P L D 1960 (W (PLP)

MUHAMMAD SHAFI, J.‑

Gujrat‑Punjab Bus is a private limited company incorporated in 1944, under the Pakistan Companies Act of 1913. A dispute is going on between the two groups of the share‑holders of this company for its control and management. On the 7th of December 1959, Mr. Riasat Ali, the Secretary of the company, purporting to act under the orders of the Board of Directors, issued information to the share‑holders by letter No. 25/A. B.‑59/618 that the annual general meeting of the share‑holders of the company would take place in the registered office of the company situated on the Railway Road, Gujrat, on the 31st of December 1959, at 10 a.m. The agenda which was circulated read as under:‑-- (1) For the inspection and sanction of the balance‑sheet in respect of the year ending with the 30th of April 1959. (2) For the sanction of the division of the profits according to the recommendations of the Directors. (3) The election of the directors because all the directors of the Board of Directors who had been elected as such by Resolu tion No. 4 in the meeting of the share‑holders of the company held on the 6th of December 1959, (presumably 1958) had resigned on the 6th of December 1959. (4) The election of the Chairman and the Managing Director because the period of the Chairman and the Managing Director as such was due to expire on the 30th of December 1959. (5) For the election of the auditors for the coming year. (6) Any other item with the permission of the Chairman.

2. Since it was apprehended that the two rival groups fighting for power might come to blows and thus lead to a serious breach of peace, an application was made to the Deputy Commis sioner, Gujrat, to make the necessary arrangement to supervise the election and prevent the breach to take place. The Deputy Commissioner, Gujrat, accordingly instructed Mr. Ikram‑ul‑Haq, Additional District Magistrate, whom we examined in Court as C. W. 1, to supervise the meeting of the share‑holders. Mr. Muhammad Afzal, Deputy Superintendent of Police, who was examined by us as C. W. 2, was also instructed to be present at the dangerous spot with a police force necessary to maintain the law and order. It is alleged that meeting of the share‑holders did take place in the office of the Chairman in the precincts of the company's registered office on the date and the time fixed. Following persons were alleged to have been elected as Directors for one year:‑-- (1) Chaudhri Muhammad Husain. (2) Haji Karam Ilahi Pagganwala. (3) Malik Farzand Ali. (4) Lala Muhammad Din. (5) Sheikh Muhammad Husain. (6) Kalla Khan Niazi. (7) Malik Manzoor Khan. (8) Muhammad Ashraf Pagganwala. (9) Sheikh Ahmad Din. Out of them, Sheikh Muhammad Hussain was elected as a Chair man and Muhammad Ashraf Pagganwala as a Managing ‑Director for the period of five years. On the 2nd of January 1960, Mian Muhammad Akbar, Chaudhri Ata Muhammad, who has since died, Chaudhri Riasat Ali, Mian Muhammad Aslam Hayat, Haji Mian Barkat Ali, Chaudhri Fateh Muhammad, Malik Abdul Karim, who is also dead, Chaudhri Imtiaz Ahmad, Mir Muhammad Sultan, Maulvi Ata ' Ullah, M. Sana Ullah, Mir Muhammad Husain, Haji Farzand Ali, Major Muhammad Abdullah and Chaudhri Muhammad Ashraf made an application in this Court under section 2 (4) of the President's Order (Post Proclamation No. I of 1958), Laws (Continuance in Force) Order, 1958, for the issue of a writ of mandamus or any other appropriate writ ordering the nine persons, alleged to have been elected as the Directors, not to function in the name of Gujrat‑Punjab Bus Limited, and restraining them from acting as the Directors of the said company. They further prayed that Sheikh Muhammad Husain and Muhammad Ashraf Pagganwala be restrained to act as the Chairman and Managing Director, respectively. They took it for granted that they had been duly elected as Directors and requested that the respondents be restrained from interfering with their functions as Directors, and Riasat Ali as Secretary, ordering them to return the keys of the safe, minute book cash books and other registers of the company to Mian Muhammad Akbar, alleged to have been elected as Managing Director, so that he along with other Directors might be able to run the affairs of the company for the period for which they had been elected. The last two prayers were based on the assertion that the meeting in which the respondents were elected as Directors in fact did not take place at all and the one which was announced to have taken place was a bogus one and a fraud on the company. The legal meeting of the share‑holders, according to them, took place outside the office of the Chairman on the same day in which the petitioners were elected as Directors with Mian Muhammad Akbar as the Managing Director and Chaudhri Ata Muhammad deceased as the Chairman. It was further alleged in the petition that Chaudhri Riasat Ali had received an information from Mr. Muhammad Ashraf Pagganwala, the outgoing Managing Director, on the 30th of December 1959, that he had been removed from the post of Secretary but this order of Mr. Muhammad Ashraf was not warranted by law and rules of the company. According to them, the Managing Director had no power whatso ever to remove Mr. Riasat Ali from the secretary ship. In the petition giving reasons why the meeting in which respondents were elected as the Directors was bogus and fraudulent, the petitioners stated as under :‑ "That the Additional District Magistrate and the Deputy Superintendent of Police were present in the office of the company on the 31st of December 1959, before the time scheduled for holding the general meeting. The petitioners and the other share‑holders were sitting in the chairs where the meeting was to be held and where the annual general meeting had been held during the last year. The Secretary, Mr. Riasat Ali, just at about 10 'clock requested the Additional District Magistrate to ask Mr. Muhammad Ashraf Pagganwala respondent to bring his keys so that the safe be opened and the minute book be taken out for completing the proceedings of the general meeting. The Additional District Magistrate asked Mian Muhammad Ashraf, respondent, to open the safe and hand over the proxy register and the minute books to the Secretary. Mian Muhammad Ashraf said that he had already dismissed the Secretary, which fact was controverted by the Secretary as allegedly wrong, just at this time. When this conversation was going on some of the share‑holders came out of the room adjacent to the office of the Managing Director and proclaimed that Mian Muhammad Ashraf has been elected as the Managing Director as the meeting had duly been concluded by electing Directors and taking other proceedings. This announcement was a big surprise for every one including the Additional District Magistrate and the Deputy Superintendent of. Police. This was all a hoax and the following circumstances, among others, are worth consideration:‑-- (i) That it was just about 10‑10 a.m. when this announce ment was made. (ii) That the place for holding the general meeting was where the petitioners and the other share‑holders, shown in Annexure `C' were sitting. The Additional District Magis trate and the Deputy Superintendent of Police were also there, The meeting at any other place was inconceivable. (iii) Mian Muhammad Ashraf Pagganwala, who was stated to have been elected as the Managing Director was still talking to the Additional District Magistrate and Mr. Riasat Ali in respect of the registers, when the announcement was made by some persons about the proceedings of the meeting to have already been completed. (iv) That even if any meeting was to be held inside, it was quite natural that other share‑holders sitting, who were present there, and the Additional District Magistrate and the Deputy Superintendent of Police should have been intimated of the fact so that they should have participated."

3. The petitioners thereafter alleged that they held the meeting which was a legal meeting in which some of the petitioners were appointed Directors including the two persons mentioned above, who were elected as Managing Director and Chairman, respectively.

4. Circumstances mentioned in the petition under which the meeting was alleged to have been held electing the respondents as the Directors were completely denied by the respondents. According to them a legal general meeting of the company had taken place on the date and at the time fixed. They alleged that while the meeting was in progress the Additional District Magistrate and the Deputy Superintendent of Police arrived along with some of the petitioners inside the room. The petitioners were asked to partici pate in the meeting but they refused to do so and, consequently, if the meeting took place without them, they were themselves to be blamed and not the respondents.

5. A report was sent for from the Additional District Magistrate who stated that he went to the Gujrat‑Punjab Bus Stand on the 31st of December 1959, at about 9 a.m. Mian Muhammad Ashraf Pagganwala was already present in the office of the company along with one or two other men and a purdanashin lady. The group led by Mian Muhammad Akbar arrived there at 9‑30 a.m. Mian Muhammad Ashraf Pagganwala's group arrived at 9‑40 a.m. The former took their seats outside the office of the Chairman while the latter went straight to the Chairman's office and took their seats there. The two groups were sitting at a distance of about 50 yards from each other. A wall, however, intervened between them and they could not see one another. At about 10‑15 a.m., Mian Muhammad Akbar and Chaudhri Riasat All from one side and Mian Muhammad Ashraf and Mian Manzoor Pagganwala from the other approached the Additional District Magistrate carrying a heated discussion over certain points. While this discussion was on, Mian Muhammad Ashraf said at about 10‑30, or 10‑45 a m., that the meeting was going on in the office building for the last half an hour and, there fore, he could not remain standing there any longer. He consequently left for the office of the Chairman followed by the Additional District Magistrate and the Deputy Superintendent of Police and some people belonging to Mian Muhammad Akbar's party. Entering into the Chairman's office, they found a meeting going on. Chaudhri Riasat Ali and Mr. Muhammad Akbar, however, shouted that it was all a fraud. Mian Muhammad Ashraf, however, invited Chaudhri Riasat Ali and Mr. Muhammad Akbar to come and participate in the meeting which offer was, however, declined by them. The Deputy Superintendent of Police and the Additional District Magistrate remained in the office for a short time and then they came out. It was after some time that Mian Muhammad Akbar's share‑holders held their meeting in the vacant site near the workshop at about 11 or 11‑15 a.m., but by that time Mian Muhammad Ashraf and his party had finished their meeting and were being garlanded for having been success fully elected as the Directors, Managing Director and the Chairman.

6. On seeing this report of the Additional District Magis trate, the petitioners put in a replication to the reply submitted by the respondents in which they materially departed from the story told by them in the original petition. They also added certain other facts which were not mentioned by them earlier. Giving the account of the meeting which was held by the respondents, they made the following new statement:‑-- "During the discussion that followed between the petitioners Nos. 2 and 4 on one side and Muhammad Ashraf on the other in which A. D. M. also took part, Muhammad Ashraf Paggan wala stated that a meeting was being held inside the office. Petitioners Nos. 2 and 4 in unequivocal terms said that it was a fraud and there could not be a meeting, going on at any other place. However, to see as to what actually was happening inside the office, the petitioners Nos. 2 and 4 along with A. D. M. went in the room where some of the share‑holders were sitting. Muhammad Ashraf stated that this was the meeting of the share‑holders and petitioners Nos. 2 and 4 disclaimed the meeting and said that it was a mere sham transaction and a proceeding on which no reliance could be placed.". They further alleged that no meeting could take place without Mian Barkat Ali, the outgoing Chairman presiding over the meeting. They also alleged that the meeting it the office and that too without the relevant books was unimaginable. It was further claimed that even if the meeting alleged to have been conducted by the respondents was regular in all other respects, the persons elected therein as the Directors could not claim to have been elected by vote of majority which meant the majority of not the heads but of the shares which the participants in the meeting had in the company.

7. In order to clarify certain points we examined the Additional District Magistrate and the Deputy Superintendent of Policy fn Court, but not an oath or solemn affirmation. The statements made by both these officers clearly show that a meeting did take place in the Chairman's office which was attended by most of the share‑holders. The meeting in which the petitioners were elected as the Directors took place afterwards. Arguing that the respondents' meeting was illegal, Sardar Muhammad Iqbal, Advocate, pointed out to us that the meeting could not have taken place inside the Chairman's office but should have taken place outside, where the petitioner's people were sitting and where the chairs had been arranged for the holding of such a meeting. A reference to the statement of Mr. Ikram‑ul‑Haq, however, would show that when he arrived in the premises of the company, he was informed that the meeting was to take place inside a room of the company's office. He also got the impres sion that the meeting was going to take place inside the room because the arrangement for holding such meeting had been made there. He further stated that he knew that the meeting was not going to take place outside in the open place. Similarly, Mr. Muhammad Afzal, Deputy Superintendent of Police, stated that when he went to company's premises he saw the office of the Chairman. He noticed a big table lying there with chairs all around it. One could conclude from the position of the chairs there that the meeting was going to take place in that office. He also saw some chairs and a small table lying outside in the open but judging from the number of the chairs which were only 10 or 12 it could safely, be said that no meeting was intended to take place there. It has been urged that previously meetings had been taking place outside the Chairman's office and, therefore, no departure could be made from this rule so as to hold the meeting inside the office of the company. In support of this contention two affidavits of Mian Muhammad Akbar Farooqi and Mirza Allah Ditta have been placed on the record, but it is not necessary to refer to them because after all if a meeting was going to take place in the precincts of the company, it could take place anywhere within those precincts. The place where the meeting is intended to take place is previously arranged by the Secretary. Sufficient chairs are put there in order to accommodate all the share‑holders. In this case it appears that arrangement for the meeting whether it was done by Riasat Ali petitioner, who still claimed to be the Secretary, or by somebody else, was made inside the Chairman's office. Normally, it would be fair to hold that the meeting would take place in the Chairman's office unless the participants in the meeting agree to hold it somewhere else, or some other cause compel the share‑holders not to hold the meeting inside the office. There is no evidence that any arrangement was made for the meeting to take place outside in the open as is alleged by the petitioners. It is alleged that the Chairman's office was not big enough to hold all the chairs necessary for all the share‑holders to sit upon. On this point, the statement of the Additional District Magistrate is quite clear when he stated in answer to a Court question that the office room of the company was a fairly big one and he saw many persons sitting there, although he did not count them.

8. It is next argued that as Mian Barkat Ali was still the Chairman, having been elected for a period of two years on the 31st of December 1957, therefore, no general meeting of the share‑holders could take place without his presence in the chair. Reference is made to Regulation 53 of Table `A' of 1st Schedule of the Company Law, which lays down that the Chairman, if any, of the Board of Directors, shall preside as Chairman at every general meeting of the company. Reference to the agenda, a printed copy of which has been appended to the petition, will show that the Chairman and the Managing Director's period as such had expired on 30th of December 1959. On the 31st of December 1959,Atherefore, there was no Chairman of the Board of Directors to preside over the general meeting. This agenda has not in any way been questioned by the petitioners in their petition. On the contrary, it was issued under the signatures of Riasat Ali, one of the petitioners, and he as well as other petitioners are bound by the contents thereof. Assuming, however, that Mian Barkat Ali was still the Chairman of the Board of Directors, still if he refuses to attend the meeting even though he was present in the precincts of the company, the share‑holders would have full power to elect a Chairman to preside over that particular general meeting, as is provided by Regulation 54, Table `A' of the 1st Schedule, which lays down that if there is no such Chairman, or if at any meeting he is not present within fifteen minutes after the time appointed for holding the meeting, or is unwilling to act as Chairman, the members present shall choose some one of their number to be Chairman.

9. It is then urged at the Bar that no meeting as alleged by the respondents could take place without the minutes book or the proxy register. No provision of law has been quoted before us to show that a meeting without a minutes book is either illegal or irregular. All that the law contains in section 83 of the Companies Act is that every company shall cause minutes of all proceedings of general meetings and of its Directors to be entered in books kept for that purpose. In order to write down the minutes of the meeting, therefore, it was necessary to have the minutes book, but then if the petitioners did not make the minutes book available to the respondent, what they could do was to hold the meeting with out the minutes book and record the proceedings on a separate sheet of paper which they in fact did. In this connection, may refer to the admitted facts of the case that the safe and the almirah in which the books of the company etc. were kept were locked in such a way that two keys were kept by one group and two by the other. No one group without the presence of the other group could open the safe etc. As the petitioners did not co‑operate with the respondents and did not hand over the keys in order to open the safe although a request to that effect was made to them by the respondents, they had no alternative but to hold the meeting in the absence of the minutes book and the proxy book. Reading of the minutes of the last meeting has been alleged to be an integral part of the general meeting, but no law to that effect has been quoted at the Bar, nor does the agenda in question show that the general meeting of the share‑holders could not take place without first recording the minutes of the last meeting.

10. So far as the proxy book is concerned, although most of the share‑holders had given proxies to one person or the other, still almost all of them were present in the general meeting except those who intentionally avoided to take part in the meetings. The question of the presence of the proxy book, therefore, did not arise.

11. Very great stress, however, was laid on the point that the respondents even if the meeting took place regularly and in accord ance with the law could not claim to be duly elected as Directors because they did not have the vote majority in their favour. Article 15 of the Articles of Association of this company runs as under: "The qualifications of the Directors shall be holding in their own name and not jointly with any other person 50 or more shares of the company with support of the votes majority." On the basis of this article, it is argued that a person cannot be said to be duly elected as a Director unless he has 50 or more shares of the company and has the support of the majority of votes. It is admitted that one share entitles the holder thereof to one vote. It would, therefore, appear that a person in order to be duly elected as a Director of the company should have the support of a majority of the shares. The Articles of Association of this company do not give the procedure which is to be adopted for the holding of the general meeting or for the election of the Directors or other office bearers of the company. If Article 15 is taken on the face value, then anybody can produce proxies and show that he has the support of the majority of the shares and is thus entitled to be declared as a Director. This, however, does not seem to be the law or the practice of this company. Previously two general meetings had taken place and the Directors had been elected. By saying that a person in order to be elected should have the support of the majority of the shares means the majority of the shares of those share‑holders who are present in the D general meeting convened for the purpose of electing the office holders. Any other interpretation would create an anomalous position and will indeed be against the specific provisions of the Companies Act. Under section 17, subsection (2) of the Companies Act, it is open for any company to adopt in its Articles of Association all or any of the Regulations contained in Table `A' in the 1st Schedule and shall in any event be deemed to contain Regulations identical with or to the same effect as Regulation No. 56 which is to the following effect:‑-- "At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands, unless a poll is (before or on the declaration of the result of the show of hands) demanded (in accordance with the provisions of clause (c) of subsection (1) of section 79 of the Companies Act, 1913); and unless a poll is so demanded, a declaration by the Chairman that a resolution has, on a show of hands, been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the book of the proceedings of the company shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of, or against, that resolution." From this provision of law, it will be perfectly clear that any resolution, including a resolution for the election of the office bearers, has, in the first instance, got to be put to the vote of the meeting which must decide it on a show of hands. That clearly means that if the show of hands shows that a certain person has a majority, then the Chairman will declare him as having been so elected even though he may not have the support of the majority of the shares in his favour. In such a case every member present in person has one vote, but if a poll is demanded, then on a poll every member has one vote in respect of each share or each 100 of stock held by him. It is thus clear that the question of the vote majority only arises if a poll is demanded. Where in a meeting of the share‑holders a person has been unanimously elected as Director, Chairman or Managing Director and no poll is demand ed, then the question of one vote in respect of each share does not arise. In the instant case, the respondents were elected unanimously as Directors, one of them as a Managing Director and the other as a Chairman, there was, therefore, no occasion since no poll was demanded, to caste a vote which was to be in respect of each share. This argument, which at first appears to be quite attractive, loses its force if it is examined in the light of sections 56 and 60 of the Companies Act.

12. Assuming, but not conceding, that the petitioners have succeeded in proving that no valid meeting took place on the 31st of December 1959, still I do not think that a case has been made out to issue a writ of mandamus. A writ of mandamus as ordinarily understood is a high prerogative writ usually issued to any natural person, corporation or inferior Court requiring them to do some particular thing therein specified and which appertained to their office or duty. Generally speaking, it is a summary writ commanding the corporation or the inferior Court or the natural person to perform some specific legal duty to which the party is entitled as of legal right to have performed. The prayers in the instant petition may with advant age be reproduced here :‑ (i) "ordering the respondents 1 to 9 not to function in the name of Gujrat‑Punjab Bus Limited ; (ii) restraining the respondents from acting as the Directors of the said company and further respondents Nos.1 and 2 to act as the Managing Director and the Chairman respectively; (iii) restraining respondents 1 to 9 from interfering with the functions of the petitioners as Directors and petitioner No. 4 as Secretary ; and (iv) ordering respondents to return the keys of the safe, minute books, cash books and other registers of the company to petitioner No. 2 Mian Muhammad Akbar so that he, along with other Directors, may be able to run the affairs of the company for the period for which petitioners Nos. 2, 3 and 5 to 16 have been elected." "From the above mentioned prayers, it will be noticed that the petitioners do not ask the Court to issue a command to the, persons cited as respondents in the case to perform some specific legal duty nor do they require the Court to issue a writ requiring them to do some particular thing which appertained to their office or duty. A negative writ, as is demanded by the peti tioners, in my view, cannot legally be issued. The office of mandamus is to stimulate, not to restrain. The mandamus cannot be used as a substitute for injunction. There are, however, some extreme cases which may be treated as an exception to the above rule, but then in such cases the mandamus can be used where it is the only proper remedy open to the aggrieved party and no other. For example, a mandamus is proper to prevent an unauthorised election to be held. In the case in hand, it is open to the petitioners to file a suit questioning the legality of the election of Directors. It is the function of the ordinary Civil Court to record evidence and, after the exhaustive enquiry, to come to the conclusion whether a valid election had taken place or not. The petition is only directed to enforce a personal right of the petitioners as distinguished from the enforcement of a duty of a public nature and is, therefore, outside the scope of mandamus. I am, therefore, of the opinion that there is no basis whatsoever in this case to issue a writ of mandamus. The petition, therefore, fails and is dismissed with costs. M. B. AHMAD, J.‑

I agree. A.H. Petition dismissed.