1. ' This petition has been filed under section 305 of the Companies Ordinance, 1984, for winding up of respondent-Company i,e, Diamond Food Industries Limited.
2. ' It is averred in the petition that the petitioners are Financial Institutions within the meaning of section 2a(ii) of the Financial Institutions (Recovery of Finance) Ordinance, 2001, and all the petitioners are creditors of the respondent-Company. It is stated that the respondent-Company was established, for the purpose of running a food processing industry, biscuit manufacturing confectionary making industry, to buy, sell, refine, prepare, process and deal in all kinds of food products and other objects set forth in the memorandum of articles and Memorandum of Association.
3. ' The case of the petitioners is that the petitioner No,1 Messrs Security Leasing Corporation Limited was approached by the Authorized Officers of respondent-company with a request for a lease facility in respect of machinery described as butter mixer, Cream mixer, Rubber Conveyor, Wafer Sandwich Cooling Tunnel. Such request was entertained by the petitioner No,1 and loan of Rs,10,123,000 was advanced. In this regard an agreement dated 9-6-1998 was executed between the petitioner No,1 and respondent-company, wherein it was agreed that the aforementioned amount shall be paid in five (5) years on monthly instalments of Rs,261,175 each and following documents were executed between the petitioner No,1 and respondent-Company:--
(1) Demand Promissory Note.
(2) Revival Letter.
(3) Personal Guarantees of the Directors of the Company.
4. ' It is further averred that the respondent-Company failed to adhere its contractual obligations, as well as agreement dated 9-6-1998. Thus a demand notice was served upon the respondent on 18- 4-2000, as envisaged under section 306 of the Companies Ordinance, 1984. Despite notice, the respondent-company failed to make payment of the lease amount. Thus in the compelling circumstances, a suit for recovery of the said amount was filed in the Banking Court at Karachi being No,266 of 2000, which was ultimately decreed in favour of the petitioner No,1 and the execution proceedings have been initiated which are still pending.
5. ' Likewise the petitioner No,2 Messrs Dawood Leasing Company Limited, is also a leasing company.
6. The respondent through its authorized officer approached the petitioner No,2 for a lease facility regarding machinery described as Wafer Spreading Machine, Wafer Sheet Cooler, Wafer Waste Crusher, Teevopharm Packing Machine. Such request was entertained and loan of Rs,10,535,000 was sanctioned in favour of the respondent-company and in this regard, an agreement on 4-6- 1998 was executed. It was inter alia contended that the amount of Rs,16,308,000 shall be repayable in five years on monthly instalments of Rs,271,803 each. Besides the agreement, following documents were also executed:--
(1) Demand Promissory Note.
(2) Revival Letter.
(3) Letters of Guarantee.
7. ' It is further stated that the respondent-company has violated the terms and conditions of agreement executed between the parties and failed to discharge its contractual obligations. Thus a suit was filed by the petitioner No,2 before Banking Court at Karachi being Suit No,7094 of 2000, which was decreed in favour of the petitioner for a sum of Rs,11,143,923. Execution proceedings have been filed which are still pending, but the company has failed to make payment of the outstanding liability. It has further stated that the petitioner No,2 also served a notice upon the respondent as required under section 306 of the Companies Ordinance, 1984 on 12-6-2002.
8. ' Similarly petitioner No,3 Messrs Crescent Leasing Corporation Limited, is also a leasing Company.
9. The respondent-company requested for lease facility which was entertained and an amount of Rs,10 million were advanced as lease finance to the respondent-company vide agreement dated 19-4-1999. Besides the aforementioned amount; Rs,5 million was also released in favour of the respondent for which a separate agreement was executed. It has been further mentioned that since the company failed to make 'payment of lease loan as agreed. Thus a demand notice was sent to the petitioner on 30-6-2000 as envisaged under section 306 of the Companies Ordinance.
10. Thus the petitioner No,3 filed a suit in the Banking Court, Karachi being No,7094 of 2000 which was decreed against the respondent-company for a sum of Rs,19,800,000. The petitioner No,3 has also initiated execution proceedings, which are still pending.
11. ' The petitioner No,4, Messrs Al-Towfeeq Investment Bank Limited, was approached by the respondent through its Authorized Officer and request was made to the petitioner No,4 to provide Morabaha Finance Facility of Rs,20,000,000. Thus an amount of Rs,20,00,000 was leased out to the company and an agreement was also executed between petitioner No,4 and respondent- company. However, the respondent-company made partial payments and few adjustments were made, but the company failed to discharge its liability and an amount of Rs,13,006,858 remained outstanding on 6-4-1999 and at the request of respondent-company, the said amount was rescheduled vide agreement dated 6-4-1999. Nevertheless the respondent failed to make payment, thus the petitioner No,4 served a demand notice upon the respondent-company on 20- 1-2000 and subsequently, filed a suit before Banking Court, Karachi being No,104 of 2000 which was decreed in favour of the petitioner No,4 for a sum of Rs,14,245,895, execution proceedings have been initiated against the respondent-company, which is still pending against the company. Thus the instant petition has been filed.
12. ' It was further averred that since a total amount of Rs,7,00,52,185.32 is due against the respondent- company who is unable to pay its debts. Thus a request was made for compulsory winding up of the company. Notice of the petition was given to the respondent-company, who have filed counter-affidavit signed by Mr. Jamal-ud-Din, Chief Executive of the respondent-company wherein the respondent-company has resisted the claim of petitioneRs, However, the maintainability of the petition has also been challenged by the learned counsel for the respondent-company on the ground that since the execution proceedings are pending, therefore, the instant petition for winding up is not maintainable. It has been further stated that the company has been closed for a temporary period, since the respondent-company is not in a position to make all its debts, thus application is not maintainable. Rejoinder to the application has also been filed by the petitioners, wherein counter-affidavit filed by one Mr. Jamal-ud-Din, Chief Executive of the Company, has been called in question. It has been inter alia contended that since the respondent-company is a corporate body, therefore, cannot orally authorize one of its members to sign the documents or pleadings which is in violation of the provision of the Companies Ordinance, 1984, Articles and Memorandum of Associations, there is no provision of sub-delegation of powers to any officer to sign such documents. It is further stated that it has been admitted by the company that execution proceedings have been pending which amounts to admission, which indicates that the company is not in a position to pay its debts. Thus, the company be ordered to be wound up compulsorily.
13. ' I have heard Mr. H. Shakil Ahmed, Advocate, assisted by Mr. Irfan Haroon, Advocate, for the petitioners and Mr. Kamran Mullakhail, Advocate, for the respondent-company.
14. ' It may be pointed out that the case came up for hearing on 13-12-2002 and at the request of Mr. Kamran Mullahkhail, learned counsel for the respondent-company, case was adjourned for 16-12- 2002; but on the said date learned counsel for the respondent-company did not appear. However, on 13-12-2002, learned counsel for the respondent-company was also asked to file written arguments, if so desired. Despite notice none appeared on his behalf on 16-12-2002. Mr. H. Shakil Ahmed, learned counsel for the petitioners contended that since the respondent-company is a corporate body, therefore, counter-affidavit filed by the respondent-company is without prior approval of the board as no resolution has been placed on record, thus not entertainable. Reliance was placed on the following case-laws:--
(1) Bankers Equity Ltd. Through Attorney and 5 others v. Sunflo CIT RUSS Ltd. Through Managing Director 'PLD 1999 Lah. 450,
(2) Messrs Taurus Securities Limited v. Arif Saigol and others 2002 CLD 1665 (Karachi)
(3) Rauf B. Kadri v. State Bank of Pakistan and another 2002 CLD 1794.
15. ' I am persuaded to agree with the contention of learned counsel for the petitioners that the company is a corporate body. Thus the counter-affidavit filed by Mr. Jamal-ud-Din, Chief Executive is not maintainable and he was not competent to sign the said documents under the Companies Ordinance, even under the Article and Memorandum of Association of the Company, there is no provision of sub-delegation. Thus the counter-affidavit filed by Chief Executive is not entertainable.
16. Adverting to the next contention of Mr. H. Shakil Ahmed, learned counsel for the petitioners that the company is liable to be compulsory wound up, as it is unable to pay its debts. It is admitted that the petitioners have filed separate suits for recovery of loan before the Banking Court at Karachi and the same have been decreed in favour of the petitioners; execution proceedings are pending before the Company which facts itself leads to the conclusion that the company is unable to pay its debts.
17. ' The petitioner served a notice upon the respondent as required under section 306 of the Companies Ordinance, but the Company has failed to pay its debts. The learned counsel in support of his contention relied upon the following case-laws:--
(1) Habib Credit and Exchange Bank Limited v. Sindh Sugar Corporation Limited 1999 CLC 1909,
(2) International Finance Corporation, Washington DC 20433 USA v. Hala Spinning Limited, Gulberg II, Lahore PLD 2000 Lah. 323,
(3) Pakistan Industrial Credit and Investment Corporation Limited (PICIC) v. Messrs Waseem Beverages Limited through Chief Executive 2000 MLD 660.
(4) Hala Spinning Mills Limited v. International Finance Corporation and another 2002 SCMR 450.
18. ' Thus for the foregoing reasons, I am inclined to accept the petition and accordingly order for winding up of Diamond Food Industries Pvt. Limited. Copy of this order be sent to Deputy Registrar, Securities and Exchange Commission of Pakistan at Quetta, who shall notify the same in official Gazette. The petitioners are directed to propose the names of persons to be appointed as official liquidators within fifteen (15) days after passing of this order.