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Public limited company

Public limited company legal meaning, translation and judicial precedents.

Meaning & Judicial Interpretation: (اردو مفہوم اور قانونی تشریح)

2025 PLC(CS) 1190 KARACHI-HIGH-COURT-SINDH Judicial Precedent

Art.199'Pension Fund Trust', abolition ofConstitutional petition, maintainability ofPublic limited companyPublic limited company not amenable to Constitutional jurisdictionFactual controversies involving disputed questionsRecording of evidence, requirement ofConstitutional jurisdiction of the High Court, scope of

Factual controversies cannot be entertained under Constitutional jurisdiction as same require recording of evidence and recording of evidence cannot be undertaken in exercise of Constitutional jurisdiction

Brief facts of the matter were that the petitioner was a former employee of a public limited company who challenged the alleged unlawful abolition and winding up of the "Pension Fund Trust" and further disputed a document claiming his signature upon it was obtained without free consent and under coercion

He sought to invalidate these documents which were allegedly obtained by the company

Held: The public limited company was incorporated under the relevant company laws and was not amenable to constitutional jurisdiction of the High Court under Art. 199 of the Constitution since it did not fall within the definition of a "person" as contemplated in Art. 199(5) thereof

Furthermore, the question of whether the petitioner's signature on the document in question was obtained through coercion or without free consent involved disputed questions of facts and required recording of evidence which could not be undertaken in the exercise of writ jurisdiction under Art. 199 of the Constitution

Moreover, the validity and enforceability of the 'declaration' though which the petitioner allegedly opted for a lump sum payment and other service benefits involved contested factual issues that fell outside the scope of Constitutional proceedings

Constitutional petition failing to meet the threshold for the exercise of constitutional jurisdiction, was dismissed, in circumstances.

2022 CLC 928 PESHAWAR-HIGH-COURT Judicial Precedent

Ss.42, 66, 73, 117 & 123Constitution of Pakistan, Art.199Constitutional petitionMaintainabilityPublic Limited Company

Petitioners assailed functions of Water and Sanitation Services Peshawar (WSSP) a public limited company, before High Court in exercise of jurisdiction under Art.199 of the Constitution

Objection was raised by authorities to maintainability of petition

Validity

Respondent company was set up for performing functions, which were primarily those of the State or local government or Provincial Government

Petitioners also challenged action of WSSP to levy tax / fee and notifications issued by official respondents, purportedly authorizing WSSP to do that was amenable to judicial review

Objection to maintainability of Constitutional petition was not sustainable

Objection was overruled in circumstances.

2022 PLC(CS) 56 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

Daily wagers (Chowkidars)Regularization in servicePublic limited companyDiscrimination

Held, that 'Pakistan Agricultural Storage and Services Corporation' (PASSCO) was a public limited company registered under the Companies Act

Human Resource Policy, 2011 (H.R. Policy) was formulated by Board of Directors of PASSCO

Policy, 2011, was non-statutory in nature and was meant for internal working

Method of recruitment for their employment of permanent and temporary employees was altogether different

Permanent employees were recruited according to the HR Policy, 2011, while temporary employees/daily wagers according to the letter dated 28/11/2014

Huge number of seasonal workers were recruited on temporary basis who were called chowkidars and were appointed seasonally on contract basis as and when required according to wheat stock and for its security and safety for a specific period

Services of petitioners were hired for 85 days in the light of said letter, therefore, they were bound by the terms and conditions as settled in the same letter

Recruitment order had further clarified that petitioners' job was purely on temporarily basis

Petitioners' services stood terminated automatically without any prior notice on completion of task/disposal of stock and they could not claim regularization of their services

Keeping in view the nature of business, it was not feasible to appoint chowkidar on permanent regular basis

Break up in the services of petitioners/daily wagers was genuine and not artificial

Four supervisors and 35 persons out of almost 700/800 daily wagers were regularized to change nomenclature of 4 minor crops

Petitioners failed to make all the regularized persons as party in their petitions, therefore, no effective order can be passed against them in their absence

Petitioners failed to establish commission of any discrimination, infringement of their fundamental rights by the said regularization, or violation of service regulations

Contractual employees had no automatic right to be regularized

Constitutional petitions were dismissed accordingly.

2021 PTD 1951 ISLAMABAD Judicial Precedent

Ss. 30(2)(b), 15(d), (f), 22 & 30Public limited company'Income from business' or 'income from other sources', determination of

Question before High Court, was whether income of taxpayer company generated as interest on bank deposits amounted to "income from business" or "income from other sources"

Held, that in previous round of litigation between taxpayer and Department, Appellate Tribunal had held that income of taxpayer would be charged as "income from business" and not as "income from other sources", which order was not challenged by Department, and had attained finality and therefore no question of law was left to adjudicate in the present case

Reference was disposed of, accordingly.

2017 PLC 199 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

Ss. 20, 2(8)(f) & 71Public limited companyEnhancement of wages of employeesContribution of Social Security amountScope

of wage limit under S.2(8)(f) of Provincial Employees' Social Security Ordinance, 1965 was only to determine the "employee" for the purpose of said Ordinance

Section 71 of the Ordinance empowered the government to enhance or reduce the wage limit

Provision of S.2(8)(f) of Provincial Employees' Social Security Ordinance, 1965 was not a charging section for the purpose of determining the contribution under the said Ordinance rather S.20 of Provincial Employees' Social Security Ordinance, 1965 was the charging provision

Monthly wage ceiling under S.2(8)(f) of Provincial Employees' Social Security Ordinance, 1965 was increased from Rs.10,000/- to Rs.12,500/- and then Rs.15,000/- by the government

Said increases on monthly wage ceiling were only to expand the net of institution to embrace more employees by enhancing the wage limit but same were not to increase the limit of contribution which was to be governed and charged under S.20 of Provincial Employees' Social Security Ordinance, 1965

Merely enhancing the monthly wage ceiling by Government under S.2(8)(f) of Provincial Employees' Social Security Ordinance, 1965, department could not recover the contribution on said enhanced wages

Demand and recovery of excess amount under the said notification was illegal and without jurisdiction

Petitioner having not challenged the vires of amendment made in S.20 of Provincial Employees' Social Security Ordinance, 1965, said notification could not be held to be illegal in absence of challenge

Enhanced ceiling of wages for contribution by employer was beneficial to the employees

Impugned notification and demand notice were intra vires of law and did not suffer from any legal infirmity

Constitutional petition was partly allowed to the extent that notifications in question could not be made basis for recovery of contribution under S.20 of the Ordinance, however constitutional petition to the extent of notification dated 12-8-2014 and demand notice dated 26-8-2014 based on said notification was dismissed.

2015 SCMR 1494 SUPREME-COURT Judicial Precedent

Ss. 30(2)(b), 15(d), (f), 22 & 30Companies Ordinance (XLVII of 1984), Ss. 15 - 25Public limited company'Income from business' or 'income from other sources', determination ofMemorandum of AssociationObjects of a company, interpretation of

Public Limited Company (before commencing its business activities) using its surplus money/reserves to invest in various profitable schemes/banks

Question as to whether income/interest generated from such schemes/banks amounted to 'income from business' or 'income from other sources'

Main and primary object of the appellant-public limited company, in the present case, was to set up and run a cement factory

When the cement plant was under construction, and the business of the company had not yet commenced, the company used money lying in its reserves to invest in certain profitable schemes/banks through fund management arrangements

Company earned income/interest through the said schemes/banks

Assessing officer (Deputy Commissioner, Income Tax) assessed such income/interest so received by the company as 'income from other sources' under S. 30(2)(b) of the Income Tax Ordinance, 1979 [since repealed]

Appellate Tribunal upheld the decision of the Assessing Officer

Contention of company was that though the primary object and purpose of the company was to establish a cement factory, however since the Memorandum of Association of the company permitted investments to be made for the purposes of its (company's) business to generate income, therefore any income or interest earned and received through such investments should be taxed as 'income from business', as opposed to 'income from other sources'

Validity

[Per Sh. Azmat Saeed, J] Main object of the company in the present case as mentioned in its Memorandum of Association was to install, establish and run a cement manufacturing plant

One of the clauses mentioned in the Memorandum of Association provided that company's object and purpose was also "to invest or otherwise deal with the money of the company in such manner as may from time to time be determined"

However a prohibitory clause was also mentioned in the Memorandum of Association which stated that "notwithstanding anything contained in the …. object clauses of …. Memorandum of Association, nothing [t]herein shall be construed as empowering the Company to undertake or indulge in the business of banking, finance, investment, leasing or insurance, directly or indirectly or any unlawful operations"

Said prohibitory clause stated in unequivocal terms that in spite of anything contained in any of the object clauses in the Memorandum of Association, nothing therein shall continue to empower the company to undertake or indulge in the business of inter alia investment

Such was the clear and unambiguous import and meaning of said prohibitory clause

Company, in the present case, could, thus, invest its money but such a transaction could not be deemed to be business of the company

Consequently, the income derived from such investment could not qualify as income from business and therefore must fall in the category of "income from other sources" in terms of S. 30(2)(b) of the Income Tax Ordinance, 1979 [since repealed]

[Per Mushir Alam, J] During the period or course of setting up of a factory or plant by the company, activity of investing surplus funds of the company and generating any sum, return or interest on such investment, could not be considered as "income from business" under S. 15(d) of the Income Tax Ordinance, 1979 [since repealed]

Company claimed that its surplus funds were employed in a proactive manner in order to generate additional fund by way of portfolio, fund and cash management venture

Such activity was carried out during the period when cement plant/factory was under construction, therefore, the company , could not be said to be carrying on any business at that point of time within the contemplation of S.22 of the Income Tax Ordinance, 1979 [since repealed]

In such circumstances the Appellate Tribunal was right in holding that such income/interest yielded from the investment of the surplus funds of the company fell under "income from other sources" i.e. S. 15(f) of the Income Tax Ordinance, 1979 [since repealed]

Such income was rightly assessed as 'income from other sources" under S. 30(2)(b) of the Income Tax Ordinance, 1979 [since repealed]

[Per Mian Saqib Nisar, J] [Minority view] Primary and main object of the company, in the present case, was to install, establish and run a cement manufacturing plant

Such object, was, however not the only object of the company, rather there were numerous other ventures which were permissible under the objects clause of the company (mentioned in the Memorandum of Association)

Some objects clauses mentioned in the Memorandum of Association were ancillary, but some were vividly and undoubtedly independent

One such independent object clause mentioned in the Memorandum of Association was that the company was empowered to, and one of its purposes and objects was "to invest or otherwise deal with the money of the company in such manner as may from time to time be determined"

Said independent object clause made it clear that investment of the money of the company, surplus or otherwise, for the purpose of earning income, would be within the pail of permissible business activities detailed in the Memorandum of Association

Memorandum of Association of the company in the present case contained a prohibitory clause too which provided that "notwithstanding anything contained in the …. object clauses of …. Memorandum of Association, nothing [t]herein shall be construed as empowering the Company to undertake or indulge in the business of banking, finance, investment, leasing or insurance, directly or indirectly or any unlawful operations"

Said prohibitory clause did not prohibit the company from making any investment of its money and carrying on any activity having no nexus to its main object for generating income

Said prohibitory clause had been seemingly added purposely in the Memorandum of Association, as an extra precaution to eliminate any doubt that the company while misinterpreting any of its object clause might not undertake and indulge into such business which was expressly covered and fell within the prohibitory domain, thereof; but where business of the company was covered expressly by one or more than one of its lawful objects, and did not clearly and unambiguously fall within the prohibitory clause, it would be beyond the pail of the said prohibitory clause

Section 30(2)(b) of the Income Tax Ordinance, 1979 [since repealed] which dealt with 'income from other sources' was only applicable where the investment of money by a company had not been made as part of its business activities

Where money had been invested by a company in its business, as in the present case, and profit was generated on such an investment, that profit shall, for all intents and purposes, be considered to be the profit earned from business and not from other sources

In the present case, amount of profit earned by the company from the investment made in the various schemes/banks was pursuant to its business activities and, therefore, such profit could not be termed to have been accrued from any other source so as to attract the application of S. 30(2)(b) of the Income Tax Ordinance, 1979 [since repealed] i.e. income from other sources

Appeal was dismissed accordingly.

2015 CLD 1482 SUPREME-COURT Judicial Precedent

Ss. 15 to 25Income Tax Ordinance (XXXI of 1979) [since repealed], Ss. 30(2)(b), 15(d), (f), 22 & 30Public limited company'Income from business' or 'income from other sources', determination ofMemorandum of AssociationObjects of a company, interpretation of

Public Limited Company (before commencing its business activities) using its surplus money/reserves to invest in various profitable schemes/banks

Question as to whether income/interest generated from such schemes/banks amounted to 'income from business' or 'income from other sources'

Main and primary object of the appellant-public limited company, in the present case, was to set up and run a cement factory

Company earned income/interest through the said schemes/banks

Assessing Officer (Deputy Commissioner, Income Tax) assessed such income/interest so received by the company as 'income from other sources' under S. 30(2)(b) of the Income Tax Ordinance, 1979 [since repealed]