INVESTMENT CORPORATION OF PAKISTAN and others vs SUNSHINE JUTE MILLS

ORDER

1. C.M. No,83-L of 2005 ' The respondent-Company was ordered to be wound up vide order dated 29-9-1997. Learned counsel for the respondent-Company/applicant contends that I.C.P. Consortium had arrived at a settlement/compromise under the scheme framed under Circular 29. According to the compromise/settlement the applicants were required to pay the forced-sale-value in the sum of Rs.20 million to petitioners/creditors. Some additional payments were also paid and the total amount paid is Rs.23.276 million. Learned counsel urged that all the creditors have been paid. The litigation against CIRC pending in the Supreme Court of Pakistan has also been withdrawn vide order dated 31-1-2005. The compromise between the parties had already acted upon. Learned counsel prays that in view of the above the winding up order dated 29-9-1997 may be recalled and the liquidator be directed to hand over the possession of the assets of the company free from any encumbrance to the applicant.

2. ' In reply to this application I.C.P. Consortium has admitted that it has no objection if this application is allowed and "the existing charges/encumbrances on the petitioner's assets, may be allowed to be redeemed by the petitioner on its own cost and expense in accordance with law".

3. ' Learned counsel for CIRC admits the aforesaid facts and states that CIRC has received the payments as per settlement and has no objection to the recall of the winding up order.

4. ' Learned counsel for I.D.B.P. Also states that he has no objection to the recall of the winding up order as I has received all the payments.

2. I have gone through the relevant provisions of the law and considered the arguments of the learned counsel for the applicant/company under winding up. Under section 319 of the Companies Ordinance, 1984 this Court may at any time not later than three years after an order for winding up, on the application of any creditor or any contributory or of the Registrar or the Authority or a person authorized by it, and on the proof to the satisfaction of the Court that all proceedings in relation to the winding up ought to be stayed, withdrawn, cancelled or revoked, make an order accordingly, on such terms and conditions as the Court thinks fit. Under subsection (2) of the same section, the Court may, before making an order, require the Official Liquidator to furnish to the Court a report with respect to any facts or matters which are in his opinion relevant to the application. Under section 320 of the Ordinance this Court shall, as to all matters relating to a winding up, have regard to the wishes of the creditors or contributories.

5. ' Under section 421(1)(ii) of the Companies Ordinance the Liquidator may, with the sanction of the Court when the company is being wound up make any compromise or arrangement with creditors or persons claiming to be creditors or having or alleging themselves to have any claim present or future, whereby the company may be rendered liable. In the instant case the CIRC being itself the creditor and Liquidator has entered into a compromise/arrangement for payment to the creditors.

6. This Court under section 422 of the Ordinance, in all matters relating to the winding up of a company, shall have regard to the wishes of creditors or contributories of the company. Since all the creditors have been paid the compromise/arrangement entered into between the creditors and the company is therefore, sanctioned.

7. ' The only hindrance seemed to be the time limit of three years prescribed in section 319 of the Companies Ordinance, 1984. In my view this provision is directory and not mandatory as the violation has not been visited with any consequence or penalty. While extending the period under section 387 of the Companies Ordinance it was held in Messrs Welcome Agencies (Pvt.) Limited Company 1988 CLC 206 that the time beyond the statutory period was directory in nature. The said case was followed by me in C.O. No,79 of 2002 vide order dated 14-1-2003. This Court while exercising the powers under sections 284 and 285 of the Companies Ordinance, 1984 has also the power, in the case of a company being wound up to sanction any compromise or arrangement. In the instant case the respondent/applicant company has paid all the creditors including the petitioner, who moved the winding up petition. The petitioner in the winding up petition does not want to pursue the winding up proceedings any more.

8. ' Under section 429 of the Ordinance, where the company has been dissolved, within two years of the date of dissolution, on an application being made by the Liquidator or by any other person who appears to the Court to be interested, make an order, upon such terms as the Court thinks fit, declaring dissolution to have been void and thereupon such proceedings may be taken as might have been taken if the company had not been dissolved. It is thus, clear that even the order dissolving the company can be declared void within a period of two years of the date of the dissolution. There appears to be no reason why the winding up order cannot be revoked.

9. ' CIRC (Corporate and Industrial Restructuring Corporation) has been established by Corporate and Industrial Restructuring Corporation Ordinance, No,L of 2000 for the acquisition, restructuring, rehabilitation, management, disposition and realization of non-performing loans and other assets.

10. Under section 3 of the Non-Performing Assets and Rehabilitation of Industrial Undertakings (Legal Proceedings) Ordinance, No,LVIII of 2000 the provisions shall have effect, notwithstanding anything contained in any other law for the time being in force. Under section 4 of the same Ordinance this Court has the exclusive jurisdiction to adjudicate and decide all claims, legal proceedings, cases for recovery of nonperforming assets, outstanding amount against obligor and matters relating to or arising or in connection with the CIRC Ordinance. The Preamble of the Ordinance, LVIII of 2000 shows that the object of the Ordinance is to make the non-performing assets attractive for profits and to promote national economy by making provisions for restructuring rehabilitation of the same. This Court is not powerless to take into account subsequent events. The compromise/ arrangement will revive the project. It will promote the national economy and create jobs. During the winding up, the company is not dead. It is alive for all practical purposes. The purpose of the aforementioned two Ordinances L and LVIII of 2000 is to promote the revitalization of nation's economy and Rehabilitation and Restructuring of Industrial Undertaking. In my view the objects of the two said Ordinances will be met if the winding up order is recalled. No prejudice will be caused to any of the creditors, contributories or any other person. In the similar circumstances in the case of Someswa ra Cements and Chemicals Ltd. v. Power Mak Industries and another (2000) 1 Comp. LJ 173 (AP) a Division Bench of the Andhra Pradesh High Court had set aside the order of the learned Single Judge.

3. In view of the above this application is allowed, the winding up order dated 29-9-1997 is recalled.

11. The CIRC is directed to hand over the possession of the assets of the Company to the applicant. It shall also release all the security documents to the Company and its Directors.