legal, corporate and other necessary steps in connection with the filing of the aforesaid scheme of Arrangement in the Hon'ble Lahore High Court."
No Objection Certificates from the Security and Exchange Commission of Pakistan as well as from the creditors of both the companies were also filed alongwith the petition. Even at the cost of repetition, it may be observed that when the petition came up for hearing on 21.10.2002, the Court issued notices to the Security and Exchange Commission of Pakistan and to the members and contributories of the two companies. "Public Notice" was also ordered to be published in the Daily "The News" and the Daily "Nawa-i-Waqt". It is not disputed that such notices were, in fact, sent and pubiished. After the requisite formalities had been observed, and as required by rule 55 of the Companies (Court) Rules, 1997, a joint application, being C.M. 2 of 2002 was filed on 18.10.2002 on behalf of both the companies, seeking an order under sub-section (1) of Section 284 of the Ordinance, for holding general meetings of the members of the two companies to consider the scheme of amalgamation. When this application came up for hearing before the Court on 24 1.2003, an order, in terms of rule 56 of the 1997- Rules was passed directing that both the petitioner- companies should "convene separate meetings of their respective members/share-holders for the purpose of approving the proposed scheme of arrangement for merger", in term of the proviso to clause (b) of rule 58, Mr. Zia-ud-Din Kasuri, Advocate, was nominated to chair both the meetings in order to find out the bona tides and genuineness of the arrangement by the members/share-holders of the petitioner-companies, and to submit his report, it was further directed that "Notices shall also be issued to Registrar of Companies and to the creditors of the petitioner companies through ordinary mode and courier service as well as by publication in the daily "Nawa-i-Waqt" and "The News" for 25.2.2003". The same are available on the record. Consequently, separate Extraordinary General Meetings of both the companies were held under the chairmanship of Mr. Zia-ud-Din Kasuri, Advocate, of 21.2.2003. As is apparent from the Report, dated 24.2.2003 of Mr. Kasuri, in compliance with the order of the Court, dated 24.1.2003, notices with the main points of the scheme and statements under Sections 286(1)(a) and 160( 1)(b) of the Companies Ordinance were served on all the members/share-holders for the meeting to be held on 21.2.2003. Moreover, the members/share-holders and other persons entitled to attend the meeting were apprised that copy of the scheme of arrangement could be obtained from the Registered Offices of the companies during normal business hours on application prior to the meeting of the Share-holders. This was quite in accord with the provisions of Section 286 of the Companies Ordinance, which reads as follows:- "286. Information as to compromise or arrangements with creditors and members. - (1) Where a meeting of creditors or any class of creditors, or of members or any class of members is called under Section 284:-
(a) With every notice calling the meeting which is sent to a creditor or members, there shall be sent also a statement setting forth the terms of the compromise or arrangement and explaining its effect; and in particular, stating any material interest of the directors including the chief executive of the company, whether in their capacity as such or as members or creditors of the company or otherwise, and the effect on those interests, of the compromise or arrangement if, and insofar as, it is different from the effect on the like interest of other persons; and
(b) in every notice calling the meeting which is given? By advertisement, there shall be included either such a statement as aforesaid or a notification of the place at which and the manner in which creditors or members entitled to attend the meeting may obtain copies of such a statement as aforesaid.
(2) Where the compromise or arrangement affects, the rights of debenture-holders of the company, the said statement shall give the like information and explanation as respects the trustee of any deed for securing the issue of the debentures as it is required to give as respects the company's directors.
(3) Where a notice given by advertisement includes a notification that copies of a statement setting forth the terms of the compromise or arrangement proposed and explaining its effect can be obtained by creditors or members entitled to attend the meeting, every creditor or member so entitled shall, on making an application in the manner indicated by the notice, be furnished by the company, free of charge, with a copy of the statement.
(4) Where default is made in complying with any of the requirements of this section, the company, and every officer of the company who knowingly and wilfully is in default, shall be liable to fine which may extend to two thojsand rupees; and for the purpose of this sub-section any liquidator of the company and trustee of a deed tor securing the issue of debentures of the company shall be deemed to be an officer of the company: Provided that a person shall not be liable under this sub-section if he shows that the default was due to the refusal of any other person, being a director, including chief executive, or managing agent or trustee for debenture- holders, to supply the necessary particulars as to his material interests.
(5) Every director, including the chief executive, or managing agent of the company and every trustee for debenture-holders of the company, shall give notice to the company of such matters relating to himself as may be necessary for the purposes of this section and on the request of the company shall provide such further information as may be necessary for the purposes of this section; and, if he fails to do so within the time allowed by the company, he shall be liable to fine which may extend to one thousand rupees."
Moreover, alongwith the Report of the Chairman, a list, spread over 55 pages, of the Share-holders of the appellant-company on whom notices were served, was attached. Seven members/share- holders, holding 4980 shares, participated in the meeting personally whereas twenty-four members/share-holders, having 19,94,408 shares, participated in the meeting through proxies, authorizing Mr. Kamal Khan, Chief Executive of the Company, in this manner, members/share-holders, having total number of 19,99,388 shares of the appellant-company, had thus participated in the Extraordinary General Meeting convened for the purpose of ascertaining the views of the members/share-holders of the appellant-company. As per Article 27 of the Articles of Association of the appellant-company: "Three members present of the total voting power either in their on account or as proxies shall be a quorum". As mentioned above, seven members/share-holders were personally present whereas twenty-four were present through proxies having nominated Mr. Kamal Khan who had undeniably participated in the meeting as is borne out from his signatures appearing on the attendance sheet filed with the Report by the Chairman. There being not a single dissentient member amongst those who had participated in the meeting wherein the afore-quoted Resolution was passed, the requirements of sub-section (2) of Section 284 were thus fully met with. The report of Mr. Kasuri, who had chaired the meeting of the respondent-company also reveals that members/share- holders having total number of 54,52,508 shares, which was much more than the required quorum, had participated either personally or through proxies. The figures given above would, at a glance, show that the members/share-holders were fairly represented and the scheme had been approved unanimously. Moreover, after the receipt of the Reports of the Chairman, the matter remained pending till 4th of March, 2003, and no one came forward to take exception to the scheme of merger/amalgamation.
28. From the above discussion, it is also abundantly clear that before the scheme for merger/amalgamation was finally formulated, both the companies had long-drawn meetings and discussions qua various facets of the scheme; Memorandum of Understanding (MOD was drawn up containing matters of interest for both the companies; SECP was approached for NOC by Mr. Kamal Khan himself, who filed C.M. 225-L of 2003 and is also prosecuting the instant appeal on behalf of the appellant-company; the whole scheme of merger/amalgamation as proposed by the two companies was filed alongwith the petition, which became a public record and could be examined by every member/share-holder of the two companies, including Mr. Kamal KhSn, who was rather on the forefront; the existing financial positions of the companies, showing their assets and liabilities were clearly reflected in the audited Balance Sheets as on 31st of March, 2002 and were annexed to the petition; the swap ratio of both the companies was put on at par and was treated alike with no difference; both the companies, after minutely examining the scheme of merger/amalgamation, had gone through the whole process of the procedure provided for the purpose by the Companies Ordinance, 1984, and the Companies (Court) Rules, 1997. In 'these circumstances, members/share-holders of the two companies were the best judges of their on interest, and the facts narrated above indicate that they had acted honestly, because the record of the case is conspicuous by an absence of reference to any piece of evidence to show that the scheme was coercive or oppressive of minority by majority, in particular in the absence of single dissenting vote.
29. Doubtless, as contended by Mr. Sahgal, in exercising its discretion under Sections 284 and 287, the Court should not act merely as a rubber stamp nor, the Court is to sit as a mute spectator. But, if the Court finds that the scheme is fair,and reasonable, it is not for the Court to interfere with the collective wisdom of the [Vol.IX I.M.L. Corpr. Ltd. V. C.A.L. Corpr. Ltd.
(Muhammad Ghani, J.) members of a company. Moreover, the Court cannot launch an investigation upon the commercial merits and demerits of the scheme which is the function of those who are interested in the arrangement, in Brook Bond Pakistan Limited and another v. Aslam Bin Ibrahim and another (1997 CLC 1873), it was observed that if the required majority of the members of both the companies have approved the resolution for merger of both the companies, in such circumstances, sanction cannot be withheld unless it is shown that it is unfair or unreasonable, it was further observed that the burden would be upon the person who alleged the scheme to be unfair, in this context, the following guidelines for deciding a matter of merger as laid down in Sidhpur Mills Co. Ltd., in re: (AIR 1962 Gujrat 305) followed in Navjivan Mills Co. Ltd., Ko/al, in re: [(1972) 42 Comp. Cases 265] and cited in Brook Bond Pakistan Ltd. And another v. Aslam Bin Ibrahim and another (1997 CLC 1873 at pages 1882-1883) are worth special notice:- "Therefore, in my judgment, the correct approach to the present case is (i) to ascertain whether the statutory requirements have been complied with, and (ii) to determine whether the scheme as a whole has been arrived at by the majority bona fide and in the interests of the whole body of Share-holders in whose interests the majority purported to act, and (i.e) to see whether the scheme is such that a fair and reasonable Share-holder will consider it to be for the benefit of the company and for himself. The scheme should not be scrutinized in the way a capring critic, a hair splitting expert, a meticulous accountant or a fastidious counsel would do it, each trying to find out from his professional point of view that loopholes are present in the scheme, what technical mistakes have been committed, what accounting errors have crept in or what legal rights of one or the other sides have or have not been protected, it must be tested from the point of view of an ordinarv reasonable shareholder, acting in a business like manner, taking within his comprehension and bearing in mind all the circumstances prevailing at the time when the meeting was called upon to consider the scheme in question. I am emphasizing the last point because an argument was made by Mr. Amin that certain circumstances or events which took place after the scheme had been considered should be taken into account. I do not wish to be understood to say that, in no case post facto circumstances or events cannot be taken into account, but, on the whole, I have come to the conclusion that, whilst, in some rare and exceptional cases, the Court may take into consideration subsequent events to protect the interests of the company or the Share-holders, as a general rule, the Court should consider the resolution on the footing of the circumstances which were in existence at the time when the scheme was formulated, deliberated upon and approved. If any other approach were to be made, then, in that case, there would be no sanctity about business contracts, in fact, such an approach may induce interested persons to shape further events and circumstances in such a way as to convert a reasonable scheme into an unreasonable one."
30. Therefore, once the scheme was approved by overwhelming majority of the members of the two companies, participating either personally or by proxies in the Extraordinary General Meetings convened , separately of the two companies for the purpose of considering the scheme, all that the Court was to examine was whether the provisions of the Ordinance and the Rules had been complied with; that the statutory majority was acting bona fide; that the arrangement was reasonably fair and that the circumstances prevailing at the time when the members/share-holders considered the scheme, justified approval thereof and there was no better option for them, it is not the duty of the Court to examine the scheme in the manner a businessm an of statute power of judgment would do it. Till such time the order was passed by the learned Judge on 4.3.2003 sanctioning the scheme, no one from the appellant-company came forth to object to the scheme on the ground of being not commercially sound. Even when the application (C.M. 225-L of 2003) was filed, the appellant could not lay hands on a shred of evidence, except bald allegations. Be that as it may, as to how much shares should have been allotted by the transferee-company to the existing members of the transferor-company and in what ratio or proportion to their existing holding, under the scheme of amalgamation, was a matter entirely between the two companies and their members, there being no occasion for the Court to intermeddle with their affairs, once the scheme was passed by the statutory majority more significantly when none had come forward to object to the same.
31. There is yet another important aspect. Undeniably, both the companies in the instant case, are listed at Lahore Stock Exchange. If the difference in the market value of shares of the two companies had been so vast, as is alleged before us, it was really not very difficult for the appellant to have rendered solid proof and evidence in support thereof. Doubtless, in order to determine the price of a share of a company which is non-functioning or has become defunct, one may have to resort to complicated calculations. But, as observed above, in the instant case, both the companies were living and working companies. Their shares were quoted at the Stock Exchange.
The price fluctuations would have been the indicator of commercial judgment of the community about the value of the shares of both the companies, in re; Press Caps. Ltd. (1949) 1 All E.R. 1013 - (1949) Ch. 434], quoted by Pannington in his Company Law, Second Edition at page 59, it was held as follows:- "If the transferor or transferee company's shares have a stock exchange quotation, . Dealing price over a period shortly before the transferee company's offer was announced will usually be taken as the measure of their value."
The swa p ratio of 1:1 appears to have been fixed by reference to the ruling price of the shares of the two companies on the Stock Exchange at the relevant time. Suspicion, conjectures or mere surmises cannot take the place of legal evidence, which is completely lacking in the instant case, to prove the allegations of fraud and misrepresentation, it is settled law that when fraud or misrepresentation is alleged in pleadings, particulars thereof must be given so that the other party is put on guard to answer the same specifically. To prove an allegation of concealment of material facts which may tantamount to fraud, the following criteria has been laid down by the Supreme Court in a recent judgment reported as Mst. Nasira Khatoon and another v. Mst. Aisha Bai and 12 others (2003 SCMR 1050 at page 1061):- "The concealment of material facts by a person having knowledge or belief of such facts may constitute fraud but the same must be proved through clear and convincing evidence and the burden of proof of fraud would lie on the party which alleges fraud except in a case in which the fraud is floating on the face of the record. The active concealment and suppression of facts in words and deeds is an essential ingredient of fraud which cannot be inferred by mere assertion rather it must be. Proved through strong, independent, clear and convincing evidence and the burden would be more heavier in the cases in which a long period has passed since passing of the decree or judgment under which valuable rights have accrued in favour of the opposite party; there can be no exception to the rule of law that without bringing the essential facts on the record and the evidence in proof of the fraud the plea of ignorance and lack of knowledge simpliciter would not be sufficient to constitute fraud and dislodge the sanctity attached with the official acts and judicial proceedings. The fraud undoubtedly vitiates solemn proceedings and time would not sanctify an action of fraud and misrepresentation but no inference of fraud can be drawn merely on the basis of an oral assertion in absence of any proof of the allegation of fraud. The appellants in the present case having taken plea of fraud were under heavy burden to substantiate the allegation of fraud through clear and convincing evidence but they have not been able to discharge their onus to the satisfaction of law."
32. In the instant case, as observed above, there is nothing on record to bring home the allegation of fraud or misrepresentation to the respondent-company. Reference may be made to Dadabhoy Cement Industries Ltd. v. N.D.F.C. (2002 PLR (SC) 1459 = KLR 2002 CC (Kar)- 30.7). In a suit filed by NDFC against Dadabhoy Cement Industries Ltd., parties arrived at a compromise on the basis of which the suit was disposed of. An application under Section 12(2), CPC filed by the defendant having been dismissed by the learned Single Judge of the Sindh High Court, the decision was challenged in appeal, in that case also, a Memorandum of Understanding had preceded the final compromise, in appeal, learned counsel for the appellant argued that MOU and the consent decree suffered from misrepresentation as the same had been obtained by fraud and that a consent decree did not stand on a higher footing or pedestal than as ordinary decree and could be set aside or recalled if it could be proved that the same was conceived out of fraud, it was further argued that there was no such principle that a party who was aggrieved by a consent decree having been obtained by fraud or was contrary to law was estopped from challenging the consent decree on the ground that there was no estoppel against law. The contentions were countered by the learned counsel for the respondent-NDFC by submitting that a party alleging fraud, misrepresentation, Concealment/suppression of facts and wrong or illegal conclusion was under a bounden duty to give the necessary particulars of the facts which according to him amounted to fraud or misrepresentation. The Division Bench, after reviewing the case-law, and taking into consideration the facts of the case as borne out from the record, reached the following conclusion:-- "In all the afore-cited cases, it was held that where a party levels allegation of fraud then it must specify and mention the details of the fraud and further that the same was required to be proved beyond or reasonable doubt and not on the basis of surmises, conjectures and suspicion. The facts/representations made by Messrs NDFC in the MOU were neither deceitful nor were based on misrepresentation as the appellants had been informed of such facts/statements which were to form the basis of the compromise prior to the making of the compromise." in the instant case also, MOU dated 27th of May, 2002 had preceded the formulation and consequent sanction of the scheme of merger/amalgamation. There is not an iota of evidence, that the respondent-company had in any manner duped the appellant-company either by fraud, misrepresentation or by concealment of any relevant factors. Thus the plea of fraud and misrepresentation also fails.
33. There is yet another aspect of the matter to which we have already made an oblique reference, which to our mind had prompted the two companies to enter into the scheme of merger/amalgamation. The two companies had to resort to merger/amalgamation because of statutory compulsion requiring them to make good the deficiency in their respective paid-up share capital. There appeared to be a little choice and freedom for manoeuvre, because none of the two companies could raise its paid-up share capital to the required minimum, in exercise of the powers conferred by Section 506 of the Companies Ordinance, 1984, read with Finance Division's Notification No. S.R.O. 698(1 )/86, dated 2nd of July, 1986 the Corporate Law Authority had made "The Leasing Companies (Establishment and Regulation) Rules, 1996". By virtue of Rule 5(b) of the said Rules, a maximum paid-up share capital of one hundred million rupees was made a condition precedent to a leasing company, incorporated under the Companies Ordinance, to qualify itself for the grant of a licence under Section 5 ibid, in rule 7(4) it was then laid down that:- "The Companies granted licence before the commencement of these Rules and having paid-up share capital less than one hundred million rupees, shall be required to raise their paid-up capital to that limit within two years from the date of commencement of these Rules."
However, by a subsequent amending Notification No. S.R.O. 1133( 1 )/97, dated 4.11.1997, for the word "one" as occurring both in rule 5(b) and rule 7(4) the word "two" was substituted, meaning thereby that a leasing company must have paid-up share capital of rupees two hundred million. Further the words "date of commencement of these Rules" were substituted by the a figure, letters, words and commas "1st November, 1 997, and after expiry of two years, the Authority may extend the said period for another one year on the basis of sound reason to be given, in writing, by the company". These Rules were, however, superseded as will be shown presently. After the enactment of the Securities and Exchange Commission of Pakistan Act (No. XLU of 1997), whereby Securities and Exchange Commission of Pakistan was established, the Commission, in exercise of its powers under Section 506 of the Companies Ordinance (No. XLVII of 1984), read with the Finance Division's Notification No. S.R.O.
698(1 )/86, dated 2.7.1986 made the Leasing Companies (Establishment and Regulation) Rules, 2000, which came into force i.e.f. 25th of September, 2000. Unnecessary details apart, a Leasing Company, which is an "NBFT" (Non-Banking Financial Institution) was required, by force of rule 5, to obtain a licence from the Commission upon fulfilment of conditions stipulated in the said rule. And, one of the requirements vide clause (b) thereof was that it should have "a minimum paid-up share of two hundred million rupees" in order to qualify itself for the requisite license, in sub-rule (3) of rule 7 it was further provided that "The companies granted license before the commencement of these Rules, shall raise the paid-up capital to two hundred million rupees by 30th June, 2001". The cut-of date, we are told, was extended from time to time and is now to expire on 31st of December, 2003. As mentioned above, whereas the authorized share capital of the appellant was Rs. 100 million its paid-up share capital was only Rs. 54.00 million, it appears, the appellant could not raise its paid-up capital to Rs. 200 million till the petition under Section 284 read with Sections 285 to 288 of the Companies Ordinance was filed on 19.10.2002. Similarly, though the authorized share capital of respondent No. 1 was Rs. 200 million, but its paid-up share capital was a little more than Rs. 77.83 million, which was also less than the upper ceiling of Rs. 200 million, in clause (d) under the heading "FACIS" of the appeal, the appellant itself has pleaded thus:- "(d) the minimum paid-up capital required in respect of leasing companies was raised to Rs. 200
(M) through an amendment in the Leasing Companies (Establishment and Regulations) Rules, 2000, and the leasing companies like the appellant, whose capital was below the stipulated level, were advised to enhance their paid-up capital upto Rs. 200 (M) by 30.6.2001. It was in this context that a number of leasing companies took initiative to negotiate merger with each other to meet the requirements of the enhanced paid-up capital."
34. We are of the view that the appellant-company in view of the stringent provisions of rule 7 of the Rules of 2000 adopted the consenting course for the impugned arrangement. Under an amalgamation, merger or take over, two or more companies are merged either de jure by a consolidation of their undertaking or de facto by the acquisition of a controlling interest in the share capital of one by the other or of the capital of both by the new company. The arrangements covered by Section 284 are of widest character ranging front simple composition or moratorium to p* amalgamation of two or more comtpanies in one, including reorganization of their shSW capital.
One can, therefore, legitimately assume that this was one of the main, rather compulsive reason, why the appellant-company opted to be merged with respondent No. 1.
35. The next question is whether a scheme of merger which has been approved by the requisite statutory majority of three-fourth of the members present and voting can be objected to by the members/share-holders participating in the meeting and voting in favour of the scheme or even by a dissenting member/share-holder/creditor, or by the company itself. In our view, it is not possible to do so. We are fortified in our view by various decisions from foreign jurisdiction, in re: Dr. S.B. Mathur v. India Porcelain Ltd. And another [(1956) 26 Comp. Cas. 161] the company passed a resolution for its voluntary winding-up. Rajasthan Govt, which was a creditor of the company applied, for compulsory winding-up which was ordered by the District Judge under the Companies Act of 1913. An Advocate of Rajisthan High Court was appointed its official liquidator. Thereafter, various creditors and contributories moved an application under Section 1 53 of the Indian Companies Act stating that they had made an arrangement with Amar Nath Mehrotra of Messrs Amar Nath Mehrotra & Co. Of Sitapur for running the company. The District Judge having agreed to the said course ordered that the requisite meetings be held. The official liquidator was appointed as chairman of the meetings. The creditors and contributories passed the scheme with certain modifications, but when the scheme came up for sanction before the District Judge, it was rejected due to absence of Amar Nath Mehrotra, on the assumption that he had no intention to run the factory. Amar Nath Mehrotra could not succeed in getting the scheme reinstated. Some other creditors and contributories also failed in their attempt to get the scheme sanctioned. The decision of the District Judge was challenged in appeal before the Punjab High Court. At the appellate stage, Government of Rajisthan sought to substitute another financier in place of Amar Nath Mehrotra. Though when the scheme originally came up before District Judge, counsel for the said Government was present but he took no objection to the scheme. Having held, on the facts of that case, that the absence of Amar Nath Mehrotra could not be taken that he was net serious in the implementation of the scheme or that he had gone back upon the scheme which was accepted by the contributories and the creditors, and that he being more "suitably placed" than the financier sought to be substituted in his place, the Appellate Court remanded the case to the District Judge, being incharge of the liquidation case, for consideration of the scheme by inter alia observing as follows:-- "The Government as creditors were represented at the meeting of the creditors and are bound by the scheme as passed by that meeting. And if they are now allowed to upset the scheme which was adopted by the contributories and the creditors, it would be a serious inroad on the powers of the Court and would make the whole thing subservient to the wishes of powerful interests and would be obvious interference with the administration of company law." in Vasant Investment Corporation Ltd. v. Official Liquidator, Coiaba Land and Mills Co. Ltd. [(198l) 51 Comp. Cas. 20] the following views were inter alia expressed:-- * "Hence, if at a meeting called to consider a scheme under S. 391, the scheme is passed by the requisite majority, then it becomes binding on all the members of the company, irrespective of the question whether they have expressly consented to it or not."
Again in Centron Industrial Alliance Limited v. Pravim Kantilal Vakil and another [(1984) 55 Comp. Cas. 731] a -petition under Section 391 of the Indian Companies Act, 1956, for sanctioning a scheme of amalgamation between the petitioner- company and Brook Bond India Limited had been filed in the Bombay High Court. Under the directions of the Court, meetings of the shareholders; secured creditors and unsecured creditors to consider the scheme of amalgamation were held. The scheme was approved by overwhelming majority. Central Govt, had also accepted application as required by Section 23(2) read with Section 54 of MRTP Act, 1969. Some of the Share-holders then floated requisition for calling an extraordinary general meeting of the company to consider the following Resolutions:- "RESOLVED that the company re-negotiate with Brook Bond India Ltd. And/or examine alternate scheme(s) in the interest of the company and for the purpose."
"FURTHER RESOLVED that the company should withdraw Petition No. 84 of 1981, filed in the High Court in Bombay from the date of this resolution." in the circumstances, the question that arose for consideration was, "Can the Share-holders now call a requisitioned meeting to compel the company to withdraw from the scheme?" it was held that "once the members of the company have approved of the scheme in the manner laid down under Section 391, it is not open to the Share-holders to requisition a meeting for the purpose of passing a resolution asking the company to withdraw the petition filed by it for sanctioning the scheme". We would, therefore, hold that after the scheme has been passed by a majority in number representing three-fourth in value of the creditors or class of creditors, or members, as the case may be, present and voting either in person or, where proxies are allowed, by proxy at the meeting, then irrespective of the question whether they have expressly consented to it or not, neither members/share- holders/creditors nor even the company can back out or go back upon the scheme.
36. The next question is the extent of sanctity attached to a scheme which has been validly sanctioned by the Court under Part IX of the Ordinance. It has been a moot question in a number of cases in England and India, in re: Calgary and Edmonton Land Co. Ltd. [(1975) All. E.R. 1046] it was held that when the scheme is sanctioned, the members become bound by the scheme, in Mahigang Loan Office Limited v. Behari Lal Chaki (AIR 1937 Calcutta 507), it was observed by a Division Bench of Calcutta High Court that the scheme once sanctioned has a binding effect. The question then came up for consideration in Krishna Nath v. Dinajpur Loan Office [(1938) 8 Comp.
Cas. 152] and the view taken was "that a scheme of arrangement which is sanctioned by the Court under Section 1 53, Companies Act, has the force of a judicial pronouncement". Similar views were expressed in Srimati Premiia Devi v. Peoples Bank of Northern India Ltd. (on Liquidation) (AIR 1938 P.C. 337). The precise question came up for consideration in Navjivan Mills Co. Ltd., Kalol, in re; [(1972) 42 Comp. Cas. 265] where a scheme of compromise and arrangement proposed between the company and its creditors and members was sanctioned by the Court after observing the necessary procedure. The right of the company vis-a-vis its members/share-holders and creditors who approved of the scheme in properly held meetings came under discussion at pages 312 and 318 of the Report, where the following observations appear:- "If Mr. Shah is further right in his submission that no scheme can be imposed upon an unwilling company, the moment the company showed its unwillingness to any proposed 252 C.L. Pakistan Company & Tax Law Reports 2004 r' ' scheme, the Court becomes powerless and has to stay its hands. I must say that there is no warrant for this construction of Section 391(1). Rule 68 appears to have been enacted for a limited purpose of apprising the company that a scheme of compromise and arrangement is proposed as between itself and its creditors and/or members. The company having its independent juristic personality, independent of its members, where a member puts forth a scheme which in the ultimate analysis would bind the company, it is just and fair that the company must be informed of such a proposal. But giving up of the information does not . ->-'i tantamount to granting of veto to the company > t - so as to repudiate the scheme by its very f dissent. The Court is not powerless to consider ~v and, if satisfied, to sanction the scheme even v in the teeth of opposition by the company, in > fact the scheme of Section 391 and especially / of Section 391(2) is that once a scheme of compromise and arrangement is approved by a statutory majority, it not only binds the dissenting minority but it also binds the company. This is manifest from the language of sub- section (2) which provides that the compromise and arrangement shall, if sanctioned by the Court, be binding on all the creditors or the class of creditors, all members or the class of members as the case may be and also on the company, or in the case of a company which is being wound-up, on the liquidator and contributories of the company. The effect of the sanction of the scheme is not merely that it binds the dissenting minority but it simultaneously and to the same extent binds the company and also the liquidator if the company is bring wound-up. Therefore, if I have to accept the construction as canvassed for by Mr. Shah it would lead to an impasse.
Assuming that a scheme proposed by someone other than the company is accepted and approved by all the members and creditors of the company, the company which has an independent personality has merely to appear through its principal executive officer and inform the Court that it is not in a mood to accept it and the scheme must fail. Mr. Shah further urged that such a situation would never arise because the majority of members of the company can always remove the directors and the principal executive officer. Now, therefore, if in a given case the statutory majority of creditors and Share-holders approve the scheme of compromise and arrangement but the company opposes it until these members go to the extent of removing the directors end the principal executive officer, the scheme cannot proceed an inch further. I am afraid that, that will render the entire provision contained in Section 391 nugatory and fruitless. This can never be the intention of the framers of Section 391."
"The fact, however, remains that the scheme was unreservedly sanctioned and could be said to have come to operation from that date. To say that, that order is interlocutory is to beg the issue.
There was nothing interlocutory about it as far as sanctioning of the scheme was concerned, it was final and binding unless revised, set aside or modified by the Appellate Court."
37. The question also came up for consideration before the Supreme Court of India in U.K.
(Bombay) P. Ltd. v. New Kaiser-i-Hind Spg. & Wvq. Co. Ltd. And others [(1970) 40 Comp. Cas. 689] where it was held as follows:- "The principle is that a scheme sanctioned by the Court does not operate as a mere agreement between the parties, it becomes binding on the company, the creditors and the Share-holders and has statutory force, and therefore, the joint-debtor could not invoke the principle of accord and satisfaction. By virtue of the provisions of Section 391 of the Act, a scheme is statutorily binding even on creditors and Share-holders who dissented from or are opposed to its being sanctioned, it has statutory force in that sense and therefore cannot be altered except with the sanction of the Court even if the Share-holders and the creditors acquiesce in such alternation [(F. Pre mil a Devi v.
Peoples Bank [1964] 2 S.C.R. 145; A.I.R. 1966 S.C. 1631)]. The effect of the scheme is "to supply by recourse to the procedure thereby prescribed the absence of that individual agreement by every member of the class to be bound by the scheme which would otherwise be necessary to give it validity. (Palmer's Company Law, 20th Ed., page 664). Sub-section (2) of Section 391 of the Act allows the decision of the majority prescribed therein to bind the minority of creditors and Share- holders and it is for that reason that a scheme is said to have statutory operation and cannot be varied by the shareholders or the creditors unless such variation is sanctioned by the Court. The effect, therefore, of a scheme between a company and its creditors is that so long as it is carried out by the company by regular payment in terms of the scheme a creditor who is bound by it cannot maintain a winding-up petition. But if the company commits a default, there is a debt presently due by the company and a petition for winding-up can be sustained at the instance of a creditor."
38. In Vasant Investment Corporation Ltd. v. Official Liquidator, Colaba Land and Mill Co. Ltd. [(198l)
51 Comp. Cas. 20] it was observed as follows:- "The scheme when sanctioned does not merely operate as an agreement between the parties but has statutory force and is binding not only on the company but even dissenting creditors or members, as the case may be. The effect of the sanctioned scheme is to supply by recourse to the procedure thereby prescribed the absence of that individual agreement by every member of the class to be bound by the scheme which would otherwise be necessary to give it validity."
39. Thus, we are of the considered view that when the scheme is sanctioned by the Court, it does not merely operate as an agreement between the parties, and the matter goes beyond the domain of contract, it becomes an order of the Court, has the force of judicial pronouncement, and it assumes statutory force and is binding not only on the members/creditors and the company but also on the dissenting creditors and members, as the case may be.
40. The question then arises whether the appellant-company had not lost its entity as a juristic person after the sanction of the scheme of arrangement for its merger/amalgamation with the respondent- company, and a third company having come into existence, in particular after the order, dated 4.3.2003 had been filed with Registrar of Companies, no proceedings could thereafter be instituted in the name of the appellant-company, in General Radio and Appliances Co. Ltd. And others v. M.A. Khader (dead) by L.Rs. (AIR 1986 Supreme Court 1218) it was observed:- "The order of amalgamation has been made on the basis of the petition made by the transferor company in Company Petition No. 4 of 1968 by High Court of Bombay. As such it cannot be said that this is an involuntary transfer effected by order of the Court. Moreover, the first appellant- company is no longer in existence in the eye of law and it has effaced itself for all practical purposes."
41. Though in different context, but the same question came up for consideration before the Supreme Court of India in Sarswa ti Industrial Syndicate Ltd. v. Commissioner of income Tax, Haryana, Himachal Pradesh and Delhi-Ill [(1991) 70 Comp. Cas. 184]. The following observations appear at page 188 of the Report:- "The question is whether, on the amalgamation of the Indian Sugar Company with the appellant- company, the Indian Sugar Company continued to have its identity and was alive for the purposes of Section 41(1) of the Act. The amalgamation of the two companies was effected under the order of the High Court in proceedings under Section 391 read with Section 394 of the Companies Act.
The Saraswa ti Industrial Syndicate, the transferee-company, was a subsidiary of the Indian Sugar Company, namely, the transferor- company. Under the scheme of amalgamation, the Indian Sugar Company stood dissolved on October 29, 1962, and it ceased to be in existence thereafter, through the scheme provided that the transferee company, the Saraswati Industrial Syndicate Ltd., undertook to meet any liability of the Indian Sugar Company which that company incurred or ft could incur, before the dissolution or not (sic) thereafter. Generally, where only one company is' involved in a change and the rights of the share-holders and creditors are varied, it amounts to reconstruction or reorganization or scheme of arrangement, in an amalgamation, two or more companies are fused into one by merger or by one taking over the other. Reconstruction or amalgamation has no precise legal meaning. Amalgamation is a blending of two or more existing undertakings into one undertaking, the share-holders of each blending company becoming substantially the share- holders in the company which is to carry on the blended undertakings. There may be amalgamation either by the transfer of two or more undertakings to a new company, or by the transfer of one or more undertakings to an existing company. Strictly, "amalgamation" does not cover the mere acquisition by a company of the share capital of the other company which remains in existence and continues its undertaking but the context in which the term is used may show that it is intended to include such an acquisition. See Halsbury's Laws of England, 4th Edition, Volume 7, para 1539. Two companies may join to form a new company but there may be absorption or blending of one by the other and both amount to amalgamation. When two companies are merged and are so joined as to form a third company or one is absorbed into the other or blended with another, the amalgamating company loses its entity."
42. Both the afore-mentioned decisions were relied upon in Data Computer Services v. Northern Digital Exchanges Ltd. [(1998) 92 Comp. Cas. 362] and it was inter alia observed as follows:- "Once the final order of merger had been passed, the erstwhile respondent-company would lose its legal or corporate entity. The amalgamation of a company must be understood as having a definite meaning, as opposed to a reorganization or scheme of arrangement arrived at between two companies, in the case of one company being merged into the other in terms of the scheme the transferor company merges in the transferee for all purposes and intents, including loss of its corporate character and legal entity. The amalgamation thus is a blending of two or more existing companies into one and the transferee company become holders of the share-holding of the transferor company. A complete merger of one company into another with complete assets and liability being transferred to the transferee company is not a mere or temporary eclipse. The legal and financial status of the merged company has the effect of replenishing the very corporate and legal entity of the said company, in simple words, it is loss of legal entity by the earlier company."
"The cumulative effect of the above settled principles of law enunciated by the highest Court of the land, upon its application to the facts and circumstances of the case, leaves no doubt in my mind that the earlier company had completely lost its legal entity and ceases to exist in the eye of law.
This is a case which on the are reading of the scheme and the order shows that one company has merg^d^and been absorbed into the other and blended with the other causing loss of legal entity of the erstwhile petitioner-company. The complete rights and liabilities of the transferor-company had become vested with all such rights and liabilities in the transferee company."
43. Although we have held that the learned Company Judge had the jurisdiction to allow amalgamation of the two companies, yet we will like to deal with the contention of the learned counsel for the appellant that if a Court, Tribunal or other authority has no jurisdiction to entertain a /is, consent of parties could not invest the Court, Tribunal or authority with any jurisdiction, in support of his submission, he relied on Jyotish Prokas Chaporag and another v. Bagla Kanta Chaudhry and others (AIR 1922 Calcutta 274) where the suit for recovery of arrears of rent when filed before the Settlement Officer, he had the territorial jurisdiction but before he could exercise jurisdiction, he was stripped of the same, and thus lost jurisdiction over the area concerned, in this context, it was observed that "jurisdiction of the subject-matter is given only by law and cannot be conferred by consent". Reliance by the learned counsel for the appellant on Muhammad Afzal/ v.
Board of Revenue, West Pakistan and another (PLD 1967 Supreme Court 314) is inapt, in that case, Muhammad Afzal, appellant in the Hon'ble Supreme Court, was a respondent before the Member, Board of Revenue who decided the case against him. Muhammad Afzal challenged the order by a writ petition in the High Court. The High Court refused to grant relief on the ground that the question of jurisdiction had not been raised below. While accepting the appeal, their Lordships of the Supreme Court held: "By mere submission, in the capacity as a respondent, to the authority of the Member, the appellant could not be thought to have conferred jurisdiction on the Member which he did not possess, or to have waived his right to challenge the Member's power, to interfere with the order of the Commissioner", in the instant case, the appellant herein was not a respondent before the learned Judge, but was one of the two applicants who had themselves invoked jurisdiction of the Court. Learned counsel for the appellant also placed reliance on Muhammad AH v. The State (PLD 1980 Lahore 195) wherein a Division Bench of this Court had not accepted the argument that if an accused was tried and convicted by a Court or a Tribunal and he had not taken objection to the jurisdiction of the Court or Tribunal, he was debarred in subsequent proceedings from raising the plea of lack of jurisdiction of the Court or Tribunal trying him. In the precedent case, the accused had not approached the Court of his on. He had been put to trial by the State. His next reliance was on the case reported as Riazuddin v. Haji Muhammad As/am represented by legal heirs and 2 others (PLD 1985 Karachi 411). In that case Riaz-ud-Din was a respondent in a rent matter and his defence had been struck of. The question of jurisdiction of Rent Controller qua an open plot and not rented land* was raised, it was in that context that it was observed that the question of jurisdiction or a pure question of law can be raised even at the appellate stage and that the consent of the parties cannot confer a jurisdiction on a Tribunal which it does not possess of. This decision is again not of any advantage to the appellant, because Riaz-ud-Din was a respondent in the case and his failure to object to the jurisdiction of the Trial Court, before the stage of final arguments, was held not final by observing that consent of parties cannot confer jurisdiction on a Court, if it otherwise lacks jurisdiction, and that the question of jurisdiction could be raised at any stage of the proceedings. Sajjad Hussain v. Musarrat Hussain Shah (1989 SCMR 1826) relied upon by the.
Learned counsel for the appellant was a case which concluded in the Trial Court by consent, but was re-opened on first appeal by the High Court, and the suits were remanded to the Trial Court for decision afresh, on the question of limitation, after recording evidence. The decision of the High Court was set aside by the Supreme Court by holding as follows:- "The first question which requires decision is whether the judgment in the Trial Court was by consent so as to bar an appeal. Section 96 of the Code of Civil Procedure prescribes that no appeal shall lie from a decree passed by the Court with consent of the parties. The order sheet already referred to shows that the statement conceding to the claim of the other and it was as a result of their consent that the judgment was given and the decree passed. Even now it is not the case of any of the parties that such consent was not in fact given. What is contended is that it should not have been given. The learned' counsel has in his Written Arguments pointed out that as in the case of Moulvi Zahirulsaid Alvi v. R.S. Seth Lachhmi Naryan (AIR 1931 Privy Council 107) the consent of the parties should have appeared on the faee of the decree. If the record ex facie shows that the decree had been passed with the consent of the parties sufficient and substantial compliance with the requirement of law has to be assumed particularly so where even in appeal before us the fact of consent and compromise is not controverted."
44. The case of Ghulam AH v. The District Judge, Lahore, etc. (NLR 1994 Civil 122) relied upon by the learned counsel for the appellant, is also not relevant to the issue involved in this case. There, it was held that submission by a party to jurisdiction of Court/Tribunal in capacity of a respondent would not disentitle him to challenge the order of Court/Tribunal in writ jurisdiction on the ground that Court/Tribunal lacked jurisdiction to decide the case. His next reliance was on Maulvi Noor Muhammad and 3 others v. The State (2000 P.Cr.L.J. 1583). In that case, the appellants who were tried and convinced under Section 365-A, PPC by the learned Special Judge for Anti- terrorism Activities, challenged the proceedings before the Trial Court being coram non judice. The contention raised by the other side that the question of jurisdiction could not be raised at appeal stage was repelled by relying on Pir Sabir Shah v. Shad Muhammad Khan, Member, Provincial Assembly, N.W.F.P, and another (PLD 1995 S.C. 66), wherein it was held that question of jurisdiction is very important and fundamental in nature and if a forum has no jurisdiction, the same cannot be conferred upon it by consent of the parties. This decision is also no answer to the contention of the learned counsel for respondent No. 1 because the appellants in that case had themselves not approached the Trial Court, but were put up for trial by the State. The precise question was considered in Nazar Hussain v. Faqir Muhammad (1974 SCMR 188) wherein the decision of the District Court was sought to be avoided on the ground that it lacked pecuniary jurisdiction to entertain the revision filed by the petitioner. The contention was repelled by holding as follows:- "However, we do not regard this as a fit case for our interference for the reason that it was the petitioner himself who invoked the revisional jurisdiction of the District Court, and he cannot now be permitted to contend that Court had no jurisdiction simply because he had failed on merits."
Similarly, in Anwaruiiah Khan (A. Khan) v. Chotey Khan (1978 SCMR 14) law was laid down thus:- "It was contended before us that the Second Appeal was not competent in view of the decision of this Court in Ibrahim v. Muhammad Hussain (PLD 1975 SC 457) and, therefore, the judgment is a nullity. But this contention appears to be misconceived for, it was the petitioner who had filed the appeal and if according to him, it was incompetent he should not have done so. But having invoked the jurisdiction and the decision being against him he is disentitled by his conduct to seek special leave to appeal against it."
45. The case reported as Haji Muhammad Asghar v. Malik Shah Muhammad Awan and another (PLD 1986 Supreme Court 542) is almost on all fours, wherein it was inter alia held as follows:- "Where a party to the proceedings before a Court or Tribunal enters into an agreement of its on free will for disposal of the matter, it cannot turn round and successfully plead that it had no legal right to consent and the Court or authority could not act on such consent and should not be allowed to do so. It is not the case of the appellant that he did not consent, or had a mistaken view of the situation or was otherwise duped or taken in. These are the cases where the doctrine of ejection, of approbation and reprobation, comes into play. **** Besides, as the order sought to be reviewed by the appellant was passed on his on undertaking and assent there was no occasion to get it reviewed. The impugned order in such a context, suffers from no legal infirmity."
46. In Federation of Pakistan through Secretary, Ministry of Works, Govt, of Pakistan, Islamabad v.
Mrs. Musarrat Bokhari and another (1993 C.L.C. 2519) the view taken was: "it is an established legal principle that if the litigant himself chooses a forum for redress of his grievance, he is estopped to challenge the jurisdiction of that forum if the ultimate decision is rendered against him", in North-West Frontier Province, Peshawar through Collector, Abbottabad and another v. Abdu! Ghafoor Khan through Legal Heirs and 2 others (PLD 1993 SC 418) the respondents having themselves invited the impugned order were not allowed to challenge the same nor to resile from the consent given by their learned counsel on the basis of which the order was passed, in Ch. Haq Nawaz Chohan v. Ch. Tariq Azam and 43 others (1994 CLC 1530), after reviewing the case-law, almost exhaustively, it was observed that though parties to Us cannot confer upon the Court or an authority, jurisdiction by their consent, but generally the person who himself invokes jurisdiction of a Court or an authority and participates in the proceedings before the said forum/authority he cannot be subsequently allowed to approbate and reprobate, and *to challenge the competency of proceedings before the said forum as he cannot be heard in support of his contention on the principle of estoppel and acquiescence, it was further held that the cases of ousters being coram non judice were exceptions to the general ruld The judgment of the Supreme Court reported as Khoo&bamonai Tribe of Samagoie, Tehsil Morkeh, District Chitral through Representative v. Provincial Government of N.W.F.P, through Add/. Secretary, Government of N.W.F.P., Home and Tribal Affairs Department, District Courts, Peshawar and 3 others (2000 SCMR 1657), relied upon by Mr. Sahgal, rather goes against him. Doubtless, it was held therein; "There is no cavil with the proposition that litigants cannot confer jurisdiction on a Court or Tribunal which is otherwise not possessed by it" but the appeal was dismissed against the decision of a Division Bench of the Peshawar High Court wherein it was inter alia observed that petitioners could not be allowed to blow hot and cold and to change their stance whenever it suited them, which observations were approved by the Supreme Court. The decision of Hon'ble Supreme Court in Federation of Pakistan v. Amir Hamza (2001 SCMR 1959) is also in point, in that case, Amir Hamza, originally an Inspector of Police, Northern Areas, but having been promoted as Senior Superintendent of Police and on earning move-over was placed in BS-19. His were, Mrs. Shaista Shamim Hamza, became Member of Northern Areas Council during 1995. During a meeting held on 24.7.1995 presided over by the Chief Executive of the Council who was Minister for Kashmir Affairs and Northern Areas, she was a little out-spoken and gave vent to her feelings qua problems confronted by local residents of Northern Areas, and sense of deprivation being felt by them, besides criticizing the Chief Executive of the Northern Areas about neglecting members of the Council. Three days thereafter Amir Hamza was transferred from the post of SSP, Ghizar to KA & NA Division, Islamabad.
Unnecessary details apart, on account of certain unpleasant and violent remarks used by him in his charge assumption report, Amir Hamza was proceeded against departmentally and was eventually dismissed from service. His representation to the President having gone by the board, he approached Federal Service Tribunal through an appeal which was partly allowed, major penalty of dismissal from service having been converted into a minor penalty of withholding three increments without cumulative effect. Federation of Pakistan as well as Amir Hamza challenged the decision of Service Tribunal before the Supreme Court. Amir Hamza took objection to the competency of authority in affecting his transfer from Northern Area etc. While dealing with the objection, their Lordships observed inter alia as follows:- "The appellant after his dismissal from service had himself invoked jurisdiction of the Tribunal by preferring Appeal No. 491 of 1996 whereby relief as regards reinstatement subject to imposition of minor penalty of withholding three increments without cumulative effect was granted. Besides, the appellant conceding the jurisdiction has further challenged position of the impugned judgment to the extent of minor penalty awarded against him before this Court through Civil Appeal No. 77 of 1997. The very factum of his invoking jurisdiction of the Tribunal and preferring proceedings before this Court, negates legal and Constitutional objections raised by him. It may be observed that the appellant cannot be permitted to approbate and reprobate in the same breath, i.e. To challenge the Constitutionality and jurisdiction of forum which he has himself nvoked for seeking relief under the law."
47. In Abdul AH v Haji Bismillah (2002 SCMR 2003) also a similar contention was raised that the High Court had no jurisdiction to hear the appeal as the appellant was charged in the F.I.R, under Section 17(4) of the Offences Against Property (Enforcement of Hudood) Ordinance, 1979, and was repelled by observing inter alia that:- "the appellant could not be permitted to raise such an objection at this stage on account of the principle of estoppel which would operate against him because of his acquiescence/silence."
48. Here also, in the first instance, an attempt was made by the appellant to seek relief from the learned Judge by invoking his jurisdiction and, when failed, has , filed this appeal. This, the contention of the learned counsel for the respondent-company that the appellant having himself approached the Court is debarred to challenge its jurisdiction after the decision has been rendered against it in C.M. No. 225-L of 2003 must, therefore, prevail.
49. The next question is whether the appeal against the original order, dated 4.3.2003 being beyond limitation, the appellant can take advantage of the order passed on 12.6.2003 in C.M. No. 25-L of 2003. The case reported as Ghulam Hussain and another v. Kanwer Ashiq AH Khan and another (PLD 1980 Supreme Court 198) is on all fours, in that case, suit of the plaintiff having been decreed, first appeal filed by the defendants was accepted by holding that the plaintiffs would have the right to retain possession of land purchased by them till they were reimbursed and returned the compensation price of Rs. 14,700/- paid by them to the vendor. This led both the parties to file Regular Second Appeal in the High Court. By a common judgment dated 14.12.1977, appeal filed by the plaintiffs was dismissed whereas that of the defendants was accepted and the matter of determination of the quantum of sale price/compensation was remanded to the learned Trial Court for fresh decision in accordance with law. The plaintiffs filed a review petition but without any success as the same was dismissed in limine on 12.2.1978. The plaintiffs then filed Civil Petition for Special Leave to Appeal against the basic order, dated 14.12.1977, as well as against the order, dated 12.2.1978 refusing to review the previous order. The Hon'ble Supreme Court dismissed the petition by holding that the object of the petitioners was to seek vacation of the basic order which had become final by efflux of time, and the order of refusal to review could not give a fresh period of limitation to challenge the same, in the context, it was held as follows:- "The present petition against the basic order of the High Court dated 14.12.1977 is barred by 395 days and there is no application or prayer either for condonation of delay or to set aside that order as such. When confronted with this situation the learned counsel argued that the present is a petition against the order dated 12.2.1978 refusing to review the previous order dated 14.12.1977 and in its on turn is within limitation qua that order. This may be so but while seeking leave to appeal against order refusing to review the main previous order, in fact the object of the petitioner is to seek vacation of the said previous order which by efflux of time has become final. The fact that in review the Court further affirmed the aforesaid order is immaterial inasmuch as a refusal to review the same will not give a fresh period of limitation to challenge it. In this peculiar situation, therefore, when the previous order has become binding on the petitioners, they cannot be allowed to by-pass it by simply pleading that the present petition is against order refusing to review the same because while stating so their intention is to point out errors and mistakes in the basic order which were sought to be removed through a review application but which failed. There may be cases where for instance petition of review may be refused merely for want of jurisdiction in which of course a petition may lie but will be on ground of refusing to exercise jurisdiction vested in a Court by law on the ground that it has no jurisdiction whereas in fact and in law it had such jurisdiction, in those cases a petition against refusal to review will not be a petition directly or indirectly against the main previous order on merits but only against the order in review itself. The position in the instant case is however different. Here the question is not of lack of jurisdiction of the High Court to entertain review, but after entertaining it refusing the same on the ground that no case for review on merits exists. Such a decision will essentially conripel a suitor to challenge the previous order itself to point out the mistakes allegedly existing therein, which exercise obviously cannot be resorted to if the period of limitation for challenging the main previous order has run out and because you cannot do that indirectly which you cannot do directly. A more proper course in such situation will be to file a petition for leave to appeal against the basic previous order and apply for extension of time under Section 5 of the Limitation Act IX of 1908 on the ground that the petitioner had in good faith and with due diligence been pursuing a remedy of review therefore the time spent therein may be allowed to him on the principle of Section 14 of the aforesaid Act etc."
50. In Lahore Development Authority v. Fahmeeda Khatoon and others (1986 SCMR 1478), a learned Single Judge of this Court had accepted, on 28.4.1980, certain writ petitions filed by persons aggrieved of LDA's decision, refusing to exempt a part of the land which had been included by LDA in its scheme. LDA filed time-barred review petitions in all cases, which were dismissed on 24.11.1980.
LDA, thereafter filed Intra-Court Appeals which were, however, dismissed on merits. LDA challenged the decision in the Supreme Court through Civil Petitions for Leave to Appeal which were dismissed by inter alia observing as follows:- "The petitions are liable to be dismissed on the short ground that no appeal was competent against the order refusing to review the order passed in the writ petitions."
"Under Order XXXVII (should be XLVII), Rule 7, C.P.C, and order of the Court rejecting an application for review is not appealable. Consequently, no I.C.A, was competent against the order, dated 24.11.1980, whereby the review applications were dismissed. The Intra-Court Appeals were liable to be dismissed on the short ground." "it needs to be mentioned that although in the heading of each Intra-Court Appeal, it is stated that the appeal is directed against the original order, dated 28.4.1980, passed in the writ petition but the text of the memorandum of appeal clearly shows that it is directed against the order refusing to review the said order. Even if each appeal is taken to be directed against order, passed in writ petition, dated 28.4.1980, the same was liable to be dismissed on the short ground of limitation."
Khawaja Muhammad Afzal and another v. Sh. Muhammad Sadiq and others (1988 SCMR 179) is a case almost on all fours, in that case, instead of filing a Letters Patent Appeal from the order of a learned Single Judge, the respondent filed a review petition which was dismissed. When the respondent filed Letters Patent Appeal, it was opposed by the appellant on the ground of being barred by time. The learned Judges of the Division Bench seized of the appeal over-ruled the objection and gave benefit to the respondent of computation of the time spent in pursuing the review application. The decision was reversed by the Hon'ble Supreme Court by inter alia holding as follows:- "It is well-established that once time has begun to run it does not stop. The time for filing the Letters Patent Appeals having already expired neither the time spent in pursuing the review application nor the time spent in obtaining copy of the order passed by the Single Judge could be deducted from the period of 20 days. Similarly the time spent in obtaining copy of the order rejecting the review application could not be deducted as under the Rule it was not necessary to file copy of that order alongwith the memorandum of the Letters Patent Appeal, in computing the time for filing the Letters Patent Appeal the High Court had thus fallen in error."
Similarly, in Cantonment Board, Rawalpindi v. Muhammad Sharif through Legal Heirs (PLD 1995 Supreme Court 472) the contention that though the appeal was barred by time as against the original order, but the petitioner had been pursuing remedy of review, and the appeal be deemed to be within time from the order passed in review, was repelled by holding as follows:- "The prosecution of the review petition before the learned District Judge and time spent therefor could not be excluded under Section 14 of the Limitation Act." in Khurshid Alam and 2 others v. Government of the Punjab and 6 others (PLD 1998 Lahore 189) a Division Bench of this Court, relying on the case of Cantonment Board, Rawalpindi, supra held that the appellants were not entitled to have the time spent by them in prosecuting the review application excluded while computing the limitation for the purpose of appeal. Relying on Ghulam Hussain's case, it was further held, as follows:- "It was observed by the Supreme Court of Pakistan that the main order remained to be the order by which the case was disposed of and not the order refusing to review the same and as the previous order had become binding on the appellants they could not be allowed to by-pass it on the ground that the application for review had been filed." * We have thus no doubt in our mind that the appeal filed by the appellant insijir.r the order dated 4.3.2003 is concerned being barred by limitation, is liable to be dismissed on this ground as well.
51. The contention of the learned counsel for the respondent-company that the appeal against the order, dated 12.6.2003 was not maintainable even if the said application was treated as review petition or an application under Section 12(2), C.P.C, or the one under Section 151, CPC has no merit.
Every Court, Tribunal or Authority, who had passed an order can recall the said order if it lacked inherent jurisdiction or it was procured through fraud and mis-representation as held by the Hon'ble Supreme Court in Muhammad Fazil Vs. Chief Settlement Commissioner (PLD 1975 SC 331).
Further, appealability of an order is not to be sent with reference to the provisions of the Civil Procedure Code because of specific provision in the form of Section 10(3) of the Companies Ordinance, 1984. It may be added that by virtue of Section 1 5 of the Code of Civil Procedure (Amendment) Ordinance (No. X of 1980), even an interim order passed in exercise of original civil jurisdiction is appealable before a Bench of two Judges. We, therefore, hold that the order dated 12.6.2003 whereby application of the appellant- company was dismissed and application of the respondent-company was allowed was appealable under Section 10(3) of the Companies Ordinance.
52. Mr. Sahgal heavily relied on S.M. Yusuf & Brother v. Muhammad Mehdi Pooya (PLD 1965 Supreme Court 1 5) to contend that since the scheme sanctioned by order, dated 4.3.2003 is not "workable" we, sitting as an Appellate Court against the said order, have unfettered power to set aside the order even though Intra-Court Appeal had not been filed against the said order within the period of limitation, in that case, their Lordships were dealing with the contention, based on Order XL1, rule 33, CPC, to the effect that the mere fact that the appeal was against a part of the decree, would not debar the Appellate Court from granting relief to the parties in accordance with justice, equity and good conscience, or where the failure to exercise jurisdiction would lead to impossible, contradictory and unworkable orders. At the same time, their Lordships had struck a note of caution in the following terms:- "The rule confers unfettered discretion and anything expressed in negative or restrictive terms, affecting its application, must be accepted as applying only to the particular facts of the case to which the rule is being applied by interpretation. Such an interpretation cannot be extended to all or any other cases, for in each one, the application of the rule must be made beneficially and in accordance with the relevant facts."
53. Learned counsel for the appellant then took exception to the order, dated 12.6.2003 by contending that the Court could not allow or modify the sanctioned scheme, in support of this submission, reliance was placed on in re: Mahigang Loan Office Ltd. v. Behari Lal Chaki (AIR 1937 Calcutta 667) wherein it was inter alia observed that the "Court has no power to modify or alter a scheme without the consent of those who agreed to it" and that "to hold that the Court has power to expunge part of a sanctioned scheme without the consent of those persons whose agreement to the scheme was essential before it could be sanctioned at all, would be in my opinion contrary to all principles of fairness and justice". Support for this contention was also sought from in re: Comrade Bank Ltd. (PLD 1957 Dacca 554) wherein the view expressed was as follows:- "In the case of in re: Bank of Mymensingh Gouripur Ltd. (53 C.W.N. 143) Das, J. Of the Calcutta High Court held that after an order sanctioning a scheme under Section 1 53 of the Companies Act has been drawn up, completed and filed, the Court can do nothing except correcting accidental omissions or mistakes in the order. But if any alteration or amendment other than correcting the accidental omissions or mistakes is required then this can only be done by way of a fresh scheme. The same learned Judge again, whilst Chief Justice of the East Punjab High Court, dealt with this question more fully in the Full Bench decision of the East Punjab High Court in the case of Sm. Bhagwanti v. New Bank of India Ltd., Amr.Tsar (AIR 1950 E.P. 111 j. The learned Chief Justice (Now Chief Justice of the Supreme Court - of India) after reviewing a number of English and Indian authorities laid down certain general principles, end one of those principles is that where a scheme which is not of the kind mentioned in Section 1 53-A or 1 53 B is sanctioned otherwise than in the course of a winding-up, the Court sanctioning the scheme has no further seisin of the s^iieme, and has no jurisdiction or power as the Company Court to entertain any application for modifying the scheme, and that this jurisdiction cannot be conferred on the Court even by providing in the scheme for reservation of powers -to the Court to entertain such subsequent applications. Applying the principles that can be gathered from the above-mentioned decisions it seems to me that any application for the modification of a scheme sanctioned under Section 153 of the Companies Act, and all the requirements of the aforesaid section must be duly satisfied before such modification can be sanctioned, it is on the basis of this principle that in the very first stage, I treated this application as a fresh application under Section 153 of the Companies Act, and directed the issue of the notices of this application."
54. The language of Section 285 of the Companies Ordinance, 1984 is exactly the same as that of Section 392(1 )(b) of the Indian Companies Act, 1956. In Mansukhlal v. M. V. Shah, Official Liquidator, Liquidator of Hathising Mfg. Co. Ltd. (in Liquidation) and others [(1976) 46 Comp. Cas. 279] the power to modify the scheme by the Court which had sanctioned the same was conceded by a Single Judge of Gujrat High Court. At pages 291-292 of the Report it was observed as follows:- "Reading clauses (a) and (b) of sub-section (1) of Section 392, it appears that Parliament did not want the Court to be functus officio as soon as the scheme of compromise and arrangement is sanctioned by it. The Court has a continuing supervision over the implementation of compromise and arrangement. Un-envisaged, unanticipated, unforeseen or even unimaginable hitches, obstruction and impediments may arise in the course of implementation of a scheme of compromise and arrangement and if on every such occasion, sponsors have to go back to the parties concerned for seeking their approval for a modification and then seek the approval of the Court, it would be a lor g drawn out, protracted, time-consuming process with no guarantee of result and the whole scheme of compromise and arrangement may be mutilated in the process.
Parliament has, therefore, thought it fit to trust the wisdom of the Court rather than go back to the interested parties. If the parties have several times to decide the modification with the democratic process, the good part of an election machinery apart, the dirt may step in, the conflicting interests may be bought and sold, and, in the process, the whole scheme of compromise and arrangement may be so twisted and torn out of context as to be thoroughly useless and may be jettisoned, in order, therefore, to guard against this eventually and situation, which is clearly envisageable. Parliament has conferred power on the Court, not only to make modifications even at the time of sanctioning the scheme, but at any time thereafter during the period the scheme is being implemented. Conceding that before the Court sanctions the scheme, it partakes the character of an emerging contract between the company and the creditors and members; once the Court approves it, it becomes a statutorily enforceable contract even on dissidents, with power in the Court to modify, amend or correct or revise the contract the outer periphery or its limit on the power being that, after testing it on the anvil of probabilities, surrounding circumstances and the prevalent state of affairs, it can be done for the proper working of the compromise and arrangement, and, subject to this limit on the Court's power, the power seems to be absolute and of the widest amplitude and it would be unwise to curtail it by process of interpretation."
Again in Ram Lal Anand v. Bank of Baroda and others [(1976) 46 Comp. Cas. 307], a decision of a Division Bench of Delhi High Court, following observations appear at page 313:- "Under Section 392, the High Court has the power to supervise the carrying out of the compromise or arrangement which has been sanctioned by it under Section 391. Further, it has the power to give directions either at the , time of sanctioning the compromise or at any time thereafter in regard to any matter for the proper working of the compromise or arrangement. The Court has the power even to modify the compromise in order to make it work satisfactorily. The order under Section 392 can be passed by the Court suo moto and it is not necessary for it to wait for an application for the purpose. While ensuring the proper working of one part of the compromise which requires the appellant to give up his rights, the Court is not prevented from giving directions in regard to the other part of the compromise dealing with the obligations of the company, it is true that no hard and fast rules can be laid for the manlier in which the Court will exercise its powers under Section 392; and there may be cases where the Court will insist on the performance of one part of the compromise leaving the other part for consideration at some future occasion, especially when the two parts are not dependent on each other."
The matter was examined, rather in details, by a learned Single Judge of Delhi High Court in a subsequent case reported as Dr. Ved Mitra v. Globe Motors Ltd. [(1978) 48 Comp. Cas. 64] and the following views were expressed:-- "In order to appreciate the legal position, it is necessary to notice the change brought about in this respect by the Companies Act, 1956, after the introduction of Section 391 instead of the old Section 153 of the Act of 1913. The position under the old Act was explained by the Judicial Committee in [1939] 9 Comp. Cas. 1 (P.C.).
Any scheme of arrangement which had become operative by virtue of the sanction given by the Court under Section 1 53 of the old Act (of 1913) became binding on the creditors and Share-holders of the company whose terms could thereafter be varied by the Court only after the variation had been approved at a meeting of the creditors and Share-holders. The Judicial Committee repelled the argument that it was possible for a company and its directors to vary the scheme under the guise of a compromise with the creditors and Share-holders; there could be no validation by mere acquiescence of the shareholders and creditors, in Natore Kamala Bank Ltd.'s case [(1937) 7 Comp.
Cas. 178 (Cal.)], Lord Williams, J. Had held that the powers of the Court under Section 153 of the old Act were strictly limited; the Court may either sanction or refuse to sanction a scheme approved by a company and its creditors or members and the Court has no power, upon an application, to alter the scheme which has been sanctioned by the Court after having been approved by the creditors and members without giving them a fresh opportunity for considering the scheme in the way the Court proposed. Since this result was found extremely inconvenient in practice, the legislature brought in a new provision, namely Section 392, giving the Court power to sanction modification of the scheme, already approved by it, without directing a fresh meeting of the creditors and members. Since there was nothing more in the old Act than the said provision (Section 153), corresponding to present Sections 391, and there was no further provision corresponding to present Section 392, the legislature thus clearly intended to clothe the Court with such special powers in the larger interest of overseeing whether the scheme was being worked satisfactorily or could be worked with some modifications; the Court could, even without giving an opportunity to the Share-holders and creditors to consider those modifications, order the existing arrangement to continue instead of winding-up the company, it is a permissible manner of gathering legislative intent by seeking to find out the mischief to be avoided and the remedy to be promoted. On the language of Section 392 and in the above context, it appears that an alternative has now been given to the Court to order winding-up in the event of a scheme already approved by the Court not being possible to work, "with or without modifications", it may be noticed that the power under Section 392 to do so has been conferred on the Court in a manner that will permit the exercise of the said power not only on any application made to it but even suo motu."
Referring to an unreported decision of the same Court, it was furtner observed: "The learned Judge also held that the contention which was put forward to the effect, namely, that the Court had no power to accord any sanction to modification of the scheme which already has been sanctioned without directing a fresh meeting was not sound and that the Court enjoyed such a power under the Companies Act of 1956 and the rules framed thereunder, as noticed above", in India, the question stood settled, once for all, with the decision of a Full Bench of Indian Supreme Court reported as S.K. Gupta and another v. K.P. Jain and another [(1979) 49 Comp. Cas. 342]. The following observations appear at page 351 of the Report:- "When a detailed compromise and/or arrangement is worked out, hitches and impediments may arise and if there was no provision like the one in S. 392, the only obvious alternative would be to follow the cumbersome procedure as provided in S. 391(1), viz., again by approaching the class of creditors or members to whom ' the compromise and/or arrangement was offered to accord their sanction to the steps to be taken for removing such hitches and impediments. This would be . Unduly cumbersome and time consuming and, therefore, the legislature in its wisdom conferred power of widest amplitude on the High Court under S. 392 not only to give directions but to make such modification in the compromise and/or arrangement as the Court may consider necessary, the only limit on the power of the Court being that such directions can be given and modifications can be made for the proper working of the compromise and/or arrangement. The purpose underlying S. 392 is to provide for effective working of the compromise and/or arrangement once sanctioned and over which the Court must exercise continuous supervision [see S. 392(1), and if over a period there may arise obstacles, difficulties or impediments, to remove them, again not for any other purpose but for the proper working of the compromise and/or arrangement. This power either to give directions to overcome the difficulties or if the provisions of the scheme themselves create an impediment, to modify the provision to the extent necessary, can only be exercised so as to provide for smooth working of the compromise and/or arrangement. To effectuate this purpose the power of widest amplitude has been conferred on the High Court and this r a basic departure from the scheme of the U.K. Act in which provision analogous to S. 392 is absent."
Needless to mention that the observations of Gujrat High Court in the case of Mansukhlal referred to above, were quoted, with approval, by the learned Judges of the Supreme Court in the afore- mentioned case of S.K. Gupta, in Mysore Electro Chemical Works Ltd. v. Income Tax Officer, Circle-1, Banglore [(1982) 52 Comp. Cas. 32] it was observed that Sections 392 and 394 of the Indian Companies Act, 1956, had set at rest the old controversy as to whether the Court sanctioning a scheme retains jurisdiction thereafter to issue any directions. We are, therefore, clearly of the view that reliance by the learned counsel for the appellant on he cases of Mahigang Loan Office Ltd. v.
Behari Lal Chaki and in re: Comrade Bank Ltd. Supra is totally irrelevant, in view of the provisions of Section 285 of the Ordinance which confers on the Court sanctioning a scheme plenary powers not only to give directions, but it can also make modifications in the scheme for its proper working.
43. Lastly, learned counsel for respondent No. 1 also took exception to the maintainability of the application (C.M. No. 225-L of 2003) whereby recall of the order, dated 4.3.2003 sanctioning the scheme of merger/amalgamation of the appellant and respondent No. 1 and as a consequence thereof coming into being a new company by the name of "CALCORP MULTI LEASING LIMITED", was sought. His precise objection was that the person, namely, Mr. Kamal Khan, who filed the application on behalf of the appellant-company had not been authorized by the Board of Directors to file the said application.
C.M. No. 225-L of 2003 was filed supposedly on behalf of the appellant-company by Mr. Kamal Khan, posing himself as "its Chief Executive" and having been authorized to institute the said petition through Resolutions, dated 4.3.2003 and 25.3.2003 passed by the Board of Directors, in order to deal with the objection of learned counsel for respondent No. 1, we have examined the two Resolutions. The same are reproduced below:- Resolution dated 4*3.2003 "it was unanimously resolved that Mr. Kamal Khan, Chief Executive and Mr. Irfan Mahmood, Marketing Executive are authorized to sign singly and jointly plaints, Written Statements, Wakalatnamas, sign and verify the petition(s), affidavits, counter-affidavits and any other related documents, to act and appear on behalf of the company and to do and perform all other act, deeds and things in all legal proceedings as are necessary for the preparation and filing of recovery suits against defaulters of the company, when it deemed necessary."
Resolution dated 25.3.2003 "it was resolved that in view of unilateral, unjustified and illegal actions taken by CALCORP necessary steps should be taken including negotiations/legal action in order to protect the interests of IML share-holder. Mr. Saleem Saigol, Advocate be appointed on a fee with mutual understanding for which the Chief Executive is authorized to make payment and subsequently inform the Board in the next meeting."
44. A bare reading of the first Resolution, dated 4.3.2003 shows that Mr. Kamal Khan and Mr. Irfan Mahmood were authorized to act on behalf of the company and to sign and verify, jointly and singly, all kinds of pleadings "necessary for the preparation and filing of recovery suits against defaulters of the company, when it deemed necessary". (Emphasis has been supplied by us). The language of the Resolution does not admit of any doubt, not more than one meaning can be given to it. In plain language, it was not all pervading but was restricted to institution of recovery suits against defaulters of the company, nothing more nothing less. Moreover, in Annex-B to the petition, wherein the Resolution has been reproduced, it is inter alia mentioned: "Extracts of the Minutes of Board of Directors Meeting of International Multi Leasing Corporation Limited held on March 4, 2003 at 11.0 a.m.". The date of this Resolution is the same as is the date of the order whereby the scheme had been sanctioned. We have seen the original file. The order is spread over four pages. May be, by 11.00 a.m. The appellant-company was not even aware of the contents of the order, and, therefore, we can safely assume that by the first Resolution, dated 4.3.2003, the Board of Directors had not authorized Mr. Kamal Khan to file C.M. No. 225-L of 2003 seeking recall of the order, dated 4.3.2003.
45. So far as the second Resolution, dated 25.3.2003 is concerned, it appears, the Board of Directors, aggrieved of certain actions of "CALCORP" which had come into being consequent upon sanctioning of the scheme of merger/amalgamation of the appellant and respondent No. 1, had authorized the "Chief Executive" to appoint "Mr. Saleem Saigol, Advocate" for taking necessary steps including negotiations/legal action in order to protect the interests of "IML Share-holder", on a fee to be settled with mutual understanding, to make payment thereof, and subsequently to inform the Board in the next meeting. Obviously, by means of this second Resolution as well, the "Chief Executive" had not been authorized to file C.M. No. 225-L of 2003 for re-call of the order, dated 4.3.2003 whereby the Scheme for merger/amalgamatkjn of the two companies was sanctioned, in this view of the matter, the objection of the learned counsel for respondent No. 1 that Mr. Kamal Khan was not a duly authorized person to have filed C.M. No. 225-L of 2003 on behalf of the appellant- company, is not without substance, and we hold that Mr. Kamal Khan was only an eminense guise.
46. By means of C.M. No. 664 and C.M. No. 878 of 2003, the appellant has attempted, during the course of hearing of this appeal, to bring on record certain documents to show that after the impugned orders, dated 4.3.2003 and 12.6.2003, had been passed, the financial health of the respondent-company has suffered adversely, as per latest Balance Sheet. If .The appellant can be permitted to introduce fresh evidence, particularly the one which has come into existence after the decision by the learned Judge, it will be opening a Pandora's box and there will be no end to litigation, in Kassowji issur v. G.I.G. Railway (34 I.A. 115) their Lordships of the Privy Council held that if the evidence could have been tendered in the lower Court it was not a substantial cause for producing it in appeal, in Hakim AH v. Member Power, WAPDA (PLD 2002 Lahore 28) a Division Bench of this Court has held that when a person has not pleaded something and has not built up his case on the specific assertion before the learned Single Judge, he is precluded from taking such a plea before the appellate forum in Intra-Court Appeal. After going through the case-law cited at the Bar, and the language of Order XL1, rule 27 itself, we are of the view that since the appellant had ample opportunity of producing documents, which were indisputedly in its possession, but it elected not to do so, rather rested its case on C.M. No. 225-L of 2003 as it stood, he ought not be allowed to tender documents sought to be produced now before us by means of C.M. Nos. 664 and 878 of 2003, at the fag end of the arguments in this^ appeal. Under the said provision, parties are not entitled to produce additional evidence, whether oral or documentary, in the Appellate Court. Additional evidence at appellate stage can be received only if it is deemed essential for pronouncing the judgment, the material already on record being not sufficient to enable the Appellate Court to come to a definite conclusion, in the view of the matter we take, C.M. Nos. 664 and 878 of 2003 for production of additional documents have no merit and are accordingly dismissed.
47. The upshot of the above discussion is that the impugned orders, dated 4.3.2003 and 12.6.2003 of the learned Single Judge do not suffer from any error of approach or a jurisdictional defect.
Consequently, the appeal fails and is hereby dismissed, leaving the parties to bear their on costs. .