1990 PLP 1329 (CLC)

C.MA. No.2452/89. This application under Section 316 of the Companies Ordinance, 1984, is filed by the respondent‑Company seeking an order that suit bearing No.852 of 1989 filed by the respondent against the petitioner and the Government of Pakistan on the original side of this Court be transferred and disposed of by me as Company Judge. In support of this application Mr. Iqbal Hussain Khilji, Managing Director of the respondent Company has filed his affidavit stating that the said suit is for declaration, injunction and damages against the petitioner and Government of Pakistan and the issues involved in the present petition as well as the said civil suit are the same and unless both are tried together irreparable loss will be caused to the respondent‑Company. It may be stated here that on 16‑6‑1988 M/s. Ulbrichts of Austria had filed the petition for winding up against M/s. Ulbrights (Pakistan) Private Ltd. under Section 309 of the Companies Ordinance 1984 on a number of grounds. The petitioner however vehemently opposes this application urging that the application is misconceived, untenable and otherwise intended to delay the winding up proceedings. It is alleged that the provisions of Section 316 of the Ordinance are not attracted to this case as no order either of winding up of the Company or of appointment of provisional Manager has been made by the Court under Section 316(1) by the Ordinance. Besides, the suit has no nexus with the petition for winding up. The cause of action in the suit is completely different and the parties are also not common. Before I proceed further it would be worthwhile to refer to Section 316 of the Companies Ordinance, 1984, under which the respondent has filed this application and is as follows:‑ "

316. Suits stayed on winding up order.‑‑(1) When a winding up order has been made or a provisional manager has been appointed, no suit or other legal proceeding shall be proceeded with or commenced against the company except by leave of the Court, and subject to such terms as the Court may impose. (2) The Court which is winding up the company shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of, any suit or proceeding by or against the company. (3) Any suit or proceeding by or against the company which is pending in any Court other than that in which the winding up of the company is proceeding may, notwithstanding anything contained in any other law for the time being in force, be transferred to and disposed of by the Court." Learned counsel for the respondent Mr. Muhammad Nasim has urged before me that Section 316 of the Companies Ordinance must be read in conjunction with Section 311 of the Ordinance which is as follows:‑ "

311. Cornmeneement of winding up by Court.‑‑‑A winding up of a company by the Court shall‑be deemed to commence at the time of the presentation of the petition for the winding up." Section 316(1) of the Ordinance is almost a reproduction of Section 171 of the repealed Companies Act 1913, substituting only "Manager" in pace of Liquidator whereas subsections (2) and (3) are newly introduced. According to the learned counsel for the respondent, the inclusion of these two subsections has brought in new elements in relation to winding up matters and vested additional powers o a company judge which were not earlier available to him. It is contended by him that there is no nexus between subsections (1), (2) and (3) of Section 316 of the Ordinance. Each one of them is independent of the other. It is further urged by him that by virtue of Section 311 of the Ordinance, proceedings of winding up of a company start with the filing of the petition and therefore the Courts' power to proceed under subsections (2) and (3) starts with the presentation of the petition for winding up and not when order is passed under subsection (1) of Section

316. Although subsection (1) of Section 316 of the Companies Ordinance, 1984, is almost a reproduction of Section 171 of the repealed Companies Act, 1913, it is pertinent to note that a part of subsection (2) and whole of subsection (3) of Section 316 have been lifted from Section 446 of Indian Companies Act 1956, which runs as follows:‑ "

446. Suits stayed on winding up order.‑(1) When a winding up order has been made car the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with against the company, except by leave of the Court and subject to such terms as the Court may impose. (2) The Court which is winding up the Company shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of‑‑ (a) any suit or proceeding by or against the Company. (b) any claim made by or against the Company (including claims by or against any of its branches in India), (c) any application made under Section 391 by or in respect of the Company; (d) any question of priorities or any other question whatsoever whether of law or fact, which may relate to or arise in course of the winding up of the Company; Whether such suit or proceeding has been instituted or is instituted, or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the Company, or before or after the commencement of the Companies (Amendment) Act 1960. (3) Any suit or proceeding by or against the company which is pending ii: any Court other than that is which the winding up of the Company is proceeding may, nothwithstanding anything contained in any other law for the time being in force, be transferred to and disposed of by that Court." Now subsection (1) of Section 446 of Indian Companies Act 1956 remaining more or less the same as subsection (1) of Section 316 of our Companies Ordinance 1984, a bare reading of Section 446 will reveal that a Company Judge in India is invested with greater powers extending to many more areas than a Company Judge under our Companies Ordinance 1984. Besides, it is also apparent that he is conferred with the jurisdiction to deal with all those matters referred to above irrespective of winding up order. As against this though the provisions of subsections (2) and (3) of Section 316 of Companies Ordinance 1984 purport to give greater powers to a Company Judge in matters relating to trial and transfer of pending suit or proceedings by or against the Company than existing before under the repealed Companies Act, 1913, nevertheless, are not as wide as enjoyed by a Company Judge under Section 446 of the Indian Companies Act, 1956. However these powers can only be exercised by him when already there is an order for winding up of the Company or of appointment of provisional liquidator made by him under subsection (1) of Section 316 of the Companies Ordinance 1984. It will therefore be a fallacy to bring in aid the left over provisions of subsection (2) of Section 446 of the Indian Companies Act 1956 to Section 316(2) of our Companies Ordinance, 1984. I do not agree with Mr. Muhammad Nasim, learned counsel for the respondent‑company that each subsection of Section 316 is independent of the other. As I can see subsection (1) of Section 316 of the Companies Ordinance, 1984 is an overriding provision and controls subsections (2) and (3) thereof which cannot be read in isolation as maintained by the learned counsel for the petitioner. No doubt subsections (2) and (3) of Section 316 of the Companies Ordinance, 1984 confer special jurisdiction to a Company Judge to try and transfer suits and other proceedings by and against the Company but this jurisdiction comes into play when there is already an order under subsection (1) thereof. According to Mr. Liaquat Merchant, learned counsel for the petitioner the newly‑conferred "special jurisdiction" of a Company Judge to try and transfer pending suits and proceedings by or against the Company will extend to the subordinate Courts and not to the High Court. It is contended that Suit No.852 of 1989 was filed by the respondent against the petitioner in the extraordinary civil jurisdiction of the High Court of Sindh and it was not intended by the makers of the Companies Ordinance 1984 to bring into its ambit such suits and proceedings as are pending before it. I do not agree with the learned counsel. The language of Section 316 of Companies Ordinance 1984 is clear and explicit and signifies a will in conferring upon a Company Judge domain over all kinds of suits and proceedings pending by or against the Company in any Court irrespective of its being a subordinate Court or a High Court exercising extraordinary original civil jurisdiction. No exception is made out. In the result, the application is premature and is liable to be dismissed. Order accordingly. M .B .A:/U‑78/K Application dismissed.