2003 PLP 211 (CLD)

(v) managed by persons who refuse to act according to the requirements of the memorandum or articles or the provisions of this Ordinance or fail to carry ,out the directions or decisions of the Court or the Registrar or the Authority given in the exercise of powers under this Ordinance; (g) if, being a listed company, it ceases to be such Company; or (h) if the Court is of opinion that it is just and equitable that the company should be wound up.

306. Company when deemed unable to pay its debt.‑‑‑(1) A company shall be deemed to be unable to pay its debts‑‑ (a) if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding one per cent., of its paid‑up capital or fifty thousand rupees, whichever is less, than due, has served on the company, by causing the same to be delivered by registered post or otherwise, at its registered office, a demand under his hand requiring the company to pay the sum so due and the company has for thirty days thereafter neglected to pay the um, or to secure or compound for it to the reasonable satisfaction of the creditor; or (b) if execution or other process issued on a decree or order of any Court or any other competent Authority in favour of a creditor of the company is returned unsatisfied in whole or in part; or (c) if it is proved to the satisfaction of the Court that the company is unable to pay its debts, and, in determining whether a company is unable to pay its debts, the Court shall take into account the contingent and prospective liabilities of the company. (2) The demand referred to in clause (a) of subsection (1) shall be deemed to have been duly given under the hand of the creditor if it is signed by an agent or legal adviser duly authorised on his behalf, or in the case of a firm if it is signed by such agent or legal adviser or by any member of the firm on behalf of the firm.

451. Documents to be delivered to Registrar by foreign companies.‑‑‑(1) Every foreign company which, after the commencement of this Ordinance, establishes a place of business in Pakistan shall, within thirty days of the establishment of the place of business, deliver to the registrar‑ (a) a certified copy of the charter, statute or memorandum and articles of the company, or other instrument constituting or defining the constitution of the company, and if the instrument is not written in the English or Urdu language, a certified translation thereof in the English or Urdu language; (b) the full address of the registered or principal office of the company; (c) a list of the directors, chief executive and secretaries (if any) of the company; (d) a return showing the full present and former name and surnames, father's name or, in the case of married woman or widow, the name of her husband or deceased husband, present and former nationality, designation and full address in Pakistan of the principal officer of the company in Pakistan x by whatever name called; (e) the full present and former names and surnames, father's name, or, in case of a married woman or widow, the name of her husband or deceased husband, present and former nationality occupation and full addresses of some one or more persons resident in Pakistan authorised to accept on behalf of the Company service of process and any notice or other document required to be served on the company together with his consent to do so; and (f) the full address of that office of the company it Pakistan which is to be deemed its principal place of business in Pakistan of the company. (2) The list referred to in clause (c) of subsection (1) shall contain the following particulars, that is to say‑ (a) with respect to each director, ‑‑ (i) in the case of an individual, his present and former name and surname in full, his usual residential address, his nationality, and if that nationality is not the nationality of origin, his nationality of origin, and his business occupation, if any, and other directorship which he holds; (ii) in the case of a body corporate, its corporate name and registered or principal office; and the full name, address, nationality and nationality of origin, if different from that nationality, of each of its directors; (b) with respect to the secretary, or where there are joint secretaries, with respect to each of them‑‑ (i) in the case of an individual, his present and former name and surname, and his usual residential address; (ii) in the case of a body corporate, its corporate name and registered or principal office: Provided that, where all the partners in a firm are joint secretaries of the company, the name and principal office of the firm may be stated instead of the particulars mentioned in clause (b). (3) Every foreign company, other than a company mentioned in subsection (1) shall, if it has not delivered to the Registrar before the commencement of this Ordinance the documents and particulars specified in section 277 of the Companies Act, 1913 (VII of 1913), shall continue to be subject to the obligation to deliver those documents and particulars and be liable to penalties in accordance with the provisions of that Act.

456. Company's failure to comply with this part not to affect its liability under contracts, etc.‑‑‑Any failure by a foreign company to comply with any of the requirements of section 451 or section 452 shall not affect the validity of any contract, dealing or transaction entered into by the company or its liability to be sued in respect thereof; but the company shall not be entitled to bring any suit, claim any set‑off, make any counterclaim or institute any legal proceeding in respect of any such contract, dealing or transaction, until it has complied with the provisions of section 451 and section 452.

459. Penalties.‑‑‑If any foreign company fails to comply with any of the provisions of this Part, the company, and every officer or agent of the company who knowingly or wilfully authorises or permits the default, shall be liable to a fine which may extend to five thousand rupees and, in the case of a continuing default, to a further fine which may extend to one hundred rupees for every day after the first during which the default continues." Since learned counsel for respondent has raised a preliminary objection regarding jurisdiction of this Court to hear this appeal, we intend to decide the same, in the first instance. Bare perusal of subsection (1) of section 10 reveals that it relates to the appeals before Honourable Supreme Court where the Company is ordered to be wound‑up subject to other conditions being fulfilled, however, subsection (2) of the said section provides that appeals from any order made a decision given by the Court shall lie in the same manner and subject to conditions under which appeal lies from any order or decision of the Court. In the instant case the company has not been ordered to be wound‑up but, the winding‑up petition has been dismissed. In such eventuality, in our view subsection (1) of section 10 (ibid) is not relevant to the instant case, but, provisions of subsection (2) shall be relevant. It may be noted that the said subsection does not convey a mandate that appeal from any order or decision given by the Court shall lie before the Supreme Court. Be that as it may, in case of Mehboob Industries Ltd. (supra), wherein, provisions of section 10 (ibid) came under consideration it was observed that: "It is, therefore, evident that the intention of the law‑maker is that an appeal against an order, decision or judgment of winding‑up of a Company notwithstanding anything contained in any other law shall lie to the Supreme Court and not to High Court but an appeal in respect of any other order, decision or judgment other than relating to the winding‑up shall lie to the High Court." In case of Brother Steel Mill Ltd. (supra) wherein, appointment of Administrator to act as Chief Executive of Company and perform functions of the management on an application under section 292 of the Ordinance was in question, Hon'ble Supreme Court, while interpreting provisions of section 10(1) (ibid) observed as follows:‑‑ "In the facts of the present case, section 10(1) of the Ordinance cannot be pressed in service because one of the preconditions for its applicability is that the company should have been ordered to be wound‑up. If no order for winding‑up of the company has been passed, section 10(1) of the Ordinance will not be attracted." It was further observed that: "

7. Mr. Hamid Khan who appeared for some of the appellants did at one stage canvass the point that subsection (1) of section 10 applies and that the orders in question are appealable to this Court under that section. But if I rightly understood them, at the end of the day learned counsel for the appellants agreed, and in my view rightly, that as the petitions before the High Court were not petitions for the winding‑up of the companies and the companies have not been ordered to be wound -up, the appellants were not entitled to invoke that provision. There is, however, no question that subsection (2) of section 10 of the Companies Ordinance does give a right of appeal but that right is dependent upon the existence of another law, providing for appeals against such an order or decision of the Court. That law, as we shall see, is section 15 of the Code of Civil Procedure (Amendment) Ordinance, 1980." In case of Agha Fakharuddin Khan v. Messrs Ruby Rice and General Mills Ltd. and another reported in 2001 YLR 1798. A Full Bench of this Court while referring to the case of Brother Steel (supra) observed as follows: "In a well considered judgment a five‑member Bench of this Honourable Supreme Court proceeded to hold that an order passed by a Company Judge, to which section 10(1) did not apply, ought to be treated as one having been passed under the Original Civil Jurisdiction of the High Court and was thus appealable before a Division Bench in terms of section 15 of Ordinance X of 1980. It is, thereof, clear that the position in respect of orders to which section 10(2) applies has been authoritatively settled by the Honourable Supreme Court." We have said in the foregoing paras. that in the instant case, the company has not been ordered to be wound‑up, but, the winding‑up application has been dismissed, therefore, following the dictum laid down in the case‑law cited above, we are clearly of the view that this appeal is maintainable before this Court. The objections raised by learned counsel for the respondent as to the maintainability of this appeal is overruled. Regarding other ground taken by learned counsel for the appellants that winding‑up petition could not be dismissed for want of compliance of section 451 of the Ordinance before filing the said petition as the appellant, during the pendency of winding‑up proceedings, made compliance of the requirements of section 451 of the Ordinance, it may be stated that learned counsel in support of this ground placed reliance on two letters, dated 21‑3‑2000 and 13‑5‑2000 referred to hereinabove. It is contended by him that first‑mentioned letter which is addressed to Registrar Joint Stock Commission, Karachi was delivered to Security and Exchange Commission of Pakistan which fact is confirmed by another letter, dated 13‑5‑2000 of Joint Registrar of Companies addressed to Registrar of Companies (Headquarter Security and exchange Commission of Pakistan Islamabad). It is submitted by him that appellant while filing written arguments before learned Single Judge mentioned so also applied a copy of letter, dated 21‑3‑2000 bearing acknowledgement of the Registrar, Joint Stock Company, therefore, compliance of section 451 of the Ordinance was deemed to have been sufficiently made, which fact, he added, ought to have been taken into account while passing the impugned order. It was further submitted by him that requirements of section 451 of the Ordinance are merely procedural and dismissal of winding‑up petition on failure of such conditions would be tantamount to non- suiting the appellant on technical ground depriving him to seek: remedy on the basis of rights otherwise available to it under the Ordinance. Part XIV of the Ordinance, in its fold, contains sections 450 to

465. Section 459 reproduced above provides penalties if a foreign company fails to comply kith any of the provisions of this part. The said section envisages that the company and every officer or agent of the company who permits the default shall be liable to fine as provided therein. Thus, viewed the case of petitioner in terms of said section, it can be said that the appellant company having failed to comply with provisions of section 451 of the Ordinance shall only incur the liability as provided in said section. Apart from above, it is pertinent to note that the admitted position in the matter is that two suits between the same parties were filed, arbitration proceedings were held where the appellant‑company participated and an Award was passed which was made a rule of Court, by order, dated 17‑11‑1998 followed by a decree. It is said that the said decree has been challenged by way of an appeal, said to be pending. Not touching the merits of all these proceedings, parties having gone to that level, it will be not fair to non‑suit the appellant‑company on the objections raised in winding‑up petition particularly when in the instant case, there are peculiar circumstances where requisite compliance is claimed to have been made. It is, however, to be seen whether compliance claimed fulfils all the conditions and that it is also a matter for consideration to determine the extent of penalties as provided by the law by applying the relevant sections of the Ordinance. In the circumstances, we are of the view that the matter merits to be remanded. Having observed as above, discussion on other contentions of learned counsel for the appellant and the case‑law referred to by him shall only be an academic exercise, virtually needing no attention, however, it is clarified that by this order neither we relax in all matters the imperative nature of the requirements udder sections 451 and 452 of the Ordinance nor it be construed that any party is allowed, in future, to institute proceedings without making compliance of requirements of section 451 of Ordinance. In view of above discussion, we admit this appeal to regular hearing, set aside the impugned order and remand the case to learned Single Judge to decide the same afresh, after hearing the parties in accordance with law. S.A.K./A‑366/K Case remanded.