1992 PLP 1094 (MLD)

This is a petition under section 247(6) of the Companies Act, 1913 ‑(hereinafter referred to as `the Act') for restoration of name of Messrs Kitabistan Ltd., on the register of Companies maintained by the Registrar of Joint Stock Companies. The facts leading to the filing of the above petition are that Messrs Kitabistan Ltd. (hereinafter called `the Company') was incorporated at Karachi on 3‑10‑1950 with a capital of Rs.2,00,000 divided into 2,000 shares of Rs.100 each as a private limited company for the objects specified in its Memo of Association. The registered office of the. Company is situated at 18, Metropole Hotel, Abdullah Haroon Road, Karachi. The case of the petitioner, as set out in the petition, is that after its incorporation, the Company commenced its business and has been carrying on the same ever since. The further Case of the Company is that in the year 1965 its relations with the landlord, Messrs Metropole Limited, of the premises in which its registered office is located, became strained and in consequence thereof the landlord had filed an eviction application on the ground of default in payment of rent from 1‑1‑1965 to 31‑7‑1965. The monthly rent was claimed at Rs.330 plus Rs.43 towards taxes and actual electricity charges. The application was resisted by the Company. The Rent Controller found that the rent of the premises had been enhanced with effect from July 1965 to Rs.330 per month; that the Company had committed default. On such finding the Rent Controller ordered eviction of the Company by order, dated 21‑2‑1968. The Company had filed First Rent Appeal against the said order which was dismissed by Additional District Judge, Karachi on 24‑11‑1969. Thereupon, the Company had filed second appeal in the then High Court of Sindh and Balochistan at Karachi which was‑allowed on 16‑1‑1976. The landlord filed petition for leave to appeal before the Hon'ble Supreme Court which was granted and the appeal of the landlord was allowed on 18‑10‑1953. It seems that notice of Execution Application was received by the Company. Thereupon, the Company filed an application on 7‑6‑1983 for setting aside the above judgment on the ground that the landlord by allegedly committing fraud obtained the above ex parte eviction order and had also suppressed the material facts that the matter was agitated upto the Supreme Court on the ground of default. This application was allowed by the Controller on 22‑1‑1984. The landlord had filed First Rent Appeal bearing No.100 of 1984 in this Court which was dismissed on 26‑2‑1984. It is the further case of the petitioner that while the above‑said appeal (Civil Appeal No. 115 of 1976) in the Supreme Court was pending adjudication, Enwar Abbasi, the Managing Director of the Company died on or about 15‑9‑1980. After his death, his sister Begum Bilquees Jehan, widow of late Muhammad Nizamuddin Ahmed acquired his share holding by transmission and was appointed by the shareholders as Managing Director of the Company. 11 is the further case of the petitioner that Begum Bilquees Jehan is eversince looking after the business of the Company alongwith her son Suhail Ahmed, to whom 20 shares of a member Muneer Fatah had been transferred. It is the further case of the petitioner that in the process of litigation with the landlord, the Company in February, 1984 learnt through Notification No.744/Com./83/3392, dated 1‑2‑1983 alleged to have been issued by Assistant Registrar, Joint Stock Companies in pursuance of section 247 of the Act. It is further case of the petitioner that according to the said notification, the Registrar has struck the. name of the Company off the Register of Companies kept by him in accordance with the Act and notice thereof was alleged published by him in the Gazette of Pakistan on 28‑12‑1983. It is the further case of the petitioner that it is alleged by the Registrar of Companies that before striking off the Company's name as aforesaid, the Registrar of Companies might have sent the notice and otherwise complied with the provisions contained in section 247 of the Act but through the mischief of some vested interest, the notices sent to the Company in accordance with the said provisions were not received and/or communicated to the directors or members of the Company nor did the notices published in the Gazette came to the knowledge of the Company's Directors until after the Company had been struck off the Register. The further, case of the petitioner is that the petitioner was not at any time aware that the proceedings were being taken by the Registrar with a view to strike the Company's name off the Register. Had they known or had they any inkling about the proceedings, they would have immediately attended to their obligations under the law. The Company matters were being dealt with by late Anwar Abbasi and after his death litigation had given hardly any time to attend to such matters. It is the further case of the petitioner that on 1‑12‑1953 the Company was carrying on business and was in operation, that is, to say it was in possession of its registered office premises aforesaid and was duly defending litigation pending against it in various Courts at Karachi and was vigilantly safeguarding its interest in every field. Although after the death of late EA. Abbasi, it had temporarily suffered business mishaps, yet it has not ceased its existence and/or its operations. In these circumstances, the above petition was filed. In response to the notice, Deputy Registrar, Joint Stock Companies, Karachi filed his written statement. He stated in his written statement that after incorporation, the Company was required to submit Annual Returns and other statutory returns as required under the Act in the Company Registration Office. He pleaded that only one Annual Return for the year 1951 was submitted and thereafter no Annual Return was submitted in the office nor anything was heard about the Company. That gave reasonal cause to believe that the Company was neither carrying on business nor was in operation. As a result, defunct proceeding was started against the Company under section 247 of the Act whereupon all due notices were issued to the Company on the registered address of the Company as required under the law. As no response was received from the Company for the notice, another notice was issued under section 247(5) of the Act on 1‑12‑1983 for dissolution of the Company to the Manager, Printing Corporation of Pakistan Press, Karachi for publication of the Gazette which had since been published in the Gazette of 1st December, 1983. The Deputy Registrar pleaded that it is not known whether the petitioner, Begum Bilquees Jehan, was the director or member of the dissolved Company and that she is now entitled to move this petition. He submitted that name of the Company was struck off from the Register of Companies after complying with all the formalities. Hotel Metropole Limited have filed two Miscellaneous Applications being Civil Miscellaneous Application No.199 of 1984 and Civil Miscellaneous Application No.200 of 1984. The first application is under section 151, C.P.C. praying for vacating the order, dated 21‑2‑1984. The other application is under Order I, Rule 10 read with section 151, C.P.C. for impleading them as respondent in the above petition. Mr. Muzaffar Ali Khan, learned counsel appearing for the petitioner raised the following contentions:‑‑ (1) Begum Bilquces Jehan, the personal representative of a member, namely Enwar Abbasi is competent to present a petition for restoration of the Company's name to the Register. (2) That on the date of the order, the Company should be deemed to be in operation as it was actually contesting eviction proceedings with its landlord. (3) The intervenor/landlord has no locus standi to be impleaded as respondent. On the other hand, Messrs Muhammad Ali Sayeed, I.H. Zaidi and Shahanshah Hussain, learned counsel appearing for the intervenor submitted that Begum Bilquees Jclian is incompetent to file the petition. The Company was not in operation as alleged by the petitioner. The intervenor is to be impleaded as respondent. In order to appreciate the respective contentions of the learned counsel for the parties, it is advantageous to reproduce section 247(6) of the Companies Act, 1913 which reads as under:‑‑ "247.‑‑‑ Registrar may strike defunct company off register. (1) ............................. (2) .................................................................. (3) .................................................................. (4) .................................................................. (5) .................................................................. (6) If a company or any member or creditor thereof feels aggrieved by the company having been struck off the register the Court. on the application of the company or member or creditor, may if satisfied that the company was at the time of the striking off tarrying on business or in operation, or otherwise that it is just that the be restored to the register, order the name of the company restored to the register and thereupon the company Shall pang to be to have continued in existence as if its name had not be deemed and the Court may by the order give such directions and been struck off; provisions as seem just for placing the company and 411 of make such in the same position as nearly as may be as if the n her persons company had not been struck off. (7) .................................................................. The question in the present case is whether the personal representative of a deceased member of the Company call petition under subsection (6) of section 247 of the Act for the name of the; company to be restored to the register. This question has been considered by Mr, Buckley, J. in re: Water Trading Co. Ltd. (1970) 1 AER

608. Mr Buckley J. Came to the conclusion, after giving cogent reasons which are fully supported by the various decisions discussed by him in the said judgment, that the personal representative of a member although not on the register of shareholders, may present a petition that the company's name be restored to the register. I am in respectful agreement with this view for the reasons given by him arid as such I am of the view that the personal representative of a member although not on the register of shareholders may present a petition. In this view o f the matter, the objection of the Deputy Registrar is overruled. A plain reading of provisions of section 247 of the shows that where the Registrar has reasonable cause to carrying on business or in operation, off the register. He has the power, as opposed to a defunct company. Subsection (6) of section 247 provides that if a company or any member or creditor thereof feels aggrieved by the company "wing been struck off the Register, the Court on the application of the company or member or creditor, may, if satisfied that the company was at the Unit of Striking off. carrying on business or was in operation or otherwise that it is ,just that the company be restored to the register, order the name of the coh1pany to be restored to the register. In a case reported in A I R 1954 M.B. at page 70, it was held that when a suit is actually pending against a company and is being contested by it at the time of the removal of its name from the register, it is proper to direct the restoration of the name of the company. In a case reported in (1969) 3 AER at page 517, Megarry, J. held that under section 353(6) (which corresponds to section‑247(6) of the Act), it must be shown that when the company was struck off, it was engaged in business or in operation or otherwise it is just that the company be restored to the register. Section 353(6) thus seems primarily of their mortal wound, as distinct from:., those which died only when they had been wound up. Company's name be restored to the register `if the Court is satisfied that the company was carrying on business' will depend upon the circumstances of each case. Where a company was simply collecting debts or paying the liabilities, it was held that it was carrying on business see Central India Millery Co. v. Sociele Colonial Anversoise, (1920) 1 K.B.

753. Similarly, what is the meaning of `in operation' is to be ascertained from the facts of each case. In re Outlay Assurance Society, (1887) 34 Ch.D 479, it was held that if the Court is `satisfied that the company was at the time of the striking off carrying on business or in operation', applies to a case of company which at the time of the striking off was carrying on business only for the purpose of winding up voluntarily and realising its assets. Apart from these two grounds, the Court may restore the company to the register if it feels that `otherwise it is just' to do so. This ground is very wide and confers on the Court wide discretionary power. Under this last ground, the Court will restore the name of the company to register if it is satisfied that some object will be achieved by such restoration. It has come on record that Messrs Hotel Metropole had filed eviction proceeding against the Company. Messrs Metropole Ltd. has also filed suit being Suit No.961 of 1980 in this Court. Under these circumstances, it is clear that there are pending proceedings against the Company and the Company was in operation though it was not doing business. Mere cessation of business does not mean that the company was not in operation. In a case reported in A I R 1954 Madh. Baharat at page 170, it was held that when a suit was actually pending against the company and was being contested by it at the time of removal of its name from the register, it was proper to direct the restoration of the name of the company, particularly when the directors were aware of fact of the contest litigation and were actually taking part in it. It has been averred in the petition that had they known or had any inkling about the proceedings, they would have immediately attended to their obligations under the law. Had the Registrar known that the Company was actually defending eviction application and suit filed by Messrs Hotel Metropole Ltd., it is extremely unlikely that he would have ordered the name of the Company to be removed from the register. The Deputy Registrar stated in his written statement that only one Annual Return for the year 1951 was filed and thereafter no Annual Return was submitted in the office nor anything was heard about the Company. That gave reasonable cause to believe that the Company was neither in business nor in operation. As a result defunct proceeding was started against the Company under section 247 of the Act whereupon all the notices were issued to the Company on the registered address of the Company as required under the law. The Deputy Registrar has not annexed copies of notices under sections 247(1), 247(2) and 247(3). Firstly no material was placed before me to show that these notices were issued at the registered address. Secondly, notices under sections 2470) and 247(2) were not published in the official Gazette as required by law. In a case reported as 1988 C L C 1538, it was held that `as the procedure prescribed under the Act was not strictly followed, the petition is allowed and the name of the company is ordered to be restored'. This decision was followed by me in Judicial Miscellaneous No.49 of 1990 decided on 12‑2‑1991. The principle laid down in these decisions is applicable to the facts of the instant case. I now proceed to consider the question that arises for determination before me. The question briefly stated is when a petition for restoration of a company having been struck off the register, is filed in Court, is the landlord of the Company entitled to ask the Court to implead him as a party or to allow him to appear and contest the petition or he has no locus standi at all so far as restoration of the company is concerned? Subsection (6) of section 247 of the Act provides that if a company or any member or creditor thereof feel's aggrieved by the company having been struck off the register, the Court, on the application of the company or member or creditor, may order the name of the company to be restored to the register. The parties who can move the Court for restoration of a defunct company to be restored to the register, arc specifically mentioned in the Act and only such persons are competent to present petition for restoration of a defunct‑company. The Act authorises the company or any member or creditor to present a petition. The right of appearance and of being heard in a petition for restoration of the name of the company to the register has been conferred on persons whom the Legislature considered to be necessary or proper parties for effective adjudication of the proceeding‑‑ before the Court. It is worth mentioning that the Act is based on the, English Companies Act and both the Acts contain more or less similar provisions. The provisions of the Act with regard to the restoration of the defunct‑companies to the register, arc almost alike to the provisions contained in the English Companies Act. As early as 1916 the English Court in re: Conrad Hale & Co. Limited (1916) W.N.275 it was contended that Kennedy (a third party) was entitled to be heard on merits and also took objection that a dissolved company could not present a petition under section 242(6) of the English Act. This contention was not accepted and it was held that Kennedy had no locus standi. It is no doubt true that this decision still holds good and is considered to be good law. In this view of the matter I hold that only persons entitled to be heard are the Company or any member or creditor. On a proper consideration of the relevant provisions of section 247 of the Act, a landlord does not have any right to appear and be heard in petition presented to Court for restoration of the defunct company. Mr. Sayeed lastly contended that the Company may be restored subject to without prejudice to any remedy which the intervenor has against the company prior to the date this order takes effect. Any restoration to the register under section 247(6) restores the company's existence retrospectively and so without the clause in the order. The relevant portions of section 247(6) are `the company shall be deemed to have continued in existence as if its name had not been struck off and `as seem just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off First the effect of the order, when delivered, the company `shall be deemed to have continued in existence as if its name had not been struck off'. This as I read it, is a necessary and automatic result of the order; and such a deeming carries with it all the consequences that flow from it. The directions which I have to give are `for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off'. In this view of the matter, I refuse to insert such a clause. Under the circumstances, I think it proper to direct the registration of name of the company to the Register of Companies. I, therefore, direct the Joint Registrar of Companies, Karachi to restore the name of Messrs Kitabistan Limited in exercise of powers under section 247(6)) of the Act. In the circumstances of the case, the petition is allowed with no order as to costs. Consequently Civil Miscellaneous Application No.199 of 1984 and Civil Miscellaneous Application No.20n of 1984 arc disposed of as having become infructuous. A.A./K‑264/K Application allowed.