2001 PLP 1708 (MLD)

3. I have heard Mr. Saeed A. Sheikh for the petitioner and Mr. Nazar Khan, Advocate/Administrator, who raised a preliminary objection that the present proceedings are liable to be stayed in view of section 316 of the Companies Ordinance, 1984. It was submitted that proceedings under section 290 of the‑Companies Ordinance, 1984 in the matter of Messrs Taj Company Limited were initiated in the Lahore High Court, which is numbered as Civil Original No.45 of 1990 and that the respondent No. l namely, Bahawalpur Board Mills Limited, being one of subsidiary of M/s. Taj Company Limited was also included in the said proceedings, that on 19‑12‑1990 a Company Judge of Lahore High Court appointed a Board of Administrators under section 290(2) of the Ordinance, 1984; that the present proceedings were filed on 5‑11‑1991 without leave of the Company Judge of Lahore High Court. It was argued that the present petitioner was in full knowledge of the proceedings at Lahore High Court but despite that the petitioner filed present proceedings. In this connection Mr. Naazar Khan has referred to paragraph 7 of the main petition which reads as follows:‑‑ "7.??????? That the respondents once again started making defaults in the repayment of loan and a legal notice dated 17‑10‑1990 was consequently served on the respondents. The respondents vide letter dated 5‑11‑1990 informed the petitioner that the repayment was being delayed because of some dispute with third parties and that the payment shall re‑start on settlement of the said dispute. In the meantime, however, the petitioner learnt through press that Taj Company Ltd. of which too respondents Nos.2 to 8 are the Directors, is being proceeded against by the Lahore High Court under the Companies Ordinance, 1984 and that a Board of Administrators had been appointed to run its affairs. The Lahore High Court had also frozen the personal accounts of the Company's Directors. In that view of the matter and for failure to repay the loan, the petitioner recalled the loan as also the re‑schedule thereof and now seeks recovery of its loan through this petition. The liability of the respondents, joint and several as on 31‑5‑1991 is Rs.25,379,300.91."

4. Mr. Naazar Khan as referred to the case of National Bank of Pakistan v. Banking Tribunal No.1q and 11 others PLD 1994 Karachi 358, Yousaf Ali v. Muhammad Aslam Zia and 2 others PLD 1958 SC (Pak.) 104 and the case of Chowdhry Muhammad Din v. The National Commercial Bank Limited, Karachi PLD 1972 Karachi

287. Mr. Saeed Ahmed Sheikh, learned counsel for the petitioner has vehemently opposed the plea of non?maintainability of the present proceedings as well as the three applications, filed by the Administrator of M/s. Taj Company Limited. It was argued that Administrator is an outsider, who is not entitled either to file these three applications or to raise instant objection. He has also pointed out that previously identical applications filed by the Administrator of M/s. Taj Company Limited (C.M.A. 652/92, C.M.A. 654/92 and C.M.A. 1814/93) were dismissed by this Court vide order dated 21‑9‑1994, therefore, it was argued that instant application is also barred by res judicata and being filed by an incompetent person having no locus standi which are liable to be dismissed. As far as the present controversy is concerned, the most relevant case is that of National Bank of Pakistan (ibid) where consequences of section 316 of the Companies Ordinance, 1984 came up for consideration before a Division Bench of this Court in respect of M/s. Taj Company Limited. In that case Banking Tribunal No‑1 at Karachi, stayed proceedings in the suit filed by National Bank of Pakistan against M/s. Taj Company Limited till the plaintiff‑Bank obtains leave of the High Court of Lahore as the proceedings for winding‑up was filed before that Court. Constitutional petition filed against that order was dismissed with the observation that no harm is likely to be caused to the petitioner NBP if the approaches the Lahore High Court for requisite permission to proceed before the Tribunal. 1n respect of section 316 of the Ordinance, 1984, it was held as follows:‑‑ "It would be obvious on a plain reading of the section that it is not only in a situation where a winding‑up order has been passed that the preclusion to proceed against the company, before Courts other than the Court in which winding‑up proceedings are pending, applies. It is also when a Provisional Manager for the company has been appointed that the same result would follow. "

5. In addition to what Mr. Naazar Khan has stated above, he has also filed copies of several orders passed by a learned Company Judge of Lahore High Court at Lahore in Civil Original No.45 of. 1990, one of such orders is dated 22‑5‑1991, passed by Khalilur Rehman Khan, J. (as his lordship then was), which runs thus:‑‑ "Bahawalpur Board Mills and Taj Printing and Packaging Industries (Pvt.) Limited are directly controlled and beneficially owned by Taj Company. These are as such subsidiary Companies within the meaning of section 3 of the Companies Ordinance, 1984. The Board of management appointed under section 290 of the Companies Ordinance, 1984 is, therefore, entitled to look after and manage the affairs of the subsidiary Companies. Anyone having any objection to the right of the Taj Company through its Board of Companies shall be at liberty to raise objection and the same will be dealt with in accordance with law as and when raised."

6. It was not denied by the petitioner that on 19‑12‑1990 in the aforesaid proceedings, all affairs of M/s. Taj Company Limited was taken over by a Board as well as the affairs of the Board of Directors of the said Company was also taken over by such Court, therefore, for all legal intent and purpose the said winding‑up order was passed for the said Company. It is also not denied by the petitioner that its representative is regularly appearing before the Company Judge, Lahore High Court at Lahore and that they are attempting to settle the dispute between IDBP and M/s. Bahawalpur Board Mills Limited, as claimed by Mr. Naazar Khan, Advocate.

7. In view of the facts as discussed above, it is established that a winding‑up proceedings of Messrs Taj Company Limited commenced much prior to filing of the present proceedings and that respondent No. l is declared by the Lahore High Court to be controlled and beneficially owned by the said M/s. Taj Company Limited against which no appeal was filed which has attained finality. It is also an admitted position that the representatives of petitioner are appearing before the learned Company Judge at Lahore. It is provided under section 316 of the Ordinance, 1984 that no suit or any other legal proceedings shall be proceeded with or commenced against such Company for which winding‑up order has been made or a Provisional Manager has been appointed except by Leave of the Court and subject to such terms as the said Court may impose. The present proceedings are filed for recovery of money under section 39 .of the Industrial Development Bank of Pakistan Ordinance, 1961, which in my considered view falls within the term "other legal proceedings", and, therefore, is liable to be stayed till leave, as provided under section 316 of the Ordinance, 1984; is obtained. H.B.T./I‑29/K Proceeding stayed.