' SABIHUDDIN AHMED, J.-These two appeals arise from a common judgment of a learned Single Judge of this Court exercising original jurisdiction dated 22-1-1990, whereby Suit No,536 of 1982 filed by the appellant was dismissed and Suit No,236 of 1983 filed by the respondent was decreed.
2. By way of necessary background it may be stated that respondent No,1 advanced a foreign currency loan to the appellant in the amount of DM 875,760 which was repayable in instalments according to an agreed schedule. By way of security the appellants created equitable mortgage in favour of the respondent through deposit of title deeds of their immovable properties.
3. The appellants were unable to make certain payment by the due dates and the respondent filed a petition for winding-up of the appellant (J.M. No,45 of 1977) on the ground that the appellant- company was unable to pay its debts. The appellant took the plea that the amount claimed to be due and payable by the appellant was not correct inasmuch as they were liable to pay all the debts in Pak rupees according to the exchange of rate operating on the due date and not the date of actual payment as asserted by the respondent. In this context it may be pertinent to mention that in Suit No,312 of 1971 PICIC v. Mahboob Industries Limited (1980 CLC 249) a learned Single Judge of this Court had taken a view which supported the appellant. After the pronouncement of the aforesaid judgment the parties agreed to disposal of the petition in terms of a joint statement, which may be reproduced in entirety:-- "The parties above-named, respectfully beg to submit as under:--
(1) That the claim of the petitioners against the respondents as on 30-9-1997 is Rs,62,52,716.95, but in view of the principles laid down in the decision of this Honourable Court in Suit No,312 of 1971, the approximate amount of Rs,15,00,000 (Rupees fifteen lacs only) inclusive of interest, penal interest, premium and charges is only admitted by the respondents payable by them up to 24-5-1980, which the respondents are ready to deposit within three months. This will be without prejudice to the rights of the petitioners for the claim of the balance amount which may become due and recoverable by the petitioners from the respondents or any claim of the parties, arising thereafter, subject to decision in the High Court Appeal No,51 of 1979.
(2) That if the respondents fail to pay the agreed amount within stipulated period .The above petition under section 162 of the Companies Act will stand granted and the company will be wound up and in case of payment of the above said amount by the respondents within the fixed time, the petition shall stand dismissed as withdrawn.
(3) That the respondents shall deposit the amount in Court and the petitioners shall not withdraw this amount till all the security documents are deposited by them In Court."
4. The petition was disposed of by the learned Company Judge in terms of the above joint statement with a further direction that in case the amount of Rs,15 lacs was not deposited within the agreed period of three months, the case would be put up for naming a liquidator. It is not disputed that the appellant made the deposit within the stipulated time, but the respondent did not deposit security documents as an appeal against the judgment and decree in Suit No,312 of 1971 (H.C.A. No,51 of 1979) was pending. There was a difference of opinion between the two Honourable Judges hearing the appeal and upon the matter having been referred to a third Honourable Judge, the view taken by the learned Single 'Judge was upheld and the appeal was dismissed. Nevertheless on 28-2-1982 the Foreign Currency Loan (Rate of Exchange) Order, 1982 (RO-3) of 1982 was promulgated mainly to nullify the effect of the appellate judgment in Mahboob Industries' case. The relevant provisions of this order may be reproduced as under:-- "3. Rate of exchange applicable to foreign currency loans:---For the removal of doubts it is hereby declared that, notwithstanding anything contained in any other law for the time being in force, the judgment, of any Court or any agreement, contract or other instrument, the rate of exchange, for the purpose of conversion into Pakistan currency for repayment in respect of an outstanding foreign currency loan or any part thereof or interest in respect is thereof payable to a financial institution in son the day of commencement of this order shall be, and shall be deemed at all material times to have been, the rate of exchange in force under section 23 of the State Bank of Pakistan Act, 1956 (XXXIII of 1956), on the day on which the loan, part or interest is actually repaid or paid to the financial institution; and all parties by whom the loan, part or interest is repayable or payable shall make the repayment or payment accordingly.
4. Bar of jurisdiction, etc.---(1)-------
(2) Any other writ, judgment, decision or decree of any Court, made, given, issued or passed before or after the commencement of this Order, which is inconsistent with the provisions of this order, shall be null and void and of no effect."
5. Since the security documents had not been deposited in Court by the respondent, in terms of the consent order, dated 25-5-1980, the appellant filed Suit No,536 of 1982 against the respondent, praying for cancellation of documents executed by it in favour of the respondent for securing repayment of the loan. The respondent after the promulgation of the aforesaid order made an application before the learned Single Judge seeking modification of the consent order dated 25-5- 1980 and after failing to receive any redress, filed Suit No,236 of 1983, for recovery of the amount calculated on the basis of rate of exchange on the date of actual payment. Both these suits were disposed of by the impugned judgment as mentioned above, which has been questioned by the appellant.
6. Mr. Iqbal Kazi, learned counsel for the appellant primarily argued that the learned Single Judge erred in law in holding the appellant liable for payment according to exchange of rate prevailing on the date of actual payment, as distinguished from due date of payment in terms of Article 3 of the Foreign Currency Loan (Rate of Exchange) Order (hereinafter mentioned as President's Order).
While conceding that the provisions of the President's Order were required to be given retrospective effect and had to prevail over any other law or any judgment of any Court, he argued that Article 3 itself required that it applied only to outstanding Foreign Currency Loan and not to loans which had already been paid off. Learned counsel went on to contend that the loan repaid by the appellant stood paid off upon the deposit of the agreed amount of Rs,1,500,000 in terms of the consent order dated 25-5-1980 passed in J.M. No,45 of 1977 and as such no loan was outstanding against the appellant on the date of the promulgation of the President's Order.
7. Learned counsel further argued that the learned Single Judge also erred in applying the provisions of Article 4(2) to the facts of the instant case. He argued that though the aforesaid provisions stipulated that any judgment or decree of the Court inconsistent with the provisions of the President's Order would be deemed to be null and void, the aforesaid provisions could apply only to live transactions and not the matters which stood past and closed. He stated that in the context of the instant case the controversy between the parties had come to rest upon passing of the consent order dated 25-5-1980 and the appellant's compliance as to his obligation to deposit the agreed amount within the given time, the respondent could not claim a premium over his negligence to deposit title deeds of the mortgaged properties in Court.
8. On the other hand Mr. Ijaz Ahmad, learned counsel for the respondent argued that the terms of the joint statement and the consent order that was passed on 25-5-1980 had to be viewed in the context of the proceedings before the Court. He emphasized that the parties had not settled all their disputes, but had agreed to the disposal of the winding-up petition upon certain conditions.
Learned counsel relied upon the well established principle that winding-up on the ground of inability of a company to pay its debts is not to be ordered when a bona fide and honest dispute as to the amount payable to the creditor existed. He stated that when the appellant had raised the question of rate of exchange for the purpose of determining the liability of the appellant the Court could have only directed winding-up if it had found that the company was unable to pay even the acknowledged amount of the debt. Against such a background the parties agreed that in case the appellant deposited the acknowledged amount i,e, the amount calculated on the basis of rate of exchange operating on the due date for payment, the winding-up petition could be dismissed.
However, the respondent's right to recover the deposited amount was kept intact by agreeing that he could recover the same or lodge any other claim subject to decision in H.C.A. No,51 of 1979.
9. We have carefully considered the respective contentions of the learned counsel. We tend to agree with Mr. Iqbal Kazi that notwithstanding the overriding provisions of the President's Order its applicability had to be restricted to cases where any part of foreign currency loan was outstanding against the latter. We also agreed that the measure of retrospective effect stipulated in the order could not have the effect of reviving or re-opening transactions which had become past and closed for all purposes. However, to determine whether the controversy between the parties had already been resolved on the date of the promulgation of the Order and no amount was outstanding the terms of the settlement dated 25-5-1980 would be required to be looked at closely.
10. It may be observed that the para. One of the joint statement/settlement dated 25-5-1980 contains two parts. In the first part it is stated that though the respondents claim Rs,6,252,716.95 to be payable by the appellants as on 30-9-1977. The appellants only admit their liability to the extent of Rs,1,500,000 inclusive of penal interest premium and charges as on 24-5-1980, which they are ready to deposit within 3 months. The second part of the aforesaid paragraph, however, qualifies the above by stipulating that this would be without prejudice to the respondent's right to claim the balance amount which may become due and recoverable or any claim of the parties arising thereafter subject to decision in H.C.A. No,51 of 1979.
11. The second paragraph spells out the consequences of the payment or non-payment by the appellant and stipulates that in the event of payment within the agreed time, the winding-up petition shall stand dismissed as withdrawn. Whereas, in case of non-payment, it will stand granted. Third paragraph makes an independent stipulation to the effect that in case the appellant deposits the amount, the respondent shall not withdraw the same till it deposits all security documents executed by the appellant in Court.
12. In the first place it may be noticed that the joint statement does not indicate that the appellant accepted the amount of Rs,1,500,000 in full and final settlement of their claim, but only shows as emphasized by Mr. Aijaz Ahmed that such amount was admitted to be payable by the appellant. At the same time, it is evident from the second part that such deposit was without prejudice to the respondent's claim for the balance amount. Indeed Mr. Iqbal Qazi argued that such reservation was only subject to a decision in H.C.A. No,51 of 1979 and could not be extended to any other cause including subsequent legislation. Mr. Aijaz Ahmed, however, argued and rightly so that if the intention of the parties was to settle all claims once and forever the appellant could have clearly bound themselves down to make payment of a higher amount in case the findings of the learned Single Judge in Suit No,312 of 1971 were reversed in H.C.A. No,51 of 1979. On the contrary it was only agreed that the right of the respondents to recover the balance amount would remain intact. In other words the respondent would be required to institute separate proceedings for recovery.
Obviously even if the H.C.A. Was allowed the respondent could not recover the amount if they did not file a suit within the prescribed period of limitation. Moreover, once the respondents were required to file a suit for recovery they could also press their claim in appellate proceedings and notwithstanding the dismissal of H.C.A. No,51 of 1979 they could even approach the Honourable Supreme Court which could have possibly taken a different view on the intricate questions of law involved. As such we are unable to share the view articulated by Mr. Kazi to the effect that the parties had agreed to finally resolve the question of liability and the second part of para.1 only indicated a resolve to be bound down by the decision in H.C.A. No,51 of 1979 to which neither of them was a party.
13. Nevertheless, Mr. Kazi relied upon para.3 of the joint statement stipulating that the respondents could only withdraw the amount deposited by the appellant upon the depositing security documents in Court which prima facie indicated a clear intention to settle all disputes. Though the argument is not altogether unfounded, we do not think it is sustainable in the total context of the document. In the first place all that this paragraph stipulates in that the respondent could withdraw the amount deposited only upon returning security documents executed by the appellant, it nowhere states that the respondent will relinquish all their claims upon such document. Reading it with the second part of para.1 it becomes evident that the respondent could still pursue their claim with respect to the disputed amount, though they might not be left with any security to execute a judgment that may be passed in their favour. On the other hand even if it be assumed that withdrawal of the amount deposited would entail complete relinquishment of the respondent's claim the best that could be inferred would be that the joint statement left two options available to the respondent i,e,, either to reserve the right, but claim the balance in terms of the second part of para.1 or to withdraw the amount in terms of para.3 in full and final settlement of their claim. Admittedly the respondents did not opt for the latter option and therefore, it could not be said that the matter became a past and closed transaction on 25-5-1980.
14. In the above context, we find a great deal of force in Mr. Aijaz Ahmed's arguments that only a petition for winding-up a company and not a suit for recovery of money was disposed of in terms of the joint statement. Admittedly part of the liability was acknowledged by the appellant and there was a bona fide dispute founded upon a pure question of law as regards the rep-minder. It is a well-settled principle of Company Law that "inability to pay its debts" which is a ground for winding-up a company does not include a debt regarding which there is a bona fide dispute between the creditor and the company. In the above context all that was agreed upon in the joint statement that the appellant agreed to deposit the amount of admitted liability whereupon winding-up the petition was dismissed. The consideration for the compromise was that the respondent were given option to withdraw the amount whereupon the security documents executed by the appellant had to be returned. This option was not exercised.
15. In view of the foregoing, we are unable to agree with Mr. Kazi that the respondent's claim against the appellant was finally settled by the agreement dated 25-5-1980 and the matter had become a past and closed transaction upon the promulgation of the President's Order. Moreover, we are also unable to share his view to the effect that a final determination of liability through the judgment of a Court would be outside the scope of the President's Order. Indeed if the debt had been paid off or had been lawfully remitted prior to the promulgation of the President's Order, might have been possible to urge that there was no foreign currency loan outstanding. However, mere determination of liabilities even through a judgment validly pronounced by a competent Court would not take the matter outside the purview of the aforesaid Order because otherwise section 4(2) of the Order rendering "any judgment or decree of a Court to be null and void" would become meaningless. Therefore, as long as the respondent's right to seek recovery (even if subject to certain conditions) remained alive it could not be assumed that the transaction had become past and closed. Moreover, Mr. Aijaz Ahmed has pointed out that even in Suit No,3112 of 1971 the judgment of the Court had been held to be void and this Court held that no decree need be prepared or signed (PLD 1984 Karachi 82). Indeed it would be highly anamolous to hold that compromise judgment in different proceedings between different parties on the same question would remain enforceable. We therefore, find little merit in these appeals and would dismiss the same. There will however, be no order as to costs.