HAMZA BOARD MILLS LIMITED and 7 others vs HABIB BANK LIMITED and another
This civil appeal arises from a winding-up order against the appellant company. During the proceedings, counsel for the respondent bank submitted that the appellant company had adjusted all its liabilities with the bank, leaving nothing outstanding. The core legal question concerned whether the winding-up order should be set aside and the company's previous status restored in light of the settlement, and how to protect the interests of other non-party creditors. The Supreme Court held that the impugned judgment must be set aside and the matter remanded to the High Court for a fresh decision on merits. The Court laid down the principle that while evaluating the restoration of a company's status upon settlement with a primary creditor, the court must comprehensively consider all surrounding circumstances and safeguard the interests of all other creditors who are not parties to the litigation.
- Whether a winding-up order can be set aside when the company has adjusted its liabilities with the primary creditor?
- Does the restoration of a company's pre-winding-up status require consideration of the interests of other non-party creditors?
- When should a winding-up matter be remanded to the High Court for a fresh decision?
ORDER
' NAZIM HUSSAIN SIDDIQUI, J.--- Mr. K.M.A. Samdani, learned Senior Advocate Supreme Court for the respondent No,1 Habib Bank Limited submits that appellants' company viz. Hamza Board Mills, Limited has adjusted all its liabilities with the Bank and leaving nothing outstanding against the appellants' Company. A letter of said Bank dated 21-6-1999 addressed to Mr. Muhammad Saleem Sahgal, Advocate of the Company in above terms, is available on record.
2. Learned counsel for the appellants states that from the date of the impugned order dated 3-5- 1995 till stay was granted by this Court on 17-5-1995 nothing had happened during above period relating to the Company's financial affairs and no transaction whatsoever was done during said period. In other words, he submits that the Company's financial rights and obligations remained the same as were on 3-5-1995. Learned counsel also submits that, under the circumstances, the winding-up order of the Company is liable to be set aside and the Company is entitled to function as it was doing before. Although learned counsel has asserted as above but there is nothing on record to substantiate it. It is not clear whether other creditors of the Company would be affected or not by restoring the previous status of the Company.
3. Under the circumstances, impugned order/judgment is set aside and the case is remanded to High Court to decide it afresh on merits regarding restoring the previous status of the Company or otherwise, having taken into consideration all the circumstances and also keeping in view the interest of those other creditors of the Company, who are not party in this appeal.
4. Accordingly, the appeal is disposed of in above terms.