INTERNATIONAL MULTI LEASING CORPORATION and others vs CAPITAL ASSETS
This matter originated as a petition for leave to appeal before the Supreme Court of Pakistan, challenging a High Court judgment concerning a scheme of arrangement and merger of a non-banking finance company. The core legal controversy revolves around the interpretation of Section 282-L of the Companies Ordinance, 1984, specifically regarding the authority competent to sanction such mergers and the interplay between the Companies Ordinance, 1984, and subsequent ordinances of 2002. The Supreme Court, upon hearing counsel, granted leave to appeal, identifying several critical questions of law. These include whether the High Court correctly construed the statutory provisions governing mergers, the proper determination of share swap ratios beyond mere market value, and whether a court-sanctioned scheme approved by a statutory majority of shareholders remains immune from challenge if found unfair or non-transparent. The Court also sought to determine whether the High Court’s findings on the increase of paid-up capital were based on conjecture and whether the principle of caveat emptor applies in such corporate amalgamations. The petition was converted into an appeal for further adjudication.
- What is the significance of Section 282-L of the Companies Ordinance, 1984 regarding the merger of a non-banking finance company?
- Can a scheme of merger be sanctioned by the High Court under the Companies Ordinance, 1984, or does it fall under the jurisdiction of the Securities and Exchange Commission of Pakistan?
- Is the market value of shares the sole criterion for determining the swap ratio in a corporate merger, or must net asset value and profit earning capacity also be considered?
- Does a scheme of amalgamation approved by a statutory majority and sanctioned by the court attain absolute finality, or can it be challenged if found unfair or non-transparent?
- Section 282-L, Companies Ordinance 1984
- Part VIII-A, Companies Ordinance 1984
- Part IX, Companies Ordinance 1984
- Ordinance No. CXXII of 2002
- Ordinance No. CXIII of 2002
- Rule 60, Companies Court Rules
- Rule 61, Companies Court Rules
1. JAVED IQBAL, J.--- Heard Syed Sharifuddin Pirzada, learned Senior Advocate Supreme Court on behalf of petitioner, Khawaja Ahmad Tariq Rahim, learned Advocate Supreme Court for respondent No.1 and Mr. Ashtar Ausaf Ali, learned Advocate Supreme Court for respondent No.2, scanned the entire record with their eminent assistance and perused the judgment impugned with care and caution. We are inclined to grant leave, inter alia, on, the following points:--
(i) What is the import and significance of the provisions as enumerated in section 282-L of the Companies Ordinance, 1984 and what effect it would have on the scheme of arrangement/merger of a non-Banking A Finance Company?
(ii) Whether such a scheme of arrangement/merger could have been sanctioned by the learned High Court pursuant to the provisions as contained in section 282-L of the Companies Ordinance, 1984 read with Part VIII-A and Part IX of the Ordinance No.CXXII of 2002 or by the Security and Exchange Commission . Of Pakistan in view of the provisions as enumerated in the Ordinance No.CXIII of 2002?
(iii) Whether the provisions as contemplated in section 282-L of the Companies Ordinance, 1984 have been misconstrued and misinterpreted?
(iv) Whether the question of limitation has been dilated upon and decided correctly by the learned High Court and time for the purposes of limitation shall be commenced w.e.f. 4-3-2003 (date of merger order) or 12-6-2003 (when the merger order attained finality)?
(v) Whether the "market value of the shares" is the only criterion to determine "the scarp ratio" and other relevant factors such as "net asset value" and "profit earning capacity value" can be ignored?
(vi) Whether, the requisite statutory majority of shareholders of the amalgamating companies have unfettered and unbridled powers and the grievance of an aggrieved party cannot be redressed where the scheme of arrangement/merger is not fair and transparent.
(vii) Whether the provisions as envisaged in rules 60 and 61 of the Companies Court Rules have been adhered to strictly?
(viii) Whether the principle of "Caveat Emptor" can be pressed into service?
(ix) Whether the conclusion of learned High Court qua increase in paid up capital to the required minimum of Rs.200 million was based on conjectural presumptions?
(x) Whether the scheme of amalgamation duly approved by the statutory majority and sanctioned by the Court has attained finality and being a statutory instrument is immune from challenge in any manner whatsoever?
(xi) Whether the order, dated 4-3-2003 can be termed as "consent order" having not been secured by the two companies?
2. This petition is converted into appeal which may be fixed at some early date.