2000 PLP 477 (CLC)

"Heading of section of a statute cannot control the meaning of the statute nor curtail or restrict its scope and working"‑‑‑ It was further ruled: 'Heading of section although could be looked into for interpreting the section if its words appeared to be doubtful but it could not restrict the plain words of the section." Similarly in the case of Firdaus Cooperative Housing Society Ltd., noted supra, it was ruled as follows:‑‑

' . "Heading prefixed to a section or sets of sections to be read along with enacting part of sections while construing them with a view to resolve any doubt as to ambiguous words but cannot be used to give a different effect to the clear words in section‑‑‑word 'arbitration' as heading or title of section 54, Cooperative Societies Act, 1925, was only a marginal note‑‑‑Such marginal notes now being enacted by legislature could be referred to for purpose of interpretation‑‑ Marginal notes cannot control meaning of clear and unambiguous words used in enactment". A careful reading of the rules noted above would show that wherever the words used in a section are explicit and clear, the heading of the sections cannot be referred to understand the meaning of the sections nor can the same control, curtail or restrict its scope and working. Even a cursory glance at subsection 8 of section 161 of the Companies Ordinance, 1984 leads one to irresistible conclusion that the provisions contained therein are explicit and unambiguous, therefore, one may not turn to the headings so as to understand the meaning of section itself. Manifestly, in the circumstances of the case application under subsection (8) of section 161 of the Companies Ordinance, 1984 is maintainable. This view of mine is further fortified by the cases reported as Haji Abdul Jabbar and others v. Haryana Asbestos Cement Industries 1987 CLC 726 and Naveed Textile Mills Ltd. Karachi and 3 others v. Central Cotton Mils Limited, S.I.T.E. Kotri, District Dadu and two others PLD 1997 Kar. 432 wherein petitions under section 161 (8) of the Companies Ordinance, 1984 were entertained and determined by the Court whereby the proceedings of a general meeting were challenged on the ground of material defects and omissions in the notice calling the general meeting and irregularities committed in holding the said meeting. It may, however, be added here that the case of Naveed Textile Mills, noted supra was decided by a Division Bench of Sindh High Court, Karachi. Learned counsel for the respondents also relied on the case of Messrs Chalna Fibre Company Limited, Khulna and 4 others v. Abdul Jabbar and 9 others PLD 1968 SC 381 and Mian Ijaz Siddique and others v. Mst. Kaneez Begum and two others 1992 CLC 1658 to canvass the proposition that in the case of challenge to the general meeting, recourse should be had to the civil Court. The judgments afore‑noted are not direct on the point involved in the present case. The judgment in the case of Messrs Chalna Fibre Company Limited is distinguishable on its own facts, therefore, cannot be cited as a precedent in the present case for it was ruled therein that there being no provision in the Companies Act, 1913 under which the petitioner in that case could seek the relief, therefore, the suit filed before the civil Court was considered to be appropriate remedy. It is now well accepted that if the field is occupied by special law providing special forum for adjudication of a dispute then the civil Court shall not have the jurisdiction to decide the matter. In the instant case subsection (8) of section 161 provides a remedy in the nature of a petition to the Company Judge, therefore, it is wrong to contend that the remedy of the petitioner lies before the civil Court. The other judgment referred in this behalf is the case of Mian Ijaz Siddique supra which is a judgement for the proposition that civil Court being the Court of plenary jurisdiction could retain jurisdiction to deal with certain matters concerning affairs of the companies to the extent that they were not specifically dealt with by the Ordinance. I have already held that section 161 of the Companies Ordinance, 1984 provides a remedy to a person who is aggrieved of proceedings of meeting illegally convened and held by the directors. Obviously, the field is occupied, therefore, the rule laid down in the two judgments noted above is not attracted in the facts and circumstances of the case.

9. This brings me to the core question as to whether the proceedings of the meeting allegedly held on 12‑2‑1998 could be set aside on the ground of material defect or omission in the notice or irregularity in the proceedings of the said meeting. Learned counsel for the petitioners referred to the notice placed on the record whereby the petitioners were allegedly intimated about the holding of the meeting. A plain look at the notice afore‑noted would make it abundantly clear that the same had been addressed to the petitioners jointly and not individually and that, too, at the address of the company. It was demonstrated from the record that the Accountant of the company received the same as is evident from the‑signatures affixed on the said notice, which were also found to be affixed on the notice allegedly issued by the Prime Bank Limited. The procedure as prescribed by section 159 of the Companies Ordinance for calling an extraordinary general meeting is as follows: "

159. Calling of extraordinary general meeting.‑‑ (1) All general meetings of a company, other than the annual general meetings referred to in section 158 and the statutory meeting mentioned in section 157, shall be called extraordinary general meetings. (2) The directors may, at any time, call an extraordinary general meeting of the company to consider any matter which requires the approval of the company in a general meeting, and shall, on the requisition of members representing not less than one‑tenth of the voting power on the date of deposit of the requisition, forthwith proceed to call an extraordinary general meeting. (3) The requisition shall state the objects of the meeting, be signed by the requisitionists and deposited at the registered office of the company, and may consist of several documents in like form, each singed by one or more requisitionists. (4) If the directors do not proceed within twenty‑one days from the date of the requisition being so deposited to cause a meeting to be called, the requisitionists, or a majority of them in value, may themselves call the meeting, but in either case any meeting so called shall be held within three months from the date of the deposit of the requisition. (5) Any meeting called under subsection (4) by the requisitionists shall be called in the same manner, as nearly as possible, as that in which meetings are to be called by directors. (6) Any reasonable expense incurred by the requisitionists by reason of the failure of the directors duty to convene a meeting shall be repaid to the requisitionists by the company, and any sum so repaid shall be retained by the company out of any sum due or to become due from the company by way of fees or other remuneration for their services to such of the directors as were in default. (7) Notice of an extraordinary general meeting shall be sent to the members at least twenty‑one days before the date of the meeting, and in the case of a listed company shall also be published in the manner provided for in subsection (3) of section 158: Provided that, in the case of an emergency affecting the business of the company, the registrar may, on the application of the directors authorize such meeting to be held at such shorter notice as he may specify. (8) Every officer of the company who knowingly or wilfully fails to comply with any of the provisions of this section shall be liable, (a) if the default relates to a listed company to a fine not less than ten thousand rupees and not exceeding twenty thousand rupees and in the case of a continuing default to a further fine which may extend to two thousand rupees for everyday after the first during which the default continues; and (b) if the default relates to any other company, to a fine which may extend to two thousand rupees and in the case of a continuing default to a further fine which may extend to two hundred rupees for everyday after the first during which the default continues." It is obvious from the provisions noted above that notice of the meeting is pivotal so far as affairs of the company are concerned, therefore, the legislature has prescribed the mode of service of‑notice on the company and its members in section 50 which reads as follows:‑‑ "

50. Service of notice on members, etc.‑‑ (1) A notice may be given by a company to any member either personally or by sending it by post to him to his registered address or, if he has no registered address in Pakistan to the address, if any, within Pakistan supplied by him to the company for the giving of notices to him. (2) Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, prepaying and posting a letter containing the notice and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post. (3) If a member has no registered address in Pakistan, and has not supplied to the company an address within Pakistan for the giving of notices to him, a notice addressed to him or to the shareholders generally and advertised in a newspaper circulating in the Province or the part of Pakistan not forming part of a Province in which the registered office of the company is situated shall be deemed to be duly given to him on the day on which the advertisement appears: Provided that in the case of a listed company such notice in addition to its being published as aforesaid be also published at least in one issue each of a daily newspaper in English language and a daily newspaper in Urdu language having circulation in the Province in which the stock exchange on which the company is listed is situated. (4) A notice may be given by the company to the joint‑holders of a share by giving the notice to the joint‑holder named first in, the register in respect of the share. (5) A notice may be given by the company to the person entitled to a share in consequence of the death or insolvency of a member by sending it through the post in a prepaid letter addressed to them by name, or by the title or representatives of the deceased, or assignees of the insolvent, or by any like description, at address, if any, in Pakistan supplied for the purpose by the person claiming to be so entitled, or until such an address has been so supplied by giving the notice in any manner in which the same might have been given if the death or insolvency had not occurred. (6) In addition to any other mode provided by this Ordinance for notice of any general meeting, notice of every general meeting shall be given in some manner hereinabefore authorized to‑‑ (a) every member of the company except those members who, having no registered address within Pakistan, have not supplied to the company an address within Pakistan, for the giving of notices to them; (b) every person entitled to a share in consequence of the death or insolvency of a member who, but for his death or insolvency, would be entitled to receive, notice of the meeting; and (c) the auditors of the company."' It is a matter of record that the alleged notices were issued to the petitioners on the address of the company i.e. 46‑M, Gulberg‑III, Lahore and were shown to have been received by the Accountant who was subsequently given enormous raise in his salary but was dismissed from his service under the orders of the Court. In any case, learned counsel for the petitioners rightly referred to the notices allegedly issued by the Prime Bank which were also received by the Accountant in order to prove that the notices for the meeting were also received by him. The two signatures are so alike and identical that it can be identified by the naked eye, thus, there was no service in the eye of law. It appears that notice, if, at all issued was issued jointly which was illegal and wrong for every member was to be issued separate and independent notice which should have been issued and served on the said member individually on his address. Secondly the notice appears to have been served on the address "Care of Messrs Yasmin Weaving Mills, 46‑M, Gulberg‑III, Lahore, which cannot be the home address of all the members described therein. Thirdly, it appears to have been received by the Accountant of the Company which again is not lawful service of the petitioners for it is not shown that the Accountant of the company is representative of the petitioners or the company itself. It was a material defect in issuance of notice, which has the resultant effect of preventing a member or members from participating in the proceedings of a meeting. Needless to add that it was not only a defect in service of notice, but no notice appears to have been served at all on the petitioners. It would be noted that provisions as to issuance and service of notice as contained in section 50 of the Companies Ordinance, 1984 have not at all been adhered to, therefore, it could not be maintained that the meeting held on 12‑2‑1998 was lawful muchless the proceedings taken therein were legal and binding on the company. Similarly, the minutes of the meeting were not‑transcribed in the register of minutes as is evident that the same were admittedly recorded on loose papers. It would also be seen that two directors of the company having convened and held the meeting proceeded to dislodge 5 directors ' of the company, they were not in possession of minute book of the company, therefore, they proceeded to record the minutes of the alleged meeting on loose papers. The minute book of the company is of great importance which contains minutes of solemn proceedings of the company, therefore, the minutes recorded on the loose papers may not be given any sanctity. Again the quorum for special general meeting as prescribed by Article 60 of the Memorandum of Association being there, the meeting as held on 12‑2‑1998 was illegal because it lacked quorum, therefore, no business could be transacted in the said meeting. Above all the meeting held on 12‑2‑1998 was also attended by Mr. Salim Baig, whose name has not been reflected in the register of members of the company, therefore, his participation in the said meeting was not backed by the register of members, hence without lawful authority.

10. In the circumstances, the proceedings of the meeting allegedly held on 12‑2‑1998 are declared to be illegal and quashed. The result being that the petitioners continued to be the directors of the company and would occupy the same position as were held by them on 12‑2‑1998. The Chairperson shall cease to act as such on and from the decision of this C.O. but she is, however, directed to take steps in accordance with the Companies Ordinance and Memorandum and Articles of Association to call for extraordinary general meeting under her supervision. She shall not be paid any emoluments for convening and holding the said meeting.

11. There is yet another aspect of the matter i.e. the apprehension of H.B.L., the major creditor of the company for it is submitted by them that as soon as an order is passed by this Court, the successful part would go and occupy the mill premises and there is great likelihood of machinery being pilfered and removed, resultantly, the security of the bank which has already diminished a lot would further be diminished. It is submitted that the Bank has already filed a suit for recovery against the company and judgment is to be announced in the said case on 23‑11‑1999. The apprehension of the bank is not all that misplaced, therefore, in order to obviate any possibility of pilferage or removal of the machinery, it is directed that a list of inventory be made at the time of delivery of possession to the petitioners by the Chairperson. The chairperson shall also join representatives of the Bank. The effort aforenoted shall be completed jointly before handing over of possession to the petitioner but within a period of three weeks from today. The Chairperson has also pointed out that she has not been given her salary since February, 1998 as also the expenses of 3 lacs. It is submitted by her that balance amount of a bill for the repair of compressor amounting to Rs.40,000 is also to be paid. The matters afore‑noted shall be attended to by the petitioners. The petition is accepted in the terms noted above. Q.M.H./M.A.K./S‑475/L Petition allowed.