2010 PLP 232 (CLD)

(vi) In the AGM dated 29-10-2005, Mr. Sadiq Hussain was appointed as proxy for late Ghulamali Rehmatullah who passed away on 14-6-1996, whereas his shares were transferred in the year 2005 by his attorney Mr. Sadiq Hussain. The attorney given by late Ghulamali Rehmatullah became void on his death and only the legal heirs could have transferred; the shares.

5. The counsel for the respondent stated that: (a) The case for initiating investigation under section 263 of the Ordinance is not made out as the appellants do not have 10% shareholding. The application for investigation was made by the appellants after the shares of appellant Nos. 1 and 2 were transferred to the respondent as such the appellants are not holding More than 10% shares. (b) The counsel for respondent on facts stated that:-- (i) The respondent entered into an agreement dated 23-4-2004 with appeals Nos. 1 and 2 for acquiring their entire shareholding. Part consideration was paid by the respondent at the time of the agreement. The shares were transferred as per the terms of the agreement, however, appellants Nos.1 and 2 on being incited by appellant No.3 are not ready to receive the balance consideration. It was contended that the respondent is ready to pay the balance consideration to appellants Nos.1 and 2. (iiv) The counsel for the respondent denied the allegations made by the appellants regarding contravention of Article of Association of the Company, issuance of fabricated notices, holding of AGM in violation of the provisions of the Ordinance. 7(sic). We have heard the parties at length. Our findings on the issues are as under:-- (a) The application for investigation was made by the appellants and as per the record available with the department, revised and amended complaint was filed by the appellant on 16-5-2007. The revised and amended complaint was supported by an authority letter dated 9-5-2007 from eight shareholders who along with respondent No.3 held more than 27% of the total shareholding at that time and had authorized appellant No.3 to take action against the respondent. This aspect was ignored in the Impugned Order and the application of the appellants was dismissed on ground that the appellants were not holding 10% shareholding. We believe that the authority letter should have been taken into account and therefore do not concur with the views of E.D. (Registration) that appellants did not have sufficient shareholding for making an application for investigation. (b) Respondent No. 1 entered into agreement dated 23-4-2004 with appellants Nos. 1 and 2 in contravention of Articles 12 and 13 of the Articles of Association of the Company which require that proposing transferor should give a notice to the Company and the Company should within 28 days after being served with the notice find a member willing to purchase the shares. In our view the contravention of the Articles has made the agreement void especially in light of objections by over 27% shareholders. The appellants should however approach the Court of competent jurisdiction for declaration to the effect. (c) We are also inclined to look into the other ground for dismissal of the application of section 263 of the Ordinance as stated in the Impugned Order that since the dispute relates to shareholding therefore the appellants should seek the relief provided under section 152 of the Ordinance. Section 152 of the Ordinance is reproduced for ease of reference:--

152. Power of Court to rectify register. -(1) If-- (a) the name of any person is fraudulently or without sufficient cause entered in or omitted from the register of members or register of debenture-holders of a company; or (b) default is made or unnecessary 'delay takes place in entering on the register of members or register of debenture-holders the fact of the person having become or ceased to be a member or debenture-holder; the person aggrieved, or any member or debenture ?holder of the company, or the company, may apply to the Court for rectification of the register. (2) The Court may either refuse the application or may order rectification of the register on payment by the company of any damages sustained by any party aggrieved, and may make such order as to costs as it in its discretion thinks fit. (3) On any application under subsection (1) the Court may decide any question relating to the title of any person who is a party to the application to have his name entered in or omitted from the register, whether the question arises between members or debenture-holders or alleged members or debenture-holders, or between members or alleged members, or debenture-holders or alleged debenture-holders, on the one hand and the company on the other hand, and generally may decide any question which it is necessary or expedient to decide for rectification of the register. (4) An appeal from a decision on any application under subsection (1), or on an issue raised in any such application and tried separately, shall lie on the grounds mentioned in section 100 of the Code of Civil Procedure, 1908 (Act V of 1908)

(a) if the decision is that of a civil Court subordinate to a High Court, to the High Court; and (b) if the decision is that of a Company Bench consisting of a single Judge, to a Bench consisting of two or more Judges of the High Court.? The appellants Nos. 1 and 2 have contended that names are fraudulently omitted from the register of members. In terms of section 152(1) of the Ordinance, where the name of any person is fraudulently or without sufficient cause entered in or omitted from the register of members, the aggrieved person may approach the Court of competent jurisdiction for relief.

8. The appellant may seek the relief from the Court of competent jurisdiction.

9. In view of the above, the appeal is dismissed. No order as to costs. H.B.T./67/SEC??????????????????????????????????????????????????????????????????????????????????? Appeal dismissed.