2025 PLP 1349 (CLD)

JAWAD HASSAN, J.

This winding up petition has been filed by the Petitioner/Additional Registrar of Companies, Company Registration Office, Islamabad (the "Petitioner"), Islamabad under Section 301(g)(ii) and (v) read with Sections 304(b) and 509 of the Companies Act, 2017 (the "Act") on the ground that the Respondent/Company is engaged in providing car financing and real estate/property on low installments to its customers without obtaining license as required under Section 282C of the Companies Ordinance, 1984 (the "Ordinance").

2. Mr. Omar Azad Malik, ASC has submitted that M/s. Ayat Enterprises (SMC-Private) Limited (the "Respondent/Company") was incorporated on 14.11.2018 under the Act as a single member private limited by shares with the authorized and paid up capital of Rs.1,000,000/- divided into 100,000 shares of Rs.10 each with paid-up capital Rs.1,000/- into 100 shares of Rs.10 each. He added that as per memorandum of association the objects for which the Respondent/Company was established are to carry on the business of all sorts of engineering goods and machinery and equipment whether locally manufactured or not and to carry on trading, fabrication, manufacturing, import, export, indenting and to act as contractors, agents, advisor, dealers of all sorts of engineering good, automobile accessories and parts of all sorts of vehicles and machinery and equipment as ancillary to the said business which may seem to the Company capable of being carried in connection with the said business and to establish and maintain workshop and testing laboratories. Further stated that the Petitioner received complaint that the Respondent/Company is engaged in providing car financing and real estate/property on low installments to its customers without obtaining license as required under Section 282C of the Ordinance. That the above said activities are against the objects of the Respondent/Company duly incorporated with the Petitioner. That during inspection it was observed that the Respondent/Company is involved in unauthorized business of auto-mobile and property leasing/financing investment on payment of 20% down payment and easy installments. Subsequently, a show-cause notice dated 27.03.2019 was served on the Respondent/Company for an explanation in writing within ten (10) days. In response thereof, the management of the Company through representative Mr. Arslan Mehmood, appeared, who was advised to act according to the requirement of memorandum of association and provision of the Act as well as the Ordinance but he refused. Hence, this Petition. Learned counsel in support of his arguments placed reliance on the judgments reported as "Messrs Platinum Insurance Company Limited, Karachi through Managing Director v. DAEWOO Corporation, Sheikhupura, through Director, Administration and Finance" (PLD 1999 Supreme Court 1) and Ali Hussain Manzoor v. Federation of Pakistan and others (2022 MLD 361 = PLJ 2022 Lahore 226 (Rawalpindi Bench).

3. Conversely, Syed Ahsan Shafique, Advocate for the Respondent/Company appeared and has made available copy of letter dated 29.04.2019, endorsed to the Registrar, Securities and Exchange Commission of Pakistan, Islamabad with the following undertaking: "I have registered my company named Ayat Enterprises (SMC) Pvt. Ltd. with SECP on November 14, 2018 through a consultant named Muhammad Shahid. I believed that he will give me suggestion for secp criteria. Unfortunately he didn't told me about any liscence for car financing. Un-intentionally I did my business but when I received a notice from SECP, I closed my operations with the time being. I have refund all the amounts received from the customer. Now we have receivables from customers. I have not much idea about the criteria of Car Financing. 1 have attached my all refund sheets, financial statements, customers contact numbers. Now I am running a business of rent a car. I want to wind up my company." He further submitted that as the Respondent-Company had already refunded all the amounts received from its customers, therefore, there is no assets of the Company.

4. Heard. Record perused.

5. Indeed, this winding up petition has been preferred by the Additional Registrar of Companies on the grounds that the Respondent/Company was involved in unauthorized/ unlicensed business of cars and property leasing/financing investment on payment of 20% down payment and easy installments. Hence, the Respondent/Company is required to be wound up under Section 301(g)(ii) and (v) read with Sections 304(b) and 509 of the Act and Section 282C of the Ordinance. For ready reference all these Sections are re produced as under:

301. Circumstances in which a company may be wound up by Court.-- A company may be wound up by the Court-- (a) .. (b) .. (c) .. (d) .. (e) .. (f) .. (g) if the company is

i. ii. carrying on business prohibited by any law for the time being in force in Pakistan; or restricted by any law, rules or regulations for the time being in force in Pakistan; or iii. ... iv. v. managed by persons who refuse to act according to the requirements of the memorandum or articles or the provisions of this Act or failed to carry out the directions or decisions of the Commission or the registrar given in the exercise of powers under this Act; or

304. Provisions as to applications for winding up... (a) ... (b) the registrar shall not be entitled to present a petition for the winding up of a company unless the previous sanction of the Commission has been obtained to the presentation of the petition: Provided that no such sanction shall be given unless the company has first been afforded an opportunity of making a representation and of being heard;

509. Repeal and savings.-(1) The Companies Ordinance, 1984 (XLVII of 1984), hereinafter called as repealed Ordinance, shall stand repealed, except Part VIIIA consisting of sections 282A to 282N, from the date of coming into force of this Act and the provisions of the said Part VIIIA along with all related or connected provisions of the repealed Ordinance shall be applicable mutatis mutandis to Non-banking Finance Companies in a manner as if the repealed Ordinance has not been repealed. ... 282C. Incorporation of NBFC.- (I) A NBFC shall not be incorporated without prior approval of the Commission. (2) Notwithstanding anything contained in any other provision of this Ordinance, a NBFC shall not carry on business unless it holds a licence issued in that behalf by the Commission; and any such licence may be issued subject to such conditions, [and payment of such fees] as the Commission may deem fit to impose. (3) Every company in existence which is engaged in any one or more forms of business as specified in section 282A, before the expiry of six months from corning into force of this section and every other company before commencing any form of business as specified in [clause (a) of] section 282 A, shall apply in writing to the Commission for grant of a licence under this section. The Commission, if it is satisfied that the company has fulfilled the conditions prescribed by the Commission in respect of the business for which the licence is being sought, may grant licences to such company for one or more of the forms of business specified in clause (a) of section 282 A. (4) A NBFC shall not commence or carry on business unless it has such minimum [equity/51 as may be prescribed by the Commission from time to time in respect of each form of business as specified in [clause (a) of] section 282 A. [(5) Notwithstanding anything in this Ordinance, the provisions of this Part VII1A and the rules and regulations made thereunder shall continue to apply to any NBFC whose licence has expired, or any NBFC or notified entity whose licence or registration has been cancelled or suspended, or to any existing company or entity carrying on a business specified in clause (a) of section 282A or notified under clause (b) of section 282A which has not applied for a fresh licence or registration, or whose application for a fresh licence or registration has not been decided by the Commission. Moreover, the undertaking made through above said letter dated 29.04.2019 shows that the management of the Respondent/Company also wants its winding up.

7. The joint perusal of the aforesaid Sections makes it crystal clear that under Section 301(g)(ii) of the Act, a Company may be wound up if it is carrying on a business prohibited or restricted by law, rules or regulations. Similarly, clause (v) of the same Section empowers the Court to order winding up where the Company is managed by persons who refuse to act in accordance with the memorandum or articles of association. In addition, Section 282C of the Ordinance protected under Section 509 of the Act clearly provides that no Non-Banking Finance Company (NBFC) can be incorporated or allowed to operate without obtaining prior license. Therefore, the Respondent/ Company's engagement in car financing and property leasing, without such license, is a clear violation of these provisions.

8. In view of the above clear violation of statutory provisions by the Respondent/Company, this is a fit case for passing an order of winding up. Accordingly, this petition is allowed. The Respondent/Company, M/s. Ayat Enterprises (SMC-Private) Limited, is hereby ordered to be wound up.

9. Although learned counsel for the Respondent/Company has submitted that there are no assets of the Company, yet to comply with the mandatory requirement of Section 315 of the Companies Act, 2017, the Securities and Exchange Commission of Pakistan (the "SECP") shall appoint a Provisional Manager from its duly maintained panel. The said Provisional Manager shall forthwith assume charge and commence performance of his duties and functions in relation to the Respondent/Company, and shall continue to do so until the final conclusion of the winding up proceedings. All legal consequences as stipulated under the Act, that ensue upon the passing of a winding up order, shall apply to the present case. A copy of this order shall be transmitted to the SECP for necessary action and for onward communication to the appointed Provisional Manager. MH/A-40/L Petition allowed.