1974 PLP 15 (SCMR)

‑‑‑‑ Ss. 162 & 247‑Liquidation‑Agreement filed in High Court embodying certain terms regarding future functioning of company signed by only two shareholders‑Other shareholders not being party to agreement, fact of counsel for such shareholders also signing document, held, irrelevant, in circumstances‑High Court, held, justified in setting aside agreement. Mohammad Ilyas Khan, Advocate instructed by Ch. M. Z. Khalil, Advocate‑on‑Record for Petitioner. Sh. Masud Akhtar. Advocate‑on‑Record for Respondent. No.

2. Nemo for the Remaining Respondents. Date of hearing: 2nd October 1973. ANWARUL HAQ, J.‑In the year 1970, the respondent Maslehuddin made a petition under section 162 of the Companies Act for winding up of a company functioning under the name and style of Messrs Seth Industries Limited (respondent No. 1). Daring the pendency of this application in the High Court an order was obtained by the petitioner from the Registrar, Joint Stock Companies under section 247 of the Act to the effect that the name of the company be struck off the register on the ground of the company having become defunct. This order was made on the 10th of May 1971 and notified in the Punjab Gazette of the 14th of May 1971. On2‑6‑1912 the learned company .fudge in the High Court accepted a compromise presented before him by the petitioner, Seth Salahuddin and respondent No. 2 Maslehuddin embodying certain terms regarding the fuure functioning of the company. No formal order was, however, made on that date for the disposal of Maslehuddin's original petition for the winding up of the company, although the learned Judge observed that from the statements of the parties and from the document filed by them he was satisfied that the matter had been adjusted outside the Court. It appears that Maslehuddin then moved a miscellaneous application for the setting aside of the previous compromise between him and Seth Salahuddin. This application was heard by another learned Judge, and was accepted by him on the 14th of September 1972. The learned Judge observed that the agreement was signed only by Maslehuddin and Seth Salahuddin but no body had signed on behalf of the company, nor on behalf of the remaining respondents who were also shareholders in the company. Accordingly, he set aside the compromise and adjourned the matter for further proceedings. The petitioner is aggrieved by this order of the High Court and it is submitted on his behalf that in view of the fact that the company had already been struck off the register under section 247 of the Companies Act, it was no longer necessary for any body to sign the compromise on behalf of the company, and that in any case the remaining two shareholders of the company, which is a private limited concern, were also a party to the agreement inasmuch as their counsel had signed the document. It is contended that respondent No. 2, Maslehuddin, could not be permitted to resile from this agreement which contemplated certain steps regarding the working of the factory which has been established by the company. We see no merit in these submissions. It is clear that during the pendency of proceedings under section 162 of the Companies Act in the High Court, it was not open to any of the shareholders to have the company declared defunct under section 247 of the Act. It is conceded by the learned counsel that the company had acquired land and undertaken the construction of a factory by installing machinery etc. for the manufacture of sanitary fittings. Such being the case and liquidation proceedings having already commenced under section 161 of the Act, the Registrar of the Joint Stock Companies was clearly in error in striking off the company from the register on the ground that it had become defunct. This provision of law had no application to this case. As a result, the liquidation proceedings pending in the High Court had to be disposed of on merits. The agreement relied upon by the petitioner was admittedly signed by only two of the shareholders, namely, the petitioner and the respondent, Maslehuddin. The fact that the counsel for the other two shareholders also signed the document irrelevant, a these two other shareholders were not a party to the agreement. On this ground alone the High Court was, therefore, justified in setting aside this agreement sad proceeding to deal with the matter an merits. Petition dismissed.