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Introduction
This research is constructed on the foundation of case laws cited in Civil
Law Digest(CLD) from 2014-2018.The following amalgam of cases is on
such points, wherein court has laid new provisions to the Companies
Ordinance 1984 and Companies Act 2017. The Honorable Courts
resolved the following Cases in dispute by providing new path way in its
judgement to the existing issues. In furtherance to it court has explained
scope of certain sections of preceding laws to end-up with contemporary
dispute among parties to suit. Moreover, some of them can be applied as
precedent in certain ways to certain similar circumstances .
This appeal is filed under section 33 of the Securities and Exchange Commission of
Pakistan SECP Act 1997 against the letter dated May 17th 2017 passed by the
Respondent.Wherein SECP directed to ensure the compliance of the Trust Deed
before purchasing the shares of the World Call Telecom Limited.
In reply to the Respondent the AHL stated that they would continue with the process
of public offer on behalf of the Acquirer.Afterward, AHL , informed the SECPC and
the Pakistan Stock Exchange of the dispatch of letters of offer along with instructions
and acceptance from all shareholders of the Company.
The AHL acting as Representative also stated that the Respondent has frustrated a
legitimate private transaction between a transferor of shares and the acquirers of such
shares.
Judgement
Keeping in view the aforementioned statements this it is important to point out that
Acquirer has completed all formalities required for an acquirer under the takeover
law regime of the Securities Act, 2015, and so far acquirer is entitled to transfer of
488,839,429 shares pursuant to the terms of the share purchase agreement entered into
between the Acquirer and the Seller and for such purpose the Seller has also entered a
transaction order in the Central Depository Company of Pakistan Limited.
The Court also placed reliance on its earlier decision in Appeal No 01 of 2016 titled
JS Bank Limited vs Commissioner Company Law Division Securities and Exchange
Commission of Pakistan wherein, it was decided that the Commission is not
empowered to interfere in private agreements. As the trustees have decided to
initiate action as per provisions of the trust deed, therefore, the Commission
should not become a party to the case and let the Courts decide this matter.The
Appeal was allowed by instructing Registrar to send a copy of this Order to the Chief
Executive of the Central Depository Company of Pakistan Limited for transfer of
shares in the name of the Acquirer.
The aforesaid judgment was appealed by SECP and SBP in the same Court wherein
court decided that the winding up proceedings shall continue before the Company
Judge and Company Judge can take action against concerned parties by issuing
notice to the parties concerned and the same was disposed.
In response of it the official liquidator filed an application under sections 412 and 413
of the Ordinance before the Company Judge of the High Court and made SECP ,SBP
and Federal Government party to it and all of them were Respondent. Further the
liquidator alleged that SECP , SBP and Federal Government have failed to regulate
the affairs of IIBL and have not made preventive measures which could have saved
the deposits and investments provided to IIBL.In this response the SECP and SBP
filed appeals which were dismissed vide common judgment dated February 4, 2016.
the same order was challenged in the leave to appeal filed on the aforesaid dates.
In leave to appeal before supreme court the learned counsel representing SBP, and the
learned counsel representing SECP, state that under section 412 or section 413 of the
Ordinance, action cannot be taken against the appellants as section 412 subsection (1)
of the Ordinance states that promoters are only those who had taken part in the
promotion and formation of the company, or any past or present director, or officer of
the company can be proceeded and under subsection (1) of section 413 of the
Ordinance it is stated that only those shall be personally responsible who are carrying
on any business of the company with intent to defraud creditors of the company.
Judgement
After perusal of the foregoing facts the first is whether the SBP or SECP can be
proceeded against under either section 412 or section 413 of the Ordinance for this
purpose focus is build on the point that Companies Act, 2017 has replaced the
Ordinance of 1984 and the matters stipulated in section 412 of the Ordinance are now
contained in section 395 of the Act and those in section 413 of the Ordinance are now
found in section 398 of the Act.To explain further it is mentioned that Section. 412 of
the Ordinance provides that if a person had misapplied, retained, committed
misfeasance or breach of trust with regard to any money or property of the company
he was liable to restore it whereas S. 413 of the Ordinance states that those shall be
personally responsible who knows that if the business of the company was conducted
wrongly will defraud the creditors. Hence the State Bank of Pakistan as a central
bank and Securities and Exchange Commission of Pakistan are not the
promoter of a company as their role is altogether different from the promoters of
a company as incorporated in foregoing sections. So, the order of the High Court is
set a side and Appeal is allowed.
2017 C L D 368
[Securities and Exchange Commission of Pakistan]
Before Zafar Abdullah, Commissioner (SCD) and Fida Hussain Samoo,
Commissioner (Insurance)
JS BANK LIMITED---Appellant
Versus
COMMISSIONER COMPANY LAW DIVISION, SECURITIES AND
EXCHANGE COMMISSION OF PAKISTAN and another---Respondents
Appeal No.01 of 2016, decided on 2nd August, 2016.
2017 C L D 656
[Securities and Exchange Commission of Pakistan]
Before Zafar Abdullah, Commissioner (SCD) and Fida
Hussain Samoo, Commissioner (Insurance)
DEWAN PETROLEUM (PVT.) LIMITED---Appellant
Versus
DIRECTOR,CORPORATISATIO AND COMPLIANCE DEPARTMENT,
SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---
Respondent
Appeal No.57 of 2013, decided on 11th February, 2016.
The representatives of the Respondent and of the Appellant informed the Appellate
Bench that the overdue AGM for the year 2013 (Year ended 31/12/12) has
subsequently been held on 30/04/14 at the Company's registered office at 46-
Nazimuddin Road, F-7/4, Islamabad.
Argument of Parties
The Appellant had filed an appeal under section 33 of the Securities and Exchange
Commission of Pakistan Act, 1997 against the stance of the Respondent by raising its
narrative that Order of the court and point presented by Respondent in the foregoing
letter have failed to justify that why AGM should not be held outside Pakistan.
Moreover, The Companies Ordinance 1984, does not restrict any public limited or
private limited company whether listed or not from holding AGM any where else
from its registered office. Further section 158(2) of the Ordinance provides that only
listed companies are required to seek permission from the Commission before holding
such AGM and Clause 13 of the AoA of Dewaan Petroleum Company also provides
that the company can arrange its AGM at such place as may be decided by the
Directors,.
In response to it the Respondent stated that MessrsDewan Salmon Fibre Ltd has
objected to the holding of the AGM of Messrs Dewan Petroleum (Pvt.) at any other
place other than registered office as the same is the substantial shareholder of 30% of
the total paid up capital of Messrs Dewan Petroleum (Pvt.) Ltd. . Moreover, the
provisions of the Companies Ordinance is silent on the point of allowing a private
company to hold the AGM at their own desire.However, such arrangement of AGM
in abroad will effect the participation of the shareholders.
Judgement
After perusing the foregoing points of the parties the court held that the AGM has
already been held at the Company's registered office further there is no provision to
arrange AGM at any place other then the registered office so, the Appeal
therefore has become futile and same was dismissed accordingly.
2017 C L D 759
[Securities and Exchange Commission of Pakistan]
Before Zafar Abdullah, Commissioner (SMD) and Fida Hussain Samoo,
Commissioner (Insurance)
SIKANDER MUSTAFA KHAN and 6 others---Appellants
Versus
HEAD OF DEPARTMENT (ENFORCEMENT), SECP, ISLAMABAD---
Respondent
Appeal No.24 of 2014, decided on 30th March, 2015.
Further the respondent invited the intention of the court towards Ss. 193, 196, 214,
216 & 476 of the Companies Ordinance 1984 and Code of Corporate Governance,
2012 which bounds the Directors for disclosure of their interest
In response to it the Appellants argued that they neither had any interest nor declared
any interest while approving the related party transactions.
Held
In pronouncing judgement the court incorporated the following section of companies
ordinance 1984
In view of the above ,the Board of Directors is not competent to approve related party
transaction, as the quorum, was not complete so, the Appellants have violated S.216
by participating in meetings, and approving transaction in which they were interested
party. Moreover, Primary legislation, would prevail over secondary legislation in
cases there occurred a conflict between the two Codes as the Code of Corporate
Governance is part of the listing regulations of the Stock Exchange and is
subordinate legislation while the provisions of Companies Ordinance1984 is
primary law.In the present case,so, the directors could not approve related party
transactions as the quorum was not complete hence the Appeal is dismissed.
2015 C L D 719
[Peshawar]
Before Yahya Afridi, J
ABDUL KAREEM KHAN---Petitioner
versus
Messrs HAROON-UR-RASHEED TEXTILE MILLS (PVT.) LTD. through
Chief Executive and 13 others---Respondents
Company Case No. 1-P of 2014, decided on 31st October, 2014.
(a) Petitioner claimed that his shares have been fraudulently reduced from 121612
shares 99500 shares so such shares to be ratified which were originally up to the sum
of 22112 shares, which he received in legacy of his late father Abdul star Khan.He
further asserts that such fraud has been made by Respondent No.2.
(b) The respondents, to be restricted from transferring of the shares like plot,building
and machinery of respondent No.1 without taking care of the codal formality
incorporated in MOM AOA and provisions of the Companies Ordinance, 1984.
Background
The business was owned by single and transfer of shares were made in different years
respectively in the year 1978, 1980, 2006, 2007.Finally on 4-8-2010 Late Abdul
Sattar Khan acting as Chief Executive of the Company served a notice upon
respondent No.14 which was received on 6-8-2010. The same notice also contained
the signatures of the present petitioner.The petitioner was not aware of it later on
during the Inspection of the Company file in SECP; the petitioner came to know that
a person fraudulently put his signature on Form 29 in which he has shown him as a
ceasing Director/Chief Executive and transferred his shares in favour of some other
person.
In response to such mischief the petitioner filed a suit on 7-6-2013. before the Civil
Court in Peshawar, seeking the same relief as claimed in the instant petition but the
Civil Judge returned the plaint to the petitioner under Order VII, Rule-10 of Civil
Procedure Code, 1908 and directed him to file it before the appropriate legal forum.
Summary of the Case
This petition is filed under section 152 read with section 290 of the Ordinance, for
taking above stated relief.
In response to this petition the petitioner raised objection that as the petitioner first
approached Civil Court on 2-5-2012 and High Court on 20-3-2014 which bring the
petition within the time prescribed under Art. 120 of Limitation Act, 1908 so the
same is barred by law.
Judgement
After considering the foregoing arguments this court is of the view that this petition
falls under section 9 of the Ordinance so, this court has original jurisdiction in this
matter.Further there is no period of limitation provided for filing of petition before the
Company Court for correction of the Members Register of the Company under
section 152 or for seeking directions against the mismanagement of the affairs of the
Company under section 290 of the Ordinance.However, the vital issue in this
petition is that the petitioner asserts that his shares including other shares owned by
him as legacy of late Abdul Sattar have been fraudulently transferred by respondent
No.2
In respect of this it is important to state that Single shareholder seeking correction
of a single share in company can seek his remedy under S. 152 of Companies
Ordinance, 1984, even if his name was not recorded in Members' Register of
company.So, under section 152 the High Court alone has the exclusive jurisdiction.
However, the essential documents to support the respective claims of the parties are
not available on the record so this court will place this petition under section 265 of
the companies ordinance 1984.for seeking further investigation of the matter in
question as to the transfer of shares.In this respect the court shall appoint one or more
competent persons as inspectors to investigate the affairs of a company or the
investigation to be conducted by an inspector appointed by the SECP.
2015 C L D 1754
[Peshawar]
Before Waqar Ahmad Seth and Musarrat Hilali, JJ
Messrs ONE 2 ONE SOLUTIONZ (PVT.) LTD.---Petitioner
Versus
The POSTMASTER GENERAL KHYBER PAKHTUNKHWA and 2 others---
Respondents
2014 C L D 1482
[Sindh]
Before Nadeem Akhtar, J
UNITED BANK LIMITED---Petitioner
Versus
GULISTAN TEXTILE MILLS LIMITED---Respondents
In respecr of the said default the company is liable to pay Rs.767,760,401.00 to the
petitioner is . Other than this the company is also liable to pay to other five financial
institution the amount which sums into Rs.794,200,865.65 to five other financial
institutions so, the total amount payable by the company to all the financial
institutions, including the petitioner, is Rs.1,561,961,266.65.Moreover, the petitioner
has also filed C.M.A. No.6 of 2013 wherein the petitioner has prayed for the
appointment of official liquidator to take over the affairs and management of the
company with immediate effect.In correspondence to winding-up the petitioner also
issued a notice to the respondent company on 12-10-2012 such notice was issued
under section 306 of the Ordinance.
Judgement
In view of the above facts it is pointed out that the current liabilities of the company
are more than four times from the amount of the paid up capital and about 2-1/2 times
higher than the amount of the authorized capital.Further the company has failed to pat
debt after due issuance of the notice so, it is a well-established principle that in the
event of failure to pay debt in accordance with the statutory notice of demand
under section 306 of the Ordinance, insolvency was to be presumed though it
could also be proved in other ways. In this case the respondent company has neither
responded to the notice of demand issued by the petitioner, nor has the petitioner's
debt been cleared.Keeping in view all the facts the court has appointed official
liquidator and he will perform all such duties and functions and shall exercise all
such powers as are required under the law.and the same petition is allowed.
Conclusion
Before pointing out the gist of this research it is pertinent to explain that this research
is the compilation of Case laws, wherein court has derived new principles. All such
principles are not on the question of fact but some are related to question of law
where court has interpreted certain provisions of Companies ordinance 1984 and
Companies Act 2017 in its Judgement and developed new points from such
interpretation which are now precedent. Moreover, this research abundantly contains
judgement on companies ordinance 1984. However, quarter portion of this research is
sum of judgement laid on the Companies Act 2017.Other than this in some of the
aforementioned judgement court dismissed the case by declaring it void ab anitio.
What so ever the narrative of Honorable Courts in foregoing judgement is but to
conclude it can be said that all these judgement are with novelty of unrecognized
points.