P L D 2026 Lahore 226 (PLP)

SHAHID KARIM, J.

This petition under Sections 286, 287, 288, 290, 397, 398, 399 and 400 of the Companies Act, 2017 ( the Act ) raises a raft of issues. The prayer clause seeks a declaration from this Court that the respondents Nos. 2 to 6 have acted in an unlawful and fraudulent manner and in a manner oppressive to its members. That a further declaration be issued that these respondents are guilty of misfeasance and breach of trust, in that, the affairs of the company have been conducted in a fraudulent manner. These prayers are based on the grounds stated in the petition which, in the estimation of the petitioner, should constrain and compel this Court to make the requested declarations. Overview/ Background:

2. The background facts as narrated in the petition state that:

2. The Petitioner owns and controls 1,239,445 shares share in United Industries Limited ("Respondent No. 1" or "Company"), representing 22.54% of its total paid-up share capital as of the date of this Petition. The Petitioner is neither a director of Respondent No. 1 nor part of its management.

3. The Petitioner is currently involved in separate litigation with Respondents Nos. 1, 2, 3, 4, 5, and 6, however, those proceedings are entirely distinct from the subject matter of this Petition. This Petition has been filed to address the management's conduct in the Company, which has been carried out in a manner oppressive to the minority shareholders, including the Petitioner, and has adversely impacted their rights and interests. The management has failed to maintain transparency in its operations, leaving minority shareholders without access to critical and accurate information about the Company's affairs. This lack of transparency raises serious concerns regarding the decision-making processes and governance within Respondent No.

1. The Petitioner, therefore, seeks the intervention of this Honorable Court to address these issues, ensure the protection of minority shareholders' rights, and restore transparency and accountability in the management of Respondent No. 1.

4. Under the provisions of the Act, the Petitioner, as a minority shareholder, is vested with statutory 4. rights designed to protect him from the unlawful and oppressive actions of the Company's management and directors. In exercise of these rights, the Petitioner has made repeated and formal requests under specific provisions of the Act, including Sections 152, 198, 199(5), 209, and 235, seeking necessary information and intervention to address his concerns regarding the Company's governance. Furthermore, the Petitioner, in accordance with Section 238 of the Act, has approached Respondent No. 7 to seek appropriate action and relief as mandated under the law. However, despite the explicit provisions of the Act and the Petitioner's rightful and repeated attempts to invoke these protections, the Respondents have failed to take any action or provide any response to the matters raised.

5. Some of the specific violations committed by Respondents Nos. 2 to 6, constituting acts of mismanagement, oppressive conduct, and fraudulent practices, which are unlawful under the provisions of the Act, are as follows: No Annual General Meeting for the years 2023 and 2024 has been held. Failure to submit annual returns under Section 130 of the Act. Failure to allow inspection of any records of resolutions and meetings under Section 152 of the Act. Failure to allow inspection of any register of directors, officers etc. under Section 197 of the Act. Failure to allow inspection of any records of investments in associated undertakings under Section 199 of the Act. Violation of Section 220 of the Act. The Petitioner has not been provided any financial statements for the years 2014-2024. The Respondents Nos. 2-6 as directors of the Company have not prepared and furnished the director s reports for the years 2022 till 2025. Breach of the Articles of Association. Lack of approvals from shareholders for the filing of Financial Statements. The Petitioner's inability to access financial information, registers, resolutions, and participate in the AGM has led to a severe lack of transparency, significantly hindering his ability to make informed decisions regarding the company's affairs. To address this critical issue, the Petitioner seeks appropriate remedies to ensure strict compliance with the Articles of Association, the timely preparation and distribution of financial statements, and the proper holding of AGMs as mandated by law. The Petitioner respectfully requests the indulgence of this Honorable Court to exercise its powers under Section 286 of the Act on the following grounds of unlawful and fraudulent conduct, breach of the legal obligations which are indicative of an oppressive ) management being undertaken by the Respondents Nos. 2-6: The nub of the case:

3. The case of the petitioner is divided into two periods and primarily revolves around the act of Board of Directors in seeking approval of the audited accounts of the company for the period from 2006 to 2015 and for the subsequent period of 2016 to 2023. The petitioner moved an application C.M No.1 of 2025 which seeks to restrain respondent No.7, Securities and Exchange Commission of Pakistan (SECP) from accepting any further statutory filings from respondent No.1 United Industries Limited (United) since no AGM/ EOGM was held to approve the appointment of auditors as per the requirements of law. It is further contended in C.M No.1 of 2025 that since respondents Nos. 2 to 6 are already conducting the affairs of the company in fraudulent manner, if these respondents were allowed to furnish the financial statements and annual accounts for the financial years 2016 to 2024 it will cause an irreparable harm to the petitioner in his trust as a minority shareholder. This application and other application too will be decided along with the main petition.

4. As explicated, the arguments of the petitioner s counsel in this Court centered on two periods for which audited accounts have been prepared by the auditors appointed by Board of Directors. By agenda item No.1 in the minutes of the meeting of Board of Directors held on April 17, 2024 (BOD meeting) it was resolved that: RESOLVED that, it is legally necessary and an in the best interest of the Company to urgently have all of its financial statements for the period from 30-06-2006 to 30-06-2023 audited and then placed for approval by majority of the Board of Directors as well as shareholders of the Company in their respective meetings and then also filed with the Securities and Exchange Commission of Pakistan. II. FURTHER RESOLVED that, upon careful review, subject to the caveat and decision of the Board as noted above in these minutes in paragraphs 3(x) and 3(xi) above on construction placed by contesting Appellants in ICA 10/2016 on certain audit qualifications in the report(s) of the Auditor submitted in C.O. 35/2006, the financial statements of the Company for the period 30-06-2006 to 30-06-2015 which have already been audited by the Auditor appointed pursuant to the consent order(s) of the Lahore High Court passed in C.O. 35/2006 and as said audited accounts have been submitted to the High Court, be and are hereby re-affirmed, re-approved and adopted unanimously by the Board of Directors and it is directed that the same be signed by Chief Executive Officer and Mr. Jahangir Muggo (Director) as per applicable law and submitted to the Auditor for endorsement on the Audit reports issued thereon and that, thereafter, the same be placed before the shareholders of the Company in an Extraordinary General Meeting duly convened for approval through an ordinary shareholders resolution. III. FURTHER RESOLVED that, Mr. Akbar Muggo (Chief Executive Officer) and Mr. Jahangir Muggo (Director) be and are hereby authorised and empowered to sign, subject to the caveat and decision of the Board in paragraphs 3(x) and 3(xi) above, the financial statements along with all other relevant documents of the Company for the period 30-06-2006 to 30-06-2015 which financial statements have already been audited by the Auditor appointed pursuant to the consent order(s) of the Lahore High Court passed in C.O. 35/2006 and as said audited accounts have been submitted to the High Court. IV. FURTHER RESOLVED that, Mr. Akbar Muggo, Chief Executive Officer or Mr. Babar Rashid, Director Finance and Company Secretary are directed, empowered and authorised to convene and issue notice, on behalf of the entire Board of Directors, for an Extraordinary General Meeting of the shareholders of the Company subsequent to endorsement of the relevant financial statements of the Company for the period 30-06-2006 to 30-06-2015 so as to seek approval and adoption of said audited financial statements through ordinary resolution of the shareholders. FURTHER RESOLVED that, the Company Secretary be and is hereby directed, authorized and empowered to do all acts, deeds and things to give full effect to resolution I, II, III and IV above.

5. The above resolution was preceded by narration of historical facts which contained a summary for deliberation of the Board and its resolution as encapsulated above. A reference was made to the orders passed by this Court in C.O No.35 of 2006 (C.O 35) in terms of the consent orders dated 27.06.2011 and 31.12.2014 whereby Chartered Accountant was appointed to ascertain share valuation of the company until the period ended 31.12.2014 starting from FY 2006 and to calculate profits till the date of final order of the Court in that petition. Since the financial statements of the company for the period 30.06.2006 to 30.06.2015 had already been audited by the auditor appointed pursuant to the orders of this Court in C.O 35, which audited accounts had been submitted to the High Court according to the resolution, these audited financial statements were placed before the members in the extraordinary general meeting of the company held on 23.05.2024 (EGM). Upon consideration of the matter, the agenda item No.1 was put to voting by poll. The minutes of EGM provided for its approval in the following manner: With a majority of 61.31% of total votes presented by all the members present in person or through proxy, the resolutions recorded in the opposite column were passed and approved and hence stood approved as a 'general resolution' under the Companies Act, 2017 binding the Company and all of its shareholders. It was for the avoidance of any doubt underscored by the shareholders approving the resolutions that the same was subject to the same caveats, qualifications and conditions as those recorded by the Board of Directors in paragraphs (x) and (xi) of the minutes of its meeting of 17-4-2024 (quoted above).

6. It is clear that with a majority of 61.31% of total votes presented by all the members present in person or through proxy the resolution was passed and approved and hence stood approved as a general resolution under the Act binding the company and its shareholder.

7. As regards the above, it is contended by the learned counsel for the petitioner that the provisions of section 223 of the 2017 Act have been breached in the approval of resolution above. Section 223 provides that:

223. Financial Statements. (1) The board of every company must lay before the company in annual general meeting its financial statements for the period, in the case of first such statements since the incorporation of the company and in any other case since the preceding financial statements, made up to the date of close of financial year adopted by the company. (2) The financial statements must be laid within a period of one hundred and twenty days following the close of financial year of a company: Provided that, in the case of a listed company the Commission, and in any other case the registrar, may, for any special reason, extend the period for a term not exceeding thirty days. (3) Subject to the provision of subsection (2), the first financial statement must be laid at some date not later than sixteen months after the date of incorporation of the company and subsequently once at least in every calendar year. (4) The period to which the statements aforesaid relate, not being the first, shall not exceed one year except where special permission of the registrar has been obtained. (5) The financial statement shall be audited by the auditor of the company, in the manner hereinafter provided, and the auditor s report shall be attached thereto: Provided that nothing in this sub-section shall apply to a private company having the paid up capital not exceeding one million rupees or such higher amount of paid up capital as may be notified by the Commission. (6) Every company shall send in the form and manner specified audited financial statements together with the auditors report, directors report and in the case of a listed company the chairman s review report to every member of the company and every person who is entitled to receive notice of general meeting, either by post or electronically at least twenty-one days before the date of meeting at which it is to be laid before the members of the company, and shall keep a copy at the registered office of the company for the inspection of the members. (7) A listed company shall, simultaneously with the dispatch of the financial statements together with the reports referred to in subsection (6), send by post three copies and electronically a copy of such financial statements together with said reports to each of the Commission, registrar and the securities exchange and shall also post on the company s website: Provided that the reports shall be made available on the website of the Company for a time period as may be specified. (8) The provisions of subsection (6) of section 220 shall apply to any person who is a party to the default in complying with any of the provisions of this section. (9) This section shall not apply to a single member company except to the extent as provided in subsection (5).

8. The above provision obligates the Board of every company to lay before the company in AGM its financial statements for the period since the preceding financial statements made up to the date of close of financial year adopted by the company. The financial statements must be laid within a period of one hundred and twenty days following the close of financial year of a company. The learned counsel for the petitioner concedes that on account of extraordinary circumstances narrated in the resolution of the Board set out above, an AGM for approval of the audited accounts for the years 2006 to 2015 could not be held and the only course was for an extraordinary general meeting to be held for the purpose. According to her, notwithstanding the above, since the directors of the company have acted in violation of the articles of the company therefore the provisions of section 204 would be triggered and in terms of subsection (8) of section 204 of the 2017 Act it is provided that: (8) Any breach of duty, default or negligence by a director in contravention of the articles of the company or any of its policy or decision of the board may be ratified by the company through a special resolution and the Commission may impose any restriction as may be specified.

9. Section 204(8) enjoins that any breach of duty, default or negligence by a director in contravention of the articles of the company or any of its policy may be ratified by the company through a special resolution and the Commission may impose any restriction as may be specified. The requirements of special resolution have been spelt out in section 2(66) which says that: (66)

special resolution means a resolution which has been passed by a majority of not less than three-fourths of such members of the company entitled to vote as are present in person or by proxy or vote through postal ballot at a general meeting of which not less than twenty-one days notice specifying the intention to propose the resolution as a special resolution has been duly given: Provided that if all the members entitled to attend and vote at any such meeting so agree, a resolution may be proposed and passed as a special resolution at a meeting of which less than twenty-one days notice has been given; Therefore, a special resolution can only be passed by a majority of not less than three-fourths of such members of the company entitled to vote as are present in person or by proxy at a general meeting. The connotation is that past acts of default of a director may be ratified by a company if it chooses to do so and by a special resolution only. If the company does not choose to do so or if it cannot gather enough vote, those acts of breach will not be erased and shall continue to smear a director s profile. The breach, in the present case, relates to holding of AGM and laying of financial statements and since, as per the petitioner, it cannot be ratified in the EGM but only through a special resolution, the breach will continue unabated and unratified. This would be an unsavoury situation and one that affects the petitioner more than the respondents.

10. As regards the financial statements for the period 2016 to 2023 and their audit, these have been done not pursuant to the orders passed by this Court but by a resolution of the BoD as approved by the members in EGM through agenda item No.2 in the same meeting of 23.5.2024. This agenda item sought shareholders approval by way of general resolution to appoint RSM Avais, Hyder, Liaqat, Noman (Chartered Accountants) to conduct audit of the company s financial statements for the year ended 30.06.2016 to 30.06.2023 in accordance with section 233 of the Companies Ordinance, 1984 and section 223 of the 2017 Act. The majority of the members holding 61.31% of the total votes resolved to approve the appointment of auditors in that meeting.

11. In essence, the challenge to this decision made by the Board of Directors by petitioner is premised upon the same set of challenges as made to the approval of the financial statements for the previous period of 2006 to 2015. Firstly, it is contended that in terms of section 246(2) there is a procedure prescribed by law for appointment of auditors which has gone abegging in the instant case. In terms of that provision and more particularly subsection (2) it has been provided that: (2) Subject to the provisions of subsection (3), the subsequent auditor or auditors shall be appointed by the company in the annual general meeting on the recommendation of the board after obtaining consent of the proposed auditors, a notice shall be given to the members with the notice of general meeting. The auditor or auditors so appointed shall retire on the conclusion of the next annual general meeting.

12. The subsequent auditors shall be appointed by the company in the annual general meeting on the recommendation of the board. In this case, it has been done in an extraordinary general meeting for which a special resolution was required to be passed in terms of section 2(66) of the Act. Doubtless, the necessary majority for a special resolution is conspicuously missing in the instant case for appointment of auditors. It is not disputed by the learned counsel for the petitioner that an annual general meeting called at this moment will be for 2024-2025 and past annual general meetings cannot be held by the company which has no power to do so under the law or the articles of the company. Therefore, the only course open to the company was for convening an extraordinary general meeting which has duly been done yet the foremost requirement of special resolution has not been fulfilled. Determination:

13. Mr. Sikandar Bashir, Advocate, learned counsel for respondents Nos. 2 to 6 and Mr. Adil Umer Bandial, Advocate for United countered the arguments of the learned counsel for the petitioner and these counter arguments will be taken up and dealt with during the course of the opinion of this Court which will follow. In sum, according to him, the petitioner s understanding of the various provisions of the Act is remarkably cramped, and is based upon a view which could not be reasonably held.

14. At the beginning Mr. Sikandar Bashir, Advocate referred to certain timelines, which in his opinion, were crucial and would have a gravitational pull on the question to be decided ultimately by this Court regarding interpretation of section 204(8) of the Act. There is no contention that C.O 35 was decided on 02.03.2016 which was a petition under Sections 305, 309 and 290 of the Companies Ordinance, 1984 (the law which has now been substituted by the Act). That petition was dismissed and the following orders were passed: Further, this stance of the learned counsel for the petitioners is a deviation from the consensual order of 27.6.2011 and the petitioners cannot be permitted to change their stance at their whim according to the circumstances. The plea of special audit has been developed by the learned counsel for the petitioners after the report of the auditors had been submitted on 10.09.2012 in which, according to the learned counsel, certain qualifications had been mentioned which allegedly point to fraudulent activities in the conduct of the affairs of the company. It is thus evident that the plea is of recent origin and has been triggered by the last report of the auditors. Therefore, I am not inclined to accept this request of the learned counsel for the petitioners. For the purpose of valuation, this Court will predicate its order on the latest report submitted by the auditor. I have not put that report to the parties for inviting objections as that was not the mandate of the appointment by consent. This will only lead to issues to be spawned off without an end in sight. This Court is amply empowered to make that report as the basis for any buy-out. Moreover, the report is based on objective assessment of the accounts and factors in various qualifications etc. in the valuation so arrived at.

6. It is, therefore, ordered as follows: a) The petition for winding up of the Company is dismissed. b) In the exercise of powers under section 290 of the Ordinance, 1984, it is directed that the respondents Nos. 1 to 7 shall buy-out the petitioners in the proportion of the shares held by the said respondents on the basis of the valuation determined by the auditors appointed by this Court on 27.6.2011 in the report submitted on 18.02.2016. c) The respondents Nos.1 to 7 shall complete the transaction of purchase of the petitioners' shares within three months of the passing of the order of this Court. The necessary transfer in the register of members shall also be made simultaneously. d) The auditors shall calculate the profit accrued to the Company for the period from 01.01.2015 till the passing of the order of this Court and after deducting the dividend paid during this period, the profits shall be ratably distributed amongst the members of the Company including the petitioners and the respondents Nos. 1 to 7. e) In terms of the report filed by the auditors, the audited financial accounts of each year/period have been addressed to the Board of Directors which shall be approved by the Board of Directors who shall sign the said financial statements along with other items of the Board letter and presented to the auditors for their signatures. This shall be done after the transfer of shares has taken place. f) Further, as recommended by the auditors, the Directors of the Company are required to hold a formal meeting of the Board of Directors and Annual General Meeting to approve the financial statements so that the formality of duly approved audited financial statements is achieved.

15. Prior to this, in paragraph 58 of the judgment, this Court had dealt with the report of breakup value of shares submitted by the Chartered Accountant appointed by this Court to which a reference was made by the learned counsel which culminated in the order reproduced above. An appeal has been filed by the petitioner to challenge the judgment in C.O 35 and the learned counsel stated that interim relief had been granted in I.C.A. No. 10 of 2016 (ICA 10), which states that:

3. Subject to notice for the said date, the portion of the impugned order containing direction shall remain stayed, meanwhile.

16. The Appellate Bench, therefore, suspended the portion of the impugned judgment which contained directions consequent upon the dismissal of winding up petition brought by the petitioner. One of those directions, it will be noted, was regarding holding of general meeting to approve financial statements. That portion, too, was suspended.

17. With reference to contents of the petition, learned counsel referred to paragraph No.5(j) of the petition which contains a challenge to the financial statements prepared and presented by the Board of Directors for approval of the members of the company in a general meeting. In particular the petitioner stated in that paragraph: These financial statements were never presented before the members of the Company in any annual or extraordinary general meeting as required under Sections 223 and 226 of the Act and had not been maintained in accordance with Sections 220 and

221. They were filed without any regard to the statutory rights of shareholders to review, approve, or disapprove them in the AGM, rendering their filing illegal The approval of financial statements falls within the mandate of the board as per Sections 223 and 226, and given that these filings were not in accordance with the provisions of the Act and Articles 71 to 76 of the Articles of Association, their submission constituted a breach of duty by the directors under Section 204 of the Act.

18. In a nub, with respect to the financial statements for the years 2006 to 2015, it has been asserted that these financial statements were never presented before the members of the company in any annual or extraordinary general meeting as required under Sections 223 and 226 of the Act. Further, these financial statements were filed without any regard to statutory rights of the shareholders to review, approve or disapprove them in the AGM. This is contradicted by the documents produced by the respondents which clearly show that the petitioner participated in the extraordinary general meeting held on 23.05.2024 as well as exercised his right to vote in that meeting. Moreover, a reference was made to successive applications filed by the petitioner before the Appellate Bench hearing ICA 10 for a direction to the company to file profit and loss accounts for successive periods which was duly done by the company on the directions of the Court and on the basis of profit and loss accounts so submitted dividends are paid out to the petitioner. To these facts there is no rebuttal on the part of the petitioner and therefore the primary basis of the case set up by the petitioner is seriously flawed and self-refuting. Further a reference was made to a Table prepared by the respondents regarding declaration of dividend for each year which is being paid to the shareholders including the petitioner (except two years). This declaration has also been submitted in ICA

10. The declaration of dividend as well as its payment to the shareholders has withstood the audit proceedings by external auditors as well and will be unfolded in the following paragraphs.

19. Although learned counsel for the petitioner separated the periods in two but learned counsel for the respondents Nos. 2 to 6 argued on the basis of three different periods. The first is between the year 2006 to 2015, the second is from 30.06.2016 to 30.06.2023 and the third spans from 30.06.2024 to 30.06.2025. These periods will be taken as the first, second and third periods respectively while addressing the arguments of counsel for respondents Nos. 2 to

6. As to the first period, there is no doubt that the financial statements have been approved by the Board of Directors. They have also been audited by external auditors and approved by EGM on 23.5.2024. As explicated, the learned counsel for the petitioner stated during the course of arguments that the petitioner did not challenge the filing of audited accounts and their approval by EGM in this petition. At a later stage of her arguments while exercising the right to rebuttal, learned counsel stated that although there was no challenge to the appointment of auditors, the conduct of audit for this period by the auditors so appointed and their approval by EGM yet they are now being challenged merely to the extent that a different set of audited accounts from the ones submitted before the Appellate Bench in ICA 10 have now been placed before this Court in these proceedings. Suffice to say that this Court will not enter upon the controversy so raised by learned counsel for the petitioner with regard to first period as all questions related to that period are the subject matter of determination by the Appellate Bench in ICA 10 which is yet to be taken up and decided finally. In terms of clause e of the final order passed by this Court in CO 35, it was directed that the audited financial statements of each year contained in the report filed by the auditors have been addressed to the Board of Directors which shall be approved by the Board of Directors who shall sign these financial statements along with other items of the Board letter and presented to the auditors for their signatures. Further directions were issued to the directors to hold a formal meeting of the Board of Directors and AGM to approve the financial statements so that the formality of duly approved audited financial statements is achieved. Therefore, it is clear that the issue regarding financial statements, their approval by the Board of Directors as well as laying before a general meeting for approval was done pursuant to the directions issued by this Court. The counterarguments by the petitioner that a different set of financial statements has been presented to the EGM are unavailing and would be a question necessarily for the Appellate Bench of this Court to determine while deciding ICA 10 finally. The learned counsel for the petitioner argued that this act by the members of the Board of Directors constituted oppression and hence a new cause of action would accrue to the petitioner to be taken up by this Court in these proceedings. Firstly, this argument has no legal legs to stand upon and as adumbrated any judgment regarding this would necessarily intrude on the competence of the Appellate Bench to decide ICA 10 holistically. Second, the petitioner cannot be permitted to bring successive petitions of oppression for each act undertaken by the Board of Directors and in particular those acts which spawn out of ones comprised within the broader causes of action which were the subject matter of CO 35 and are now before the Appellate Bench in ICA

10. This would lead to multiplicity of proceedings which must be discountenanced and discarded.

20. It has rightly been pointed by learned counsel for respondent No.1 that if there is no challenge to the EGM already held to approve the financial statements for the period 2006 to 2015 then the petitioner is left with no further challenge as the company in the EGM merely agreed to convene a general meeting to consider the financial statements and audited accounts for the second period. Learned counsel for the petitioner stated that the challenge is to the act of the Board of Directors in appointing the auditors for audit of financial statements for the second period as also failure to convene the AGM which was a statutory obligation to do so under any circumstances. In turn, according to learned counsel for the petitioner, this would lead to the violation of section 204(8) of the Act for which a special resolution is required and a simple resolution through an EGM would not suffice. This is the only question left to be determined by this Court in this petition.

21. As regards the third period, learned counsel for the respondents Nos. 2 to 6 stated that Board of Directors had recommended appointment of the previous auditors and which recommendation is pending approval by the general meeting. February 1, 2023, (The crucial date) according to him, is a crucial date and would be at the center of the arguments to be addressed. On this date, the composition of the Board of Directors changed and the petitioner and other directors of the group were ousted from the Board. This petition has been brought by one of the former directors and the petitioner s shareholding is 22.9% currently. Previously, the Board constituted of four directors of each group with no synergy with each other and for the entire period till the crucial date a deadlock persisted in the company regarding each decision. It was precisely for this purpose that the appointment of the auditors as well as holding of AGMs was held in abeyance on account of the deadlock between two rival groups. More particularly, a large suite of litigation ensued between the parties, one of which was CO35 and now ICA 10 (some of the others are CO52/2005, CO 24829/2023). This petition is also part of the litigation in which the parties got entangled. Therefore, the accounts of the company were not subjected to audit by external auditors till the crucial date. After reconstitution of the Board of Directors, a new Board was placed at the helm of the company and according to the learned counsel for the respondents inherited a situation which has been narrated above. Learned counsel for respondents Nos. 2 to 6 referred to certain background facts to show that as soon as CO 35 was filed by the petitioner, the financial institutions refused to offer any kind of finance facility and to this effect various letters have been attached with the reply. Once again, a letter by one of the financial institutions dated February 8, 2023, has been placed on record which on the one hand recognizes the company to be one of the market leaders in Ghee, Oil having excellent financial standing but regretted at the same time to move forward on LC facility request made by the company. The point that learned counsel was attempting to bring home was that as a result of the litigation between the parties and more particularly brought by the petitioner (and his group) against the company, financial institutions have restrained themselves from allowing any loans or other finance facilities which have put business of the company in a precarious commercial viability all along. Under these circumstances, the Board approved the appointment of external auditors who required substantial time to revalidate the audits which had already been conducted by the auditors for the past years. A meeting of the Board of Directors was convened on 17.04.2024 to discuss and approve financial statements from 30.06.2006 to 30.06.2015 which were earlier audited by Avais, Hyder, Liaqat, Noman (C.As). The EGM was duly held on 23.05.2024 in which the petitioner attended and cast his vote. Sections 131 to 152 of the Act:

22. Sections 131 to 152 of the Act comprise the chapter entitled meetings and proceedings of a company and constitute a code unto itself. For facility of reference, Sections 131, 132 and 133 are set out below:

131. Statutory meeting of company. (1) Every public company having a share capital shall, within a period of one hundred and eighty days from the date at which the company is entitled to commence business or within nine months from the date of its incorporation whichever is earlier, hold a general meeting of the members of the company, to be called the statutory meeting: Provided that in case first annual general meeting of a company is decided to be held earlier, no statutory meeting shall be required. (2) The notice of a statutory meeting shall be sent to the members at least twenty-one days before the date fixed for the meeting along with a copy of statutory report. (3) The statutory report shall state (a) the total number of shares allotted, distinguishing shares allotted other than in cash, and stating the consideration for which they have been allotted; (b) the total amount of cash received by the company in respect of all the shares allotted;(c) an abstract of the receipts of the company and of the payments made there out up to a date within fifteen days of the date of the report, exhibiting under distinctive headings the receipts of the company from shares and debentures and other sources, the payments made there out, and particulars concerning the balance remaining in hand, and an account or estimate of the preliminary expenses of the company showing separately any commission or discount paid or to be paid on the issue or sale of shares or debentures; (d) the names, addresses and occupations of the directors, chief executive, secretary, auditors and legal advisers of the company and the changes, if any, which have occurred since the date of the incorporation; (e) the particulars of any contract the modification of which is to be submitted to the meeting for its approval, together with the particulars of the modification or proposed modification; (f) the extent to which underwriting contracts, if any, have been carried out and the extent to which such contracts have not been carried out, together with the reasons for their not having been carried out; and (g) the particulars of any commission or brokerage paid or to be paid in connection with the issue or sale of shares to any director, chief executive, secretary or officer or to a private company of which he is a director; and certified by the chief executive and at least one director of the company, and in case of a listed company also by the chief financial officer. (4) The statutory report shall also contain a brief account of the state of the company s affairs since its incorporation and the business plan, including any change or proposed change affecting the interest of shareholders and business prospects of the company. (5) The statutory report shall, so far as it relates to the shares allotted by the company, the cash received in respect of such shares and to the receipts and payments of the company, be accompanied by a report of the auditors of the company as to the correctness of such allotment, receipt of cash, receipts and payments. (6) The directors shall cause a copy of the statutory report, along with report of the auditors as aforesaid, to be delivered to the registrar for registration forthwith after sending the report to the members of the company. (7) The directors shall cause a list showing the names, occupations, nationality and addresses of the members of the company, and the number of shares held by them respectively, to be produced at the commencement of the meeting and to remain open and accessible to any member of the company during the continuance of the meeting. (8) The members of the company present at the meeting shall be at liberty to discuss any matter relating to the formation of the company or arising out of the statutory report, whether previous notice has been given or not, but no resolution of which notice has not been given in accordance with the articles may be passed. (9) The meeting may adjourn from time to time, and at any adjourned meeting any resolution of which notice has been given in accordance with the articles, either before or after the original meeting, may be passed, and an adjourned meeting shall have the same powers as an original meeting. (10) The provisions of this section shall not apply to a public company which converts itself from a private company after one year of incorporation. (11) Any contravention or default in complying with requirement of this section shall be an offence liable (a) in case of a listed company, to a penalty of level 2 on the standard scale; and (b) in case of any other company, to a penalty of level 1 on the standard scale.

132. Annual general meeting. (1) Every company, shall hold, an annual general meeting within sixteen months from the date of its incorporation and thereafter once in every calendar year within a period of one hundred and twenty days following the close of its financial year: Provided that, in the case of a listed company, the Commission, and, in any other case, the registrar, may for any special reason extend the time within which any annual general meeting, shall be held by a period not exceeding thirty days. (2) An annual general meeting shall, in the case of a listed company, be held in the town in which the registered office of the company is situate or in a nearest city: Provided that at least seven days prior to the date of meeting, on the demand of members residing in a city who hold at least ten percent of the total paid up capital or such other percentage as may be specified, a listed company must provide the facility of video- link to such members enabling them to participate in its annual general meeting. (3) The notice of an annual general meeting shall be sent to the members and every person who is entitled to receive notice of general meetings at least twenty-one days before the date fixed for the meeting: Provided that in case of a listed company, such notice shall be sent to the Commission, in addition to its being dispatched in the normal course to members and the notice shall also be published in English and Urdu languages at least in one issue each of a daily newspaper of respective language having nationwide circulation. (4) Nothing in this section shall apply to a single member company. (5) Any contravention or default in complying with requirement of this section shall be an offence liable (a) in case of a listed company, to a penalty of level 2 on the standard scale; and (b) (b) in case of any other company, to a penalty of level 1 on the standard scale.

133. Calling of extra-ordinary general meeting. (1) All general meetings of a company, other than the annual general meeting referred to in section 132 and the statutory meeting mentioned in section 131, shall be called extra-ordinary general meetings. (2) The board may at any time call an extra-ordinary general meeting of the company to consider any matter which requires the approval of the company in a general meeting. (3) The board shall, at the requisition made by the members (a) in case of a company having share capital, representing not less than one-tenth of the total voting power as on the date of deposit of requisition; and (b) in case of a company not having share capital, not less than one tenth of the total members; forthwith proceed to call an extra-ordinary general meeting. (4) The requisition shall state the objects of the meeting, be signed by the requisitionists and deposited at the registered office of the company. (5) If the board does not proceed within twenty-one days from the date of the requisition being so deposited to cause a meeting to be called, the requisitionists, may themselves call the meeting, but in either case any meeting so called shall be held within ninety days from the date of the deposit of the requisition. (6) Any meeting called under sub-section (5) by the requisitionists shall be called in the same manner, as nearly as possible, as that in which meetings are to be called by board. (7) Any reasonable expenses incurred by the requisitionists in calling a meeting under sub-section (5) shall be re-imbursed to the requisitionists by the company and the sums so paid shall be deducted from any fee or other remuneration payable to such of the directors who were in default in calling the meeting. (8) Notice of an extra-ordinary general meeting shall be served to the members in the manner provided for in section 55: Provided that in case of a company other than listed, if all the members entitled to attend and vote at any extraordinary general meeting so agree, a meeting may be held at a shorter notice. (9) Any contravention or default in complying with requirement of this section shall be an offence liable (a) in case of a listed company, to a penalty of level 2 on the standard scale; and (b) in case of any other company, to a penalty of level 1 on the standard scale.

23. There can be no quarrel with the arguments of learned counsel for the respondents Nos. 2 to 6 (as adopted by the counsel for United) that these provisions deal with general meetings of a company. They have further been categorized into three different kinds of meetings depending on the purpose for which the law requires them to be convened and held.

24. But the meeting for all intents remains a general meeting and continues to retain the appellation notwithstanding its purpose. Section 131 relates to statutory meetings of a company and obligates every public company having a share capital to hold a general meeting of members of the company within a period of one hundred and eighty days from the date of which the company is entitled to commence business or within nine months from the date of its incorporation whichever is earlier. This shall be called a statutory meeting. Section 132 is about annual general meetings of a company and provides that every company shall hold an annual general meeting within sixteen months from the date of its incorporation and thereafter once in every calendar year within a period of one hundred and twenty days following the close of its financial year. Thus, by the tenor of section 132 every company is obliged under the law to hold an annual general meeting once in every calendar year within a period of one hundred and twenty days following the close of its financial year. Only in respect of a listed company, the Commission and in any other case the Registrar may for special reasons extend the time within which an AGM shall be held and the extension cannot exceed thirty days. Thus, the learned counsel for the respondents are correct in stating that the time for holding an AGM cannot be extended beyond a period of thirty days from the original one hundred and twenty days provided by law. That period has come to pass in respect of financial years till 2024. It was under these circumstances that the respondents resorted to calling of extraordinary general meeting as contemplated by section

133. A reading of section 133 indubitably leads to the conclusion that all meetings of the members of the company shall be referred as general meetings of a company. Further, all general meetings of a company other than the annual general meeting referred in section 132 and statutory meeting mentioned in section 131 shall be called extraordinary general meetings for the precise reason that an EGM is held under special circumstances and by subsection (2) the Board may at any time call an extraordinary general meeting of the company to consider any matter which requires approval of the company in a general meeting. Doubtless, subsection (2) of section 133 confers power on the Board to call an EGM and any matter may be considered in an EGM which requires the approval of a company in a general meeting.

25. We may now refer to section 134 (2) which provides that: 2) For the purposes of subsection (1), in the case of an annual general meeting, all the businesses to be transacted shall be deemed special, other than (a) the consideration of financial statements and the reports of the board and auditors; (b) the declaration of any dividend; (c) the election and appointment of directors in place of those retiring; and (d) the appointment of the auditors and fixation of their remuneration.

26. By subsection (2) of section 134 the consideration of financial statements and the reports of the Board and auditors shall be considered at an AGM. This will also include the business of appointment of the auditors and fixation of their remuneration. Reading subsection (2) of section 133 and subsection (2) of section 134 together will lead to the ineluctable conclusion that the members of the company may in any EGM consider the financial statements of previous financial years as well as the reports of the Board and auditors. This was precisely what was considered and approved by the members of United in the EGM under challenge in this petition.

27. Learned counsel for the petitioner alleged that no AGM has been held for the previous years and in the EGM under question auditors have been appointed to conduct audit from 30.06.2016 onwards. This contention as articulated by the learned counsel for the petitioner during the oral arguments has not been mentioned in the petition as such. As a corollary it was argued that this act of approval in the EGM is unlawful and constitutes breach of duty within the meaning of section 204(8) of the Act and requires a special resolution by the company.

28. As narrated above, the question that begs an answer is if no AGM is held, can a company hold an EGM to transact the same business as provided in section 134(2) viz. consideration of financial statements/ reports of auditors etc. as well as appointment of auditors for future audits? The short answer to this question is in the affirmative. Upon a consideration of the Chapter relating to meetings and proceedings holistically and conjunctively there is no doubt in my mind that the law provides for the transaction of a business in an EGM which could have been transacted in an AGM but was not so done at the relevant time. In the context of the arguments with regard to section 204(8) (which will be considered in greater detail in the proceeding paragraphs of this opinion) suffice to say that we have to reconcile the two provisions and in view of the established rule of interpretation the legislature cannot be attributed redundancy and contradiction. The ratification by EGM of audited financial statements is a distinct act and must not be confused with breach of duties by any directors under Section

204. It is another question whether the consideration of financial statements cannot be done at all unless a prior special resolution is passed to ratify the acts of directors. This question, it is submitted, was not presented before this Court for deliberation. A related question would give rise to a distinction between companies which have the majority to pass a special resolution and ones that do not have that majority, such as United. The former will have the leeway to ratify all kinds of default by the directors while the latter will have no such leeway. This is not the result that the law intends. Further, notwithstanding the ratification, the Commission may impose penalties and take action for any defaults and breach of duties by directors. At the first opportunity a company should proceed with the approval of the financial statements of past years and the only course is for their approval by EGM since admittedly AGMs for the previous years cannot be held. Subsection (5) of section 132 provides for penalty in case of contravention or default in complying with the provisions of section 132 in calling an AGM by the company. Therefore, this provision itself provides for a penalty which may be visited upon the directors or any officers responsible for failing to convene and hold an AGM on time. But this does not necessarily imply that the company is barred from holding an EGM for consideration and approval of financial statements and the reports of the Board and auditors which is a duty towards the shareholders and must be performed under any circumstances albeit with a delay. If the argument of the learned counsel for the petitioner were to be accepted, then this will give carte blanche to the directors to simply evade their duty to place the financial statements before the members of the company by deliberately failing to hold an AGM. This cannot be the intention of the legislature under the law. Moreover, the provisions of section 133(2) are broadly worded and do not shackle or restrain the directors from calling an EGM to consider all matters which could have been placed before an AGM for approval. In case an AGM is not held on time as provided by law for any reason whatsoever and no extension can be granted by the Commission, the only option left is for an EGM to be held. It will also be noted that the learned counsel for the petitioner did not raise any objection during the course of arguments to the approval of audited financial statements for the first period by EGM and therefore by necessary implication the petitioner would be estopped from raising objection in respect of later years in respect of which the decision was to appoint auditors to conduct audit of financial statements for these years, merely. The only objection can be the failure of the Board to hold AGMs of the previous years timeously and within the period provided by the provisions of section 132 of the Act.

29. As stated above, the learned counsel for the petitioner oscillated between different arguments and the oral arguments addressed in this Court at times did not conform with the ground taken in this petition. To reiterate, the learned counsel for the petitioner did not challenge the audited financial statements submitted in ICA 10 before the Appellate Bench but stated that in fact different accounts had been approved in the EGM. This is not a ground taken in the petition and sets up a different case which cannot be allowed to be argued without the permission of this Court and without the necessary amendment in the petition. The contents of the petition itself revolve around various grounds sought to support the arguments of oppression of minority shareholders. At the heart of these grounds was the alleged failure on the part of the respondents to audit the financial statements and to provide them to the petitioner for scrutiny so that the petitioner could undertake a fair review of its business . It has been asserted in paragraph 5(a) that AGM for the years 2023 and 2024 have not been held. This is not denied by learned counsel for the respondents who put forth the peculiar circumstances in which the company has been operating and undertake to hold an EGM for these years shortly after the financial statements for these years have been audited by the Chartered Accountants which were only appointed to do so in the EGM under challenge. It goes without saying that an AGM for these years cannot be held now, for the time has come to pass.

30. A crucial strand of this statement requires unpacking. The petitioner has made a selective challenge to the failure to hold an AGM for three years. Priorly, the petitioner and his group was equally represented on the BOD and hence equally liable, if at all. There is no material on record to show that during that period the respondents, despite entreaties by the petitioner s group, circumvented their duty to hold an AGM or to audit financial statements. Further grounds relating to violation of sections 152 and 196 of the Act were not seriously argued by the learned counsel during the course of oral arguments. In any case these grounds require the copies of minutes of the meetings of BoD for the years 2023 and 2024. As stated above, the meetings have admittedly not taken place in these years and are likely to take place in the near future upon audits being completed for these years. In ground 5(h) it has been urged that respondents Nos. 2 to 6 as directors of the company have not prepared and furnished the directors report for the year 2022 till 2025 as required under Sections 226 and 227 of the Act. The short answer to this ground has been narrated above. Learned counsel for respondents Nos. 2 to 6 clearly stated that the directors reports have been delayed on account of various litigations as also that the Board after its reconstitution in the year 2023 has proceeded expeditiously to approve the appointment of auditors for audit of financial statements for the past years since 2016. As soon as these reports are submitted, the EGMs will be held along with directors reports for these years. Paragraph 5(j) alludes to the lack of approvals from shareholders for filing of financial statements. It has been stated that certified copies of the directors reports and audited financial statements were provided for the years 2006 to 2015. In the same vein, the next paragraph asserts that these financial statements were never presented before the members of the company in any annual or extraordinary general meeting as required under Sections 223 and 226 of the Act. By implication the petitioner concedes that these financial statements could be presented before the members of the company in an EGM. This palpably contradicts ground q taken by the petitioner which states that the EOGM of respondent No.1 on May 23, 2024 purportedly adopted financial statements without a valid special resolution under Section 204(8) a clear case of corporate fraud . Thus, the petitioner has been blowing hot and cold and on the one hand denied the approval of the financial statements for the financial years 2006 to 2015 through either an AGM or an EGM yet in the grounds of challenge the EGM of 23.05.2024 was asserted as a fraud. To recapitulate, the financial statements and their audit for the first period, that is, 2006 to 2015 has not been challenged by the petitioner as per the statement made by the learned counsel for the petitioner. Therefore, the approval of these financial statements in the EGM, under challenge, cannot be called in question by necessary implication as well.

31. In this regard, the learned counsel argued that a ratification can only be done under the mandate of section 147 of the Act. Section 147 provides that:

147. Power of Commission to call meetings. (1) If default is made in holding the statutory meeting, annual general meeting or any extraordinary general meeting in accordance with section 131, 132 or 133, as the case may be, the Commission may, notwithstanding anything contained in this Act or in the articles of the company, either of its own motion or on the application of any director or member of the company, call, or direct the calling of, the said meeting of the company in such manner as the Commission may think fit, and give such ancillary or consequential directions as the Commission thinks expedient in relation to the calling, holding and conducting of the meeting and preparation of any document required with respect to the meeting. Explanation. The directions that may be given under sub-section (1) may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting. (2) Any meeting called, held and conducted in accordance with any such direction shall, for all purposes, be deemed to be a meeting of the company duly called, held and conducted, and all expenses incurred in connection thereto shall be paid by the company unless the Commission directs the same to be recovered from any officer of the company which he is hereby authorized to do.

32. The above provision gives power to the Commission to call, inter alia, an AGM either on its own motion or on the application of any director or member of the company in such manner as the Commission may think fit. This power has not been exercised by the Commission and it has been informed by learned counsel for the petitioner that an application in this regard was indeed filed to the Commission on which no action has been taken. It follows that the Commission has the power to call an AGM of past years as well and this discretion may be exercised by the Commission. Admittedly an application has been filed by the petitioner to the Commission and in case that application were to be allowed by the Commission, a direction will be made by the Commission for holding of past AGMs and this would condone the fault, if any, on the part of the respondents (and the petitioner, too, for most of these years) in holding AGMs for the previous years. It further follows from this consideration of section 147 that in fact no special resolution would be required in that eventuality as sought to be argued by the learned counsel for the petitioner.

33. Considering the Chapter relating to meetings and proceedings in its entirety clearly shows that there are a number of ways nestled in law itself by which a company in default of holding AGMs may do so either on its own motion or as directed by the Commission. Any default by the company in this regard would be visited by a penalty which has been prescribed as an eventuality in the respective provisions under this Chapter. Thus, one way of breaking the impasse between the parties would be to issue a direction to the Commission to decide the application filed by the petitioner for holding of not only future AGM but AGMs for the past years. That direction, presently, would be futile since United has held the EGM to approve the financial statements for the first period. There is a clear intent on the part of directors to hold general meetings in future in respect of which a case can be made out. Since the crucial date, the alleged oppression seems to be waning with all those steps being taken which conform to law and puts the company on course to promote the objects of the company in the interest of members generally. This leads us to address the arguments made by learned counsel for the petitioner that the only remedy lies in section 204(8) for which a special resolution is required. Section 204:

34. All arguments of learned counsel for the petitioner which featured in the case converged on section 204 of the Act, which provides that:

204. Duties of directors. (1) Subject to the provisions of this Act, a director of a company shall act in accordance with the articles of the company. (2) A director of a company shall act in good faith in order to promote the objects of the company for the benefit of its members as a whole, and in the best interests of the company, its employees the shareholders the community and for the protection of environment. (3) A director of a company shall discharge his duties with due and reasonable care, skill and diligence and shall exercise independent judgment. (4) A director of a company shall not involve in a situation in which he may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company. (5) A director of a company shall not achieve or attempt to achieve any undue gain or advantage either to himself or to his relatives, partners, or associates and if such director is found guilty of making any undue gain, he shall be liable to pay an amount equal to that gain to the company. (6) A director of a company shall not assign his office and any assignment so made shall be void. (7) In addition to the preceding sub-sections, the Commission may provide for the extent of duties and the role of directors as may be specified. (8) Any breach of duty, default or negligence by a director in contravention of the articles of the company or any of its policy or decision of the board may be ratified by the company through a special resolution and the Commission may impose any restriction as may be specified. (9) Without prejudice to any other action that may be taken under this Act or any other law, any contravention or default in complying with requirements of this section shall be an offence liable to a penalty of level 1 on the standard scale.

35. In a word, the counsel submitted that since the directors (the emphasis is on the past ten years) were in default of their duties as such in holding the AGMs and consideration of financial statements for these years as well as the reports of directors and auditors, that breach of duty by the directors/ Board was a contravention of the articles of the company and can only be ratified by the company through a special resolution in terms of subsection (8) of section 204 of the Act.

36. The provisions of section 204, set out above, pointedly make a reference to a director of a company . It is couched in singular and has reference to the duties of a director of a company who has been enjoined to act in accordance with the articles of the company. Further, a director of a company is to act in good faith in order to promote the objects of the company and its members. A director of a company shall discharge his duties with due diligence and reasonable care, skill and shall exercise independent judgment . The entire tenor and structure of section 204 leads one to conclude that it is addressed to the duties to be performed by a director of any company but not cumulatively and taken as a whole. Subsection (8) of section 204 in particular on which emphasis was laid by learned counsel for the petitioner gives power to the company to ratify a breach of duty, default or negligence by a director in contravention of the articles of the company through special resolution. It follows that in case the company considers that a director is in breach of his duties in contravention of the articles of the company or any of its policy or decision of a board, it may proceed to convene an EGM for the purpose of ratification of the act of a director and for which a special resolution would be required. Thus, the company has firstly to form an opinion that any of its directors has committed a breach of duty or is in default of its policies or decision of the board and thereafter it may further decide to ratify that act by a special resolution. That opinion can only be formed by the Board of Directors of a company and none else. Hypothetically, if the entire board is in breach of a duty, then it may never ratify that act by a special resolution, and the business will simply carry on. United, in this case, has not come to that conclusion nor has it formed its opinion to the effect that there has been a breach of duty by any or all of its directors which would require ratification by the company. The petitioner cannot compel the company to do so by convening an EGM and to pass special resolution in this regard. Ratification of an act would only arise if preceded by a determination of culpability.

37. As stated above, section 204 clearly refers to the breach of duty by a director of a company and to a personal act of default or negligence by that director. It has no reference to a decision taken by the board as a whole. Such decisions are taken under section 183 which provides that the business of a company shall be managed by the board. Significantly, subsection (6) of Section 183 provides that (6) Any contravention or default in complying with requirement of this section shall be an offence liable to a penalty of level 2 on the standard scale and shall be individually and severally liable for losses or damages arising out of such action. Thus any default in the duties of the board as a whole is an office and no question of ratification arises. In particular, with reference to holding of AGM, as stated above, the Chapter relating to meetings and proceedings is a complete answer to any default by a company in holding an AGM. Penalties have indeed been provided which may be visited upon the company as also section 147 empowers the Commission to compel the company to hold an AGM subject to certain conditions. A default in doing so is also visited by penalties. Further it has already been concluded in the paragraphs above that an EGM for the purpose would also suffice and all matters which require the approval of a company for a general meeting may be transacted in an EGM. It cannot be contemplated that the law envisages a duplication of duties and penalties and has not provided the manner in which an AGM may be held or the manner in which, upon default, a company may be compelled to hold an AGM. There is no warrant for the argument that section 204 would still be required to be invoked for the purposes of ratification through a special resolution. This argument cannot prosper.

38. There is nothing in law itself which obliges the Board to hold an AGM which obligation has been placed upon the company and its officers to do so. It is, therefore, unclear whether the directors of a company can be held liable for failure to hold an AGM and thus, proceeded under Section 204 of the Act. The purported failure to hold AGMs is the act of the company and not an individual director. Thus the default of the company will have to be ratified in contradistinction to the default of an individual director. Section 204 does not deal with such species of default. Any default by a company will be for the Commission to determine and fix liability. The company itself cannot be conceived to have power to ratify its own defaults or breach of duty. That is the reason the law assigns determination of default by a company to the Commission by the various provisions of the Act. Be that as it may, till 01.02.2023, the petitioner was also part of the Board of the company and it will have to be seen whether his culpability regarding alleged breach of duty can be separated from rest of the directors. The term board and a director cannot be used interchangeably. The board acts as a board and takes decisions in terms of section 183(2) through a resolution and in terms of section 178(3) the proceedings of a board will be deemed validly held unless proven to the contrary.

39. Section 156 of the Act relates to good corporate governance and practices by the board and this has reference to the practices to be performed by the board while exercising its powers under Section

183. Interestingly, section 172 of the Act confers power on the Commission to pass disqualification orders in respect of a director of a company in the circumstances mentioned in that provision. The power under this provision may be exercised by the Commission without prejudice to ratification by the company and despite that ratification. This, too, brings into stark focus the distinction between approval of financial statements of past years by an EGM and ratification under Section 204(8). The Commission may not upend the proceedings of an EGM held for the purpose yet may decide to proceed against a director on allegations of breach of duty etc.

40. In the meeting of the Board held on 17.04.2024 a summary of historical facts was presented to the Board for its deliberations. It refers to the series of litigation between two rival groups of shareholders which nominated directors to the Board in equal numbers and which state of affairs continued till 01.02.2023. United has continued to grapple with wrangling by directors/ shareholders over the business of the company. Allegations of oppression by the petitioner herein merely echo the allegations made in C.O 35 which have already been dealt with by this Court and need not be adverted to in order to form a fresh opinion. Suffice to say that the conclusions drawn by this Court while deciding CO35 are now subjudice in ICA 10 and it would not be appropriate for this Court to consider anew substantially the same set of allegations with the same connotation. A reference was made to the pendency of ICA 10 in the summary presented to the Board and due to which, according to that summary, the company s financial statements were not formally audited in spite of mandatory requirements of section 223 of the Act. It was further noted that dividends have been distributed to all shareholders until financial year 2021 and this includes the petitioner. There is no contention that due to the ongoing litigation between the two set of shareholders, this Court was compelled, by consent orders dated 27.06.2011 and 31.12.2014, to proceed to appoint Chartered Accountants to ascertain the share value of the company and calculate profits till the date of final order of the Court in CO

35. The auditors pursuant to that direction performed an audit of the company from 01.07.2005 till 02.03.2016. It was under these circumstances that the Board resolved that: it is legally necessary and in the best interest of the Company to urgently have all of its financial statements for the period from 30-06-2006 to 30-06-2023 audited and then placed for approval by majority of the Board of Directors as well as shareholders of the Company in their respective meetings and then also filed with the Securities and Exchange Commission of Pakistan.

41. The agenda item No.2 merely relates to assessing the possibility of engaging an audit firm to conduct a special assignment of auditing company s financial statements from 30.06.2016 to 30.06.2023. That was also approved as a resolution by the Board of Directors and the audited accounts for this period are yet to be placed in general meeting of the company for approval of the members.

42. No correspondence has been placed on record to establish that the petitioner before the crucial date impressed upon the other members of the Board of United to perform their duties in accordance with the articles of association and to disassociate himself from the affairs of the Board in taking the decisions which constituted, in his opinion, a breach of duty. There is a countervailing argument by learned counsel for respondents Nos. 2 to 6 that but for the cases filed by the petitioner against the company and its directors, and a host of conditions ensuing therefrom, the duties under the Articles of Association as well as those cast by the provisions of the Act would have been complied by the Board of Directors and therefore the petitioner cannot now turn around and point a finger at the other directors who were all along willing to fulfill their duties . By implication any allegation regarding breach of duty would also ensnare the petitioner and other directors of his group who remained on the board till 01.02.2023. To reiterate, if certain raft of circumstances compelled this Court to appoint auditors for past financial statements, those circumstances have continued to prevail till 2023. This time the appointment for succeeding years is being done by the company itself.

43. The two concepts espoused by learned counsel for the petitioner and sought to be interwoven as one texture, is a fallacy. The act of BoD to conduct audit (and appoint auditors) is a legal obligation and must not be confused with the purported negligence of a director which, for its ratification, would require a special resolution, doubtless. The objections of the petitioner based on section 246(2) of the Act must be met with the same answer of holding an EGM to transact any business of AGM.

44. Be that as it may, this Court has not been called upon to determine the culpability of directors. That would require proceedings of a different nature and an investigation into conduct of each director individually. The learned counsel for the petitioner proceeded on the assumption that a set of directors are in breach of duty and hence a special resolution would be required. This argument, it is submitted, apart from being untenable, betrays an intention to stonewall any approval (and audit) of financial statements since, undoubtedly, no special resolution can be passed at all. And so the affairs of United will continue to descend into chaos and uncertainty, without previous accounting at all. Contrarily, if past acts of directors can be ratified through special resolution (and in case United can stitch together the required votes) then the plea of oppression of minority shareholders will receive a serious setback. There can conceivably be no oppression in respect of acts which, under the law, can be ratified. Any decision by BoD taken collectively must fall within the realm of other provisions (and not section 204) of the Act which not only impose a duty but provide consequences as well. Section 136:

45. The respondents contended that a remedy is prescribed by law which was not availed and the instant petition is not maintainable. Section 136 of the Act provides that:

136. Power of the Court to declare the proceedings of a general meeting invalid. The Court may, on a petition, by members having not less than ten percent of the voting power in the company, that the proceedings of a general meeting be declared invalid by reason of a material defect or omission in the notice or irregularity in the proceedings of the meeting, which prevented members from using effectively their rights, declare such proceedings or part thereof invalid and direct holding of a fresh general meeting: Provided that the petition shall be made within thirty days of the impugned meeting.

46. The above provision empowers the Court to declare the proceedings of a general meeting including an EGM, invalid. This would require a petition by members having not less than 10% of the voting power in the company and may be declared invalid by reason of a material defect or omission in the notice or irregularity in the proceedings of the meeting. Therefore, the law itself provides an alternate remedy to the members having not less than 10% of the voting power which admittedly the petitioner possesses and so it cannot be contended that the petitioner could not have availed the remedy under Section 136 to have the proceedings of EGM nullified. The only issue is regarding the period provided by the proviso to section

136. It states that the petition shall be made within thirty days of the impugned meeting. Since the petitioner did not do so within the period provided by law, he cannot bring the present petition alleging oppression of the minority shareholders while that question already stands resolved in CO

35. The challenge at the heart of this petition is to the EGM and the approval of financial statements for the past years as also appointment of the auditors to undertake an audit of financial statements for the next years (although no specific prayer to this effect has been made by the petitioner). No other purpose can be discerned from a reading of the petition itself as well as from the oral arguments addressed by learned counsel for the petitioner. In view of section 136 of the Act, the instant petition (to the extent that it challenges the EGM of 23.05.2024) is incompetent and an abuse of process of the Court. The grounds of oppression taken in this petition do not make out an actionable claim as stated above.

47. There is another reason for which this petition is in the realm of multiplicity of litigation which adds to the backlog and burdens the docket of this Court. CO24829/2023 (pending in this Court) challenges the election of the board held on 1.2.2023 in an EOGM. Instead of bringing a separate petition to challenge the EGM (of 23.5.2024), the petitioner ought to have added this as a ground to CO24829/2023 to seek winding up of United. On this basis too, the instant petition is an abuse of the process of this Court.

48. In closing; a) the holding of EGM of 23.5.2024 and other factors mentioned in the petition do not give rise to unlawful and fraudulent acts by the respondents Nos. 2-6 to constitute oppression. The petition to that extent is dismissed. b) It is, however, considered fit to pass orders under sub-section (2) of section 286 in order to streamline future affairs of United. It is directed that: i) The audited accounts in terms of agenda item No.2 shall be completed expeditiously and placed before a general meeting for consideration soon thereafter. ii) The AGM for the upcoming financial year shall be held on time and according to law. The SECP shall ensure for this to happen on time. iii) The petitioner and other shareholders shall have access to financial statements, directors reports, audited reports etc. as and when these are prepared and presented. Their entitlement shall be regulated by law and in case of denial, an authorized officer of SECP shall take measures to compel United to fulfill its obligations. It is reiterated that any request shall have a basis in law and will not the designed to prevent United from carrying out its lawful functions. UN/W-6/L Petition dismissed.