2004 PLP 123 (CLD)

221.41 (C) The Lenders namely NDFC, UBL and HBL have agreed with MSCL that out of the amount payable by MSCL to Lenders (NDFC, UBL and HBL) an amount, to the extent of Rs.228.0 million will be converted into MSCL's equity. The share of NDFC, UBL and HBL in equity conversion would be as follows:‑‑ Share in conversion of loan amount into equity in Million) NDFC 140.0 UBL 19.0 HBL 69.0 228.0 The MSCL agrees that it will complete all the requisite legal formalities and procedure and issue ordinary shares in the capital of MSCL to NDFC, UBL and HBL equivalent to the amounts shown above, within 90 (Ninety) days of the date of signing of this MOU. (D) Furthermore the Lenders (NDFC, UBL and HBL) have agreed with MSCL that out of the total amount owed and payable by MSCL an amount of Rs.395 million be adjusted by way of collection of receivables /claims and sale of excess land as mentioned at 12.A (ii) a‑d above. No mark‑up will be charged on the said Rs.395 million till June 30, 1998. The situation will be reviewed in July, 1998 and decision will be made accordingly. The decision of NDFC will be final and binding on all parties. The share of each Lender in the said Rs.395 million on pro rata sharing basis is given below:‑‑ Pro‑rata Share Sharing basis (Rs. In Million) NDFC 63.29 250.00 UBL 11.42 45.11 HBL 25.29 99.89 100.00 395.00 (E) (i) After the adjustments as proposed above in paras. 12(A)‑(D) above against the total outstanding amount payable by MSCL to the NDFC. UBL and HBL an aggregate amount totaling Rs.416 million will still remain to be paid. It is agreed that the balance amount will be paid by the company to the NDFC, UBL and HBL in 20 bi‑annual instalments alongwith mark‑up at 16.1% per annum. Institution‑wise break‑up of balance loan of Rs.416 million is given below:‑‑ (Rs. In Million) NDFC 265.08 UBL 61.55 HBL 89.26 415.89 The figure is rounded to Rs.416 million. (ii) A grace period of 2 years will be allowed for payment of this amount i.e. the first instalment will fall due on 30‑12‑1999. (iii) Each Lender namely NDFC, UBL and HBL will sign a separate supplemental agreement(s) to cover the revised repayment schedule(s) and the liability of the aforesaid amount to be paid by MSCL to the respective institution. The MSCL hereby undertakes unconditionally that it will sign all the requisite/documents, as required by the respective institutions to give effect and secure all the future repayments of the said liability. (iv) The mark‑up charged during the grace period will be frozen and recovered in one year after the payment of twenty bi‑annual instalments referred above. (v) The security/type of loan of each Lender (except HBL) would remain unchanged. If MSCL secures release of pledged item the amount paid by the MSCL to secure release of the pledge will be adjusted against the very next instalment falling due and accordingly the share of beneficiary. Lender in the next instalment due will be reduced. (F) Cut‑off date for determining the amount outstanding against MSCL, for the purpose of current restructuring will be September 30, 1997 which is the effective date. (G) Habib Bank Limited will be allowed to create second charge on the assets of the company. Collateral of rest of the creditors will remain unchanged. (H) Summary of adjustment of total outstanding amounts. Total ____________________Adjustments Outstanding Down Waive as on 30‑9‑97 payment Conversion into Equity Assignment of Balance Receivable Loan NDFC 816.60 18.99 142.53 140.00 250.00 265.08 UBL 147.30 3.42 18.22 19.00 45.11 61.55 HBL 326.40 7.59 60.66 69.00 99.89 89.26 1290.30 30.00 221.11 228.00 395.00 415.89 (13) That it has been agreed between the parties that a consultant will be appointed by NDFC to implement the whole restructuring exercise. His remuneration will be shared by the NDFC, UBL and HBL. (14) That the Board of Directors of MSCL have appointed Mr. Haq Nawaz Akhtar as the Managing Director and Chief Executive Officer of MSCL w.e.f. June 1, 1998 for a period of one year extendable to one year on mutual consent on the terms and conditions as decided by the Board of MSCL in their meeting held on 22‑5‑1998. It is agreed between the parties that the Managing Director so appointed will not be removed or changed without the written approval of NDFC, UBL and HBL. (15) It is agreed that a full time financial controller will be appointed for the company. His remuneration will be borne by the Lenders (NDFC, UBL and HBL) participating in the restructuring exercise. (16) That MSCL agrees, undertakes and assures the Lenders (NDFC, UBL and HBL) that it shall settle its disputes with Messrs National Bank of Pakistan, Messrs Chasemanhattan Bank. NA, Messrs Deutsche Bank AG and Messrs City Bank NA, Inc. amicably and clear its liabilities whereafter the recovery suit and the petitions for winding up filed by the aforesaid institutions and pending before the Courts shall be got dismissed as withdrawn‑‑‑Pending settlement with NBP and the aforesaid three foreign banks, MSCL shall make an effort to get the recovery suit and the petitions for winding up adjourned sine die. That it is agreed between the parties that in terms of the above the parties shall move a compromise application in J. M. 22 of 1997 seeking a conditional order of the winding up of MSCL from the Honourable High Court of Sindh. It is clearly understood by MSCL and the Lenders namely NDFC, UBL and HBL, that non‑compliance of the aforesaid conditions by MSCL will render MSCL liable to be wound up. The MSCL irrevocably accepts, admits and acknowledges that non‑compliance as aforesaid shall be, and be deemed always to be, tantamount to an admission and acceptance by MSCL, that it is unable to pay its debts and that it is just and equitable that it be wound up." Nothing herein contained shall prevent the Lenders from seeking and/or pursuing such right or remedies against the MSCL, its sponsors or any guarantors of MSCL as .may be available now or at any time hereafter or amount to any waiver of such rights or remedies. On 22‑5‑1998 meeting of the Board of Directors of MSCL was held inter alia to discuss the matters pertaining to the averments made by the management in respect of re structuring of losses, advances from banks/DFI and compromise agreement to recapitalize the company and present status of the same and discuss the resignation submitted by Syed Asghar Jamil Rizvi and to approve the appointment of Mr. Haq Nawaz Akhtar as new Chief Executive and Managing Director. The following Directors attended the meeting:‑‑‑ (1) Mr. Mohammad Ali Sheikh In the Chair (2) Mr. Manzurul Haq Director (3) Mr. Suleman I. Vohra Director (4) Mr. Ali Sher Jatoi Director (5) Mr. Ghulam Mustafa Jatoi Director (6) Mr. Munir Ahmed Director (7) Mr. S. Asghar Jamil Rizvi Managing Director and Chief Executive The minutes further contained as follows:‑‑ "EFFORTS MADE BY THE MANAGEMENT FOR RE STRUCTURING OF LOANS BY BANKS AND NDFC AND REVITALISATION OF THE COMPANY" The Managing Director briefly highlighted the efforts made .by the management towards restructuring of the loans and advances outstanding against the company. He informed that a revival package which envisaged financial restructuring of the Company including conversion of a portion of loan into equity, freezing of portion of loan to be adjusted against recoverable including amount lying with the Nazir of High Court of Sindh and making available sufficient funds company by way of sponsors contribution towards equity etc. etc., subject to a suitable strengthening of the management has been submitted to NDFC consortium of banks which is under consideration. Approval by financial institutions for this package will not only revive the company but will also end the ongoing litigation. The M.D. further informed that the company is still viable as there are orders in hand from WAPDA financed by IBRD and the DGP Army which could keep the company in operation for about a year. Director, Ali Sher Jatoi presented to the Board, resignation submitted by Mr. Syed Asghar Jamil Rizvi as Chief Executive and Managing Director of the company. The Board lauded the dedicated services of Syed Asghar Jamil Rizvi and the efforts made by him to keep the company alive during its difficult timing and handling all the negotiations, up till now with HDFC led consortium. Mr. Munir Ahmed suggested to the Board to approve a reward for Mr. Rizvi. The Board accepted the resignation and the following resolution was unanimously passed: Resolved that the resignation submitted by Syed Asghar Jamil Rizvi be and is hereby accepted w.e.f. May 31, 1998. It was further resolved that in appreciation of his services and as a gesture of goodwill a suitable cash reward be made to Mr. Rizvi and the Chairman is hereby empowered to fix the amount of the reward. Then the Chairman introduced Mr. Haq Nawaz Akhtar who was nominated to be appointed as new Chief Executive and Managing Director in place of Mr. Rizvi whose resignation has been accepted by the Board. The Bio data and proposed remuneration package was circulated to the members. All the Directors hailed the nomination and expressed their utmost satisfaction. Mr. Ali Sher Jatoi said that this appointment of Mr. H.N. Akhtar will become a turning point for MSCL. Mr. Munir Ahmed said that keeping in view the present state of affairs and ongoing negotiations with banks, the appointment of Mr. H. N. Akhtar will build the confidence of the institutions, customers and shareholders and will help its revival." It is alleged that by virtue of the Memorandum of Understanding dated 21‑7‑1998 and the meeting of the Board of Directors dated 22‑5‑1998 the management was for all practical purposes vested with NDFC, the predecessor‑in -interest of defendant No.2. It is alleged that, however, the ownership remained with the appellants/plaintiffs. It is alleged that in spite of management being run by NDFC, the MSCL continued to suffer heavy losses. Subsequently, NDFC was wound up and the assets and liabilities were taken over by defendant No.2. The plaintiff has alleged that, the defendant No.1, instructed Prime Commercial Bank Ltd. vide letter dated 9‑5‑2002 for encashment of bank guarantee which was furnished on 8‑5‑1994 and the same was encashed. However, in spite of payment of Rs.6.66 crores the shares were not transferred by the defendant No. 1% in favour of appellant/plaintiff and a vested right accrued favouring the plaintiff for completion of the necessary formalities for the transfer of shares. It is further alleged that the undue delay and avoidance to complete all necessary formalities came recently to the knowledge of the appellant/plaintiff when it discovered that the defendant No.2 has advertised as far back as on 3‑7‑2002 for the sale of 73.60% shares alongwith management and control of MSCL (the suit was filed on 31‑12‑2002). It is contended that such advertisement could not have been issued especially when the above 73.60% shares included 50.93% shares which have already been paid by the plaintiff to defendant No.

1. Apart from the above 73.60% shares the balance shares were held by various Government institutions. According to appellant/plaintiff, the defendants Nos. 1 and 2 had no authority in law to sell 73.60% shares out of which 50.93% had already been paid for to the defendant No. 1 by the plaintiff. It is further alleged that the appellant/ plaintiff was ready and willing to run and manage MSCL and offer the same prices as to the defendants Nos. 1 and 2, however, they failed to hand over the operation to the plaintiff. It is averred that the plaintiff by virtue of holding 50.93% shares had the first right to refusal in the event of sale of shares of MSCL. It is further alleged that by surreptitious negotiations, the defendants Nos. 1 and 2 accepted the offer of defendant No.3 in the sum of Rs.290.5 million. It is alleged that the defendants 1 and 2 have acted in collusion for mutual benefit and the appellant/plaintiff have been kept in dark although it has vested right for the transfer of 73.60% shares. It is further stated in the plaint that the appellant/ plaintiff is ready and willing to match the bid after the adjustment of amount already paid by the plaintiff and further reserve the right to increase their bid if so ordered by the Court. On the basis of above averments a learned Single Judge of this Court granted ad interim injunction on 31‑12‑2002 which reads as follows:‑‑ "31‑12‑2002 Messrs Abid S. Zuberi and A.N. Farooqi, Advocates for plaintiff.

1. It is stated by learned counsel for the plaintiffs that the plaintiff by virtue of agreement to sell is the owner of 50.93% of the shares in Metropolitan Steel Corporation Limited having paid the entire amount for said shareholding as reflected from the letter of encashment of the Bank Guarantee made pursuant to the disposal of Suit No.383 of 1995. It is stated, at bar, that such Bank Guarantee has been encashed. It is, inter alia, contended that the defendant No.2, National Bank of Pakistan, has offered to sell 73.60% of the shares in MSCL which according to learned counsel are not available for disposal as the plaintiffs have already paid for 50.93% of the shares. It is further contended that the defendants are acting in post‑haste to transfer the 73.60% shares alongwith management and assets of Messrs Metropolitan Steel Corporation Limited. Accordingly, the urgency is granted. 2 &

3. It is contended that offers to sell share in MSCL were invited behind the back of the plaintiffs. Knowing fully well the plaintiffs state to the extent of 50.93% shares therein. Mr. Zubairi states that the plaintiffs are prepared to even improve the offer which has been received by the defendants for the sale of the shares or MSCL pursuant to offer received as a result of offer to sell vide Advertisement dated 3‑7‑2002 Annexure `P/10' (at page No. 147). Learned counsel for the plaintiffs states, at bar that the plaintiffs have been informed that the offer received from defendant No.2 is for Rs.290.00 Million. Learned counsel, on instruction, further submits that plaintiffs, in fact, are prepared to make offer better than what has been received i.e. Rs.290 Million (Two Hundred and ninety Million). Since plaintiff claims to be owner of 50.93% share in MSCL and on the basis of assertion of their right of first refusal against the offer to sell, subject to deposit of 10% of the amount of 290.00 Million. The defendants may not finalize the transfer of the shares or hand over the possession of assets of MSCL to the defendant No.3, Messrs Alloy Steel 10% amount to be deposited within three (3) days with the Nazir of this Court. Plaintiffs also undertake to deposit shortfall, if any, in the total bid amount, as made by the defendant No.3 against the offer as advertised (Annexure `P/101. Let notices through all modes and courier except publication be issued to the defendants for 3‑1‑2003." Subsequently, the counter‑affidavit and re‑joinder were filed and the injunction application was dismissed on 25‑2‑2003 which has been impugned in this appeal. In the impugned order, the learned Single Judge observed that the crux of the plaintiff's case is that the Lenders are now selling 73.50% shares by calling bids through press advertisements and such shares include the 50.63% shares purchased by the plaintiff from the original Buyer which have not been transferred in the name of the plaintiff till date. On the basis of the aforesaid contention an ad interim injunction was granted in favour of the plaintiff vide order dated 31‑12‑2002. The learned Single Judge after perusal of various documents placed on record observed that all the actions were taken when the directors nominated by the plaintiff were on the Board of MSCL including the person authorized to file the present suit. The learned Judge further observed as follows:‑‑ The plaintiff's assertion that the shares which were subject‑matter of the Original Agreement and the Novation Agreement are part of the shares being sold by the Lenders is patently false." The plaintiff's assertion that it has right of first refusal for the purchase of shares being sold by the Lenders appears to be equally baseless. The learned counsel for the plaintiff has been unable to point out any provision in the MOU which gives any such rights to the plaintiff who in any case is not a party to the MOU. The learned counsel for the plaintiff also attempted to support assertion by arguing that the shares in favour of the Lenders could not have been issued without first offering the same to the plaintiff in proportion to the plaintiff's shareholding of 50.93%. This argument again is misconceived for the reason that admittedly the shares subject‑matter of the Original Agreement and Novation Agreement have not been transferred in the name of the plaintiff. Furthermore section 86 of the Companies Ordinance, 1984 does allow issuance of shares without issuance of right shares subject to certain conditions. Similarly section 87 of the Companies Ordinance, 1984 also allows issuance of share in lieu of the outstanding debts. The plaintiff has not brought anything to show that the shares in favour of the Lenders were not issued in accordance with the provisions of the Companies Ordinance, 1984 nor the plaintiff appears to have initiated any action under the Companies Ordinance, 1984. I may also point out that this assertion was not raised in the plaint and only a halfhearted attempt was made in the affidavit in rejoinder to introduce this argument ..Plaintiffs. claim that it is ready to operate MSCL and to improve the bid also appears to be illusory in view of its own conduct in the past. The plaintiff's letter dated 16‑12‑1999 attached with the counter‑affidavit of defendant No.2 clearly shows that the plaintiff's nominee Directors voluntarily withdrew their nominations from the election of MSCL Directors and have never shown any interest in the affairs of MSCL thereafter. There would not be any possibility of the plaintiff running the management of MSCL even if the shares subject‑matter of the Original Agreement and the Novation Agreement are transferred to the plaintiff since the same would only constitute a small minority in the currently paid‑up capital of MSCL. "It is regrettable to note that the plaintiff has deliberately attempted to cause a false impression that it owns more than 50% shares of MSCL and the shares being sold by the Lenders include such shares. Such conduct alone would disentitle the plaintiff from obtaining any equitable relief. With the above observation the injunction application was dismissed with cost. We have heard Mr. Anwar Mansoor Khan, Advocate assisted by Mr. Abid Zuberi, Advocate for the appellants and Mr. Khalid Jawaid, Advocate for the respondent No.1. Mr. Khalid Anwar, Advocate for the respondents Nos. 2 and 5, Mr. Mansoor‑ul‑Arfain, Advocate for respondent No.3, Mr. Afsar Abidi, Advocate for the respondent No.4 and Mr. Asif Ali, Advocate for respondent No.6. Mr. Anwar Mansoor, has contended that the learned Single Judge, did not hear and dispose of the application under Order 6, rule 17, C.P.C. and did not consider the averments made therein. He has submitted that the learned Single Judge ought to have heard and disposed of the application under Order 6, rule 17, C.P.C., first and thereafter should have considered the injunction application. He has further submitted that even if the application under Order 6, rule 17 was not allowed, the learned Single Judge ought to have considered the averments made therein as the amendment can be sought at any stage so as to include the necessary relief which has not been claimed in the original plaint and to allege the necessary facts which were omitted in the original plaint: In support of his contention he has placed reliance on a Division Bench judgment of this Court in the case of Mst. Malik Sultan and others v. Twin Store (Pvt.) Limited 2003 CLC 695, in which reliance has been placed on the judgment of Honourable Supreme Court in the case of Ghulam Bibi v. Sersa Khan PLD 1985 SC

345. He has further contended that the facts narrated in the impugned order are not correct and the law discussed is also incorrect and contrary to the established principles. After reading from the plaint and the documents annexed thereto extensively, Mr. Anwar Mansoor Khan has contended that the execution of sale agreement between the Privatization Commission and Mr. Muhammad Ashraf D. Baloch and second agreement between M. Ashraf D. Baloch and the appellant and the execution of tripartite Novation Agreement are admitted. He submitted that the appellant fulfilled all its obligations under the said agreement and fully paid the sale consideration in addition to the payment of amount on account of Golden Handshake Scheme and other liabilities but the shares agreed to be sold were not transferred to Mr. Ashraf D. Baloch and the appellant, although management and control of the MSCL was handed over to them. He has submitted that the entire trouble started with the winding up of NDFC and taking thereof by the National Bank of Pakistan, who are averse to the appellant. He has contended that initially the Memo. of Understanding was executed for the benefit of NDFC who were having management and control of MSCL though under compulsion and coercion practised upon the appellant. He has submitted that the original authorized capital was to the extent of 8 Million shares of Rs.10 face value and the appellant had purchased, 4.1 Million shares which represented 50.93% of the shares and it constituted major shares which gave the right of control and management of the company to the appellant. He has maintained that although the shares were not formally transferred to the appellant but with the payment of entire sale consideration the appellant become the real and actual owner of the majority shares. According to him the banks and NDFC in collusion with each other enhanced the authorized capital with mala fide intention to deprive the appellant of the management and control of the company which is not permissible in law. He has insisted that the appellant who is new purchaser was not a party to the Board's Resolution dated 22‑5‑1998 in which the authorized capital was increased and in the Memo of Understanding the Directors representing the appellant were made to admit each and everything and the purpose of entire exercise was to dilute the majority shares and resultantly the control and management of the appellant held over the company. He has urged that in the MOU the new arrangement has been devised for restructuring and rescheduling but the arrangement therein neither amounts to restructuring nor re-scheduling. He has further submitted that it was a financial arrangement and the appellant was entitled to first offer for purchase of the increased shares. He has however, conceded that there is no statutory provision in this behalf and there is no contract creating any such right, in favour of the appellant. He has stated that the appellant offered to pay Rs.228 million through its Advocate on 31‑12‑2002 and deposited 10% of the above amount as directed by the Court. He has further submitted that the entire exercise of enhancing the authorized capital is mala fide and amounts to unfair practice which is alone sufficient to grant the interim injunction as according to him, a prima facie case is made out. On the other hand, Mr. Khalid Anwar, learned counsel for the respondents Nos.2 and 5 submitted that initially the authorized capital was worth 8 Million shares of the face value of Rs.10 each. The Privatization Commission agreed to sell 4.1 Million shares to Mr. Ashraf D. Baloch, who was obliged to fulfil the other conditions specified in the agreement in addition to the payment of agreed, sale consideration. He has further submitted that in the original agreement sale price was agreed at 16.8 crores and subsequently at the instance of appellant it was reduced to 6.6 crores out of which the appellant paid 5.5 crores and executed bank guarantee in the sum of Rs.1.1 crores undertaking to make payment within 60 days. The guarantee was furnished on 31‑5‑1995 and after few days the appellant, filed a suit and got a stay order which was finally encashed after 8 years. He has further submitted that MSCL owed 5.5 crores to bank and the Government furnished guarantee to the bank in the sum of 456.070 Million which guarantee has not been discharged as yet. He has referred to paras. 6 and 7 in the first sale agreement dated 9‑5‑1992 (which has been reproduced in the earlier part of this order) and has contended that the obligation under above conditions have not been fulfilled as yet with the result that the shares could not be transferred to the appellant. He has maintained that the appellant had realized that all the conditions under the agreement have not been complied with by them and therefore, for a period of 10 years no legal action was taken for transferring of the shares lying with the defendant No.

1. He has argued that the appellant could approach the High Court under section 152 of the Companies Ordinance, 1984 if the name of appellant, fraudulently or without sufficient cause was not being entered in the register of members. He has further submitted that the appellant could approach the Corporate Law Authority and that was also not done. He has submitted that the management of MSCL was taken over by the original Buyer and thereafter by the appellant in the year 1992 but they could not manage and run the company and created mess. The debt rose to 129 crores and in the year 1997, the Directors representing the appellant themselves approached for restructuring and for coming to their help with the result that the Banks came to their rescue. He has vehemently argued that Mr. Ali Sher Jatoi, through whom the suit has been filed and Mr. Munir Ahmed representing the appellant/plaintiff participated in the Board of Directors' meeting dated 22‑5‑1998 and thereafter signed the MOU dated 21‑7‑1998 and made no complaint of any sort pertaining to any compulsion‑coercion exercised on them or any malice or mala fide on the part of the respondents/defendants. He has further submitted that the respondents/defendants waived the loan to the extent of Rs.221.41 Million and due to non‑availability of funds with MSCL agreed to convert the amount of Rs.228 Million in the equity against issuance of shares to the NDFC, UBL and HBL. He has contended that all this was done to bail out and revive the company which was totally destroyed by the appellants. He has further submitted that subsequently, Mr. Ali Sher Jatoi and Mr. Munir Ahmed, the Directors representing the appellant lost interest in the management of MSCL and withdrew their names from incoming election vide letter dated 12‑12‑1999 addressed to Chairman and Chief Executive of MSCL. According to Mr. Khalid Anwar, the authorized capital was increased and the shares were issued to the NDFC, UBL and HBL in accordance with the provisions contained in section 87 of the Companies Ordinance, 1984, as there was no other way out to pay the outstanding balance of loan to them. He has said that it was done as a matter of a very great favour to the MSCL and at the beseeching of the appellant themselves, therefore, now they cannot turn around and say that it was all mala fide and with malice to deprive them of their vested right. He has next contended that the advertisement for sale was published in the newspaper and highest bid given by respondent No.3, was accepted and full payment was made by him. He has taken plea that the appellant in spite of full knowledge that the authorized capital of MSCL has been increased, 228 Million shares have been issued to the NDFC, HBL and UBL in the year 1998 and subsequently, the sale of said shares have been advertised in newspapers kept silent till the full payment of the bid money by the respondent No.3 and acceptance thereof, which shows that the appellant itself filed the suit on false assertions and with unclean hands as rightly observed by the learned Single Judge, Mr. Khalid Anwar has vehemently argued that the appellant obtained ad interim injunction by concealment of facts and by making assertion that they were the majority shareholders to the extent of 50.93% of the shares although they were reduced to a very minor shareholders at their own instance and consent in the year 1998. He has submitted that the appellant was fully aware that 228 Million shares held by the bank had nothing to do with 4.1 shares agreed to be sold to them and still they made a misstatement that 73.60% shares advertised for sale were inclusive of 50.93% of the shares agreed to be sold to the appellant. He has maintained that the learned Single Judge was perfectly justified in holding that the misstatements made are sufficient to decline the prayer of issuance of interim injunction. Mr. Khalid Anwar, has fully supported the impugned order and has submitted that the appellant has not made out a prima facie case for issuance of interim injunction. The other Advocates for the respondents have adopted the arguments addressed by Mr. Khalid Anwar. In reply arguments Mr. Anwar Mansoor, learned counsel for the appellant submitted that although Mr. Ali Sher Jatoi and Mr. Munir Ahmed have been described as Directors of MSCL representing the appellant but they could not be appointed as Directors because under the Companies Ordinance only such person can be appointed as Director who is member of the company and a member means in relation to a company having share capital as subscriber to the memorandum of the company and every person to whom a share is allotted or who becomes holder of the share which gives him a voting right in the company and whose name is entered in the register of its members. He has contended that admittedly the shares have not been transferred to the appellant and their name has not been entered in the register of company therefore, notwithstanding the description of Mr. Ali Sher Jatoi and Mr. Munir Ahmed, as Directors of company and having exercised management and control of the company from 1993 to 1998 they were not Directors in law. We have carefully considered the contentions raised by the learned Advocates for the parties and material available on record. We would not like to make any observation about the application submitted before the trial Court seeking amendment in the plaint, because the application is still pending and while sitting in appeal it would not be appropriate to make any observation on the merits of a pending application. We would like to observe that, if for the sake of considering whether the appellant has made out a prima facie case warranting issuance of interim injunction, the averments made in the application under Order 6, rule 17, C.P.C., are taken into consideration, no prima facie case is still made out. The reason being that Mr. Ali Sher Jatoi and Mr. Munir Ahmed were taken on the Board of Directors of MSCL in pursuance of the agreements executed between the appellant and the Privatization Commission which has been reproduced in the earlier part of this order. At this stage, we would not like to give any finding whether they could be appointed as Directors of MSCL in accordance with the law or not, but we would like to observe that the authorized capital was increased and 228 Million shares were transferred to the banks/Lenders at the instance of Mr. Ali Sher Jatoi and Mr. Munir Ahmed, representing the appellant. Everything was done with their full knowledge and consent and we are constrained to observe that glaring misstatement has been made in the original plaint in which it is stated that 73.60% shares sought to be sold were inclusive of 50.93% shares agreed to be sold to the appellant. Mr. Anwar Mansoor, has not been able to make out a prima facie case of commission of any mala fide act with malice or illegality, in enhancement of the authorized capital of the company and issuance of shares to the bank by conversion of the outstanding balance to equity. We further find substance in the contention of Mr. Khalid Anwar that in addition to the payment of price for share capital the appellant was required to get released the counter guarantees amounting to Rs.456.070 Million which the appellant failed to do, as no such document has been produced in this regard. We further find that there is an arbitration clause in the first agreement between Privatization Commission and M. Ashraf D. Baloch and tripartite Novation Agreement, to the effect that in case of any difference or dispute arising out of the agreement between the Seller and the Buyer the same shall be referred to the Secretary, Ministry of Finance, Government of Pakistan for decision, who shall be the sole arbitrator and his decision shall be final and binding on the parties. The appellant never invoked this arbitration clause. We further agree with the contention of Mr. Khalid Anwar that 73.60% shares sold to respondent No.3 has nothing to do with the shares agreed to be sold to the appellant and thus, notwithstanding, any vested right in favour of appellant pertaining to 4.1 million shares the MSCL could enhance the authorized capital and transfer the shares under section 87 of the Companies Ordinance, 1984. For the foregoing reasons, we are of the opinion that the learned Single Judge has rightly rejected the injunction application to which no exception can be taken. The impugned order is upheld and the appeal stands dismissed. After hearing the learned Advocates for the parties on 21‑3‑2003, the appeal was dismissed by a short order and these are the detailed reasons in support thereof. M.B.A./M‑485/K Appeal dismissed.