1980 PLP 423 (PTD)

In a general meeting of the share‑holders of Hyderia Transport Company Limited a resolution was passed on the 26th February, 1957, for splitting up the Company into two groups to be known as Group 'A' and Group 'B' and for dividing inter se the assets of the Company including route permits. No action under section 153 of the Companies Act was taken for several years till the Assistant Registrar, Joint Stock Companies, drew tile attention of the Management of the two groups to this provision of law. Accordingly, an application under section 153 of the Companies Act was submitted in the High Court which was allowed on the 30th May, 1966 (Annexure 'B'). The short order is as follows. "An Extraordinary General Meeting of the share‑holders of the Hyderia Transport Company was held at the Head Office of the Company at Jhang on the 15th May, 1966, at 10.00 a. m. under the Chairmanship of Mr. Muhammad Akhtar, Advocate, after publication in the Press and issue of notices to the share‑holders. It appears from the report of Mr. Muhammad Akhtar, Advocate, that all the shareholders were present in the meeting and they all agreed to accept the entire scheme which was approved by the share‑holders of the Company in a meeting held on the 26th of February, 1957. The scheme has been acted upon ever since and formal approval of this Court is desired by this application under section 153 of the Companies Act. It is stated by the learned counsel for the petitioner that there are no creditors of the Company, who affected by the scheme, which has been approved and then accepted by all the share‑holders. As there is no objector, I sanction the scheme as in Annexure 'A'. "

2. The Income‑tax Officer, Companies Ward, assessed the Company for the years 1959‑60, 1960‑61 and 1961‑62 on the 30th April 1958 (Annexure 'E'), for the year 1962‑63 on the 19th June, l967 (Annexure 'F'), for the year 1963‑64 on the 30th April, 1968 (Annexure 'G') and for the year 196‑1‑65 on the 10th March, 1969 (Annexure 'H') it was contended before biz that each of the two groups is liable to be assessed but this argument did not find favour with the said officer who held that the company was the only entity and assessee.

3. Hence this writ petition.

4. The learned counsel for the petitioner argued that the two groups were declared as separate entitles by the order (Annexure B ) and this order was retrospective in character and became effective from the date of passing of the said resolution dated the 26th February, 1957, and as such they should have been assessed separately.

5. The learned counsel for the respondents, on the order hand, urged that the grouping had been done by the Cone; any for its own convenience and was not binding upon the Income‑tax Officer. He further argued that the income‑tax Officer was definitely a creditor on the date of the order of the High Court and no order binding him could have been passed except with his Consent or by holding a meeting of the creditors.

6. The learned counsel have not relied upon any case‑law in support of their contentions. There is no doubt that even after the grouping the Company remained registered as a Company with the Registrar of Joint Stock Companies. The groups as such were not incorporated separately as separate Companies. It, therefore, prima facie appears that the grouping was not binding upon the creditors and was only a step towards creating a domestic harmony among the shareholders. It was only an internal arrangement.

7. It is unnecessary to develop upon this particular point for the reason that even if it is assumed that the two groups of the Company became separate Companies which they were not, the Income‑tax Officer is not bound by the order of the High Court. Section 153 provides that where a compromise a or arrangement is proposed between a company and its creditors or any class of them, or between the company and its member or any class of them, the Court may, order a meeting of the creditors or class of creditors or of the members of the company or class of members, as the case may be, to be called, held and conducted in such manner a the Court directs. Subsection (2) of section 153 provides that the compromise will be subject to sanction if a majority in number representing three‑fourths in value of the creditors or class of creditors, or members or class of member agree to any compromise or arrangement.

8. In the present case, it appears that the High Court had proceeded on the assumption and, in fact, on the misrepresentation that there were no creditors of the Company. It is clear from Annexures 'F' 'E' and `H' that the creditors bad shown profits in the returns which means that they had accepted their liability to pay some income‑tax. In view of this it cannot be doubted that the Income‑tax Officer was their creditor. They, however, obtained an order from the High Court by concealing this fart and by misrepresenting that there were no creditors of the Company. If this fact had been brought to the notice of the High Court the meeting of the creditors, which is mandatory in section 153, would have been arranged.

9. I can contemplate of a case where the creditors, by resolution passed by them, either unanimously or by a majority of three‑fourths, as laid down in the section, agree to the compromise. In such a case it can be urged that if the creditors have agreed to recover their dues from any particular group of share‑holders, the liability of other groups ceases. But in the present case, there is no such agreement on behalf of the Income‑tax Officer. The Income‑tax Officer was, therefore, right in assessing the Company as a whole. This is further supported by the conduct of the petitioner himself in filing Civil Original No. 44 of 1970, for liquidation of the Company as a whole without making any reference to the groupings thereof. It will, therefore, appear that the Company was treated to be a separate entity by the petitioners themselves. I, therefore, find no ground to interfere with the impugned orders and disallow this petition. I will, however, leave the parties to bear their own costs. Petition dismissed