WELLCOME AGENCIES (PRIVATE) LIMITED COMPANY: IN RE Versus WELLCOME AGENCIES (PRIVATE) LIMITED COMPANY: IN RE A.A. Qadri and Sh. A. Aziz,Khalid M. Ishaque , Mansoorul Arifin

1. The respondents in the above noted petitions jointly raised a preliminary objection. It is contended by them that these petitions have abated as the time limit of 90 days from the date of institution of these petitions prescribed in section 9 of the Companies Ordinance (XLVII of 1984) 1984, for their final disposal has already expired and as such the Court is not competent now to pass any orders thereon (I will hereinafter refer this Ordinance as the Ordinance' only for the state of convenience.) As the question raised above is of general importance, besides hearing the learned counsel for the parties, I also heard Mr. Muhammad Ali Sayeed as an amicus curiae. The learned counsel for the petitioner as well the learned amicus contended that the provision of Section 9 of the Ordinance are only directory in nature and as such the Court continue to possess jurisdiction to decide these cases in spite of expiry of the period of 90 days prescribed under section 9 of the Ordinance for their final disposal from the date of institution of these petitions.

2. The learned counsel for the respondents jointly contended that the effect of promulgation of the Ordinance, which replaced the Old Companies Act of 1913 is to bring about a change in the existing state of law relating to companies. It is contended that the intention of the legislation to effect the change in the existing procedure and the law applicable to companies is sufficiently borne out from the preamble of the Ordinance and various other sections contained therein and specially Sections 9,312 and 314 thereof. It is pointed out that Section 9 of the Ordinance for the first time prescribed a time limit for disposal of all petitions and applications from the date of their presentation, filed under the Ordinance. It is contended that the employment and use of negative expression "not later than 90 days" in Section 9 of the Ordinance by the legislature positively indicates the intention of legislature that the provision with regard to limitation of time for disposal of such petition and application is to be treated as mandatory in effect and not merely directory as contended by the petitioners and the learned amicus curiae'. It is urged that in spite of making a clear provision with regard to maximum time limit for disposal of all petitions and applications filed under the Ordinance, the fact that the legislature while enacting Sections 312 and 314 of the Ordinance which deal with the procedure for disposal of 'winding up' petition of the Company under the Ordinance, once again referred to the manner of disposal and the power of Court to grant adjournment provided under Section 9 of the Ordinance, in the above Sections, leaves no manner of doubt that it was clearly the intention of the legislature to treat the provisions of Section 9 mandatory and not directory. It is also urged that keeping in view the preamble of the Ordinance which amongst other speaks of healthy growth of corporate enterprises, protection of investors and creditors, promotion of investment and development of economy as objects of consolidating and amending the law relating to corporate enterprises, through the Ordinance, it will be only appropriate to conclude that the time limit prescribed in Section 9 of the Ordinance for disposal of a winding‑up petition within a limited time is mandatory in nature as it cannot be disputed that pendency of a winding‑up petition against a company, which is undoubtedly a threat to very stance of the Company, for an indefinite period would offend against the objects of the law as declared in its preamble.

3. Learned counsel for the respondents in support of their contention that in these circumstances the provisions of Section 9 of the Ordinance shall be treated as mandatory, have relied on the cases of Col. (Rtd). Syed Mukhtar Hussain Shah v. Wasim Sajjad (PLD 1986 S.C. 178) Chairman District Council Jhelum v. Ali Akbar (1970 S.C.M.R. 105), Brendra Mohindas v. Aminuddin Malik (1970 S.C.M.R. 304). Government of Pakistan v. Syed Akhlaq Hussain (PLD 1965 S.C. 527). In addition to the above cited cases the learned counsel also referred to a passage from the book 'Craies on Statute Law' 7th Edition at page 271 and Article 269 from Crowford on Statutory Construction. In the first noted case of Mukhtar Hussain Shah the dispute before the Supreme Court related to the election to a seat of the Senate. The court while interpreting rules 17 and 22 of Senate (Election) Rules 1975, held as follows:‑

4. 'Two principles of interpretation of statutes get attracted to the controversy. The first such principle somewhat broadly expressed is that so far as election laws are concerned the requirements of law in so far as officers conducting the election are concerned are usually taken to be directory and so far as these requirements concern the voter they are usually taken to be mandatory. This principle actually follows from a more general principle expressed (Maxwell, Interpretation of Statutes, 11th Edition, Page 369) as follows:‑

5. "Where the prescription of a statute relates to the performance of a public duty and where the invalidation of the acts done in neglect of them would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty without promoting the essential aims of the Legislature, such prescriptions seem to be generally understood as mere instructions for the guidance and government of those on whom the duty is imposed, or in other words as directory only. The neglect of them may be penal indeed but it does not affect the validity of the act done in disregard of them.'

6. The principle was recognized in the case of the Election for Thornbury Division of Gloucester (1888) 2 TLR 489 by observing that "the general principle is that where the matter is one in which the voter has no control he is not to lose his vote on account of an omission by the officer".

7. In the case of M.V. Kamath Vs: Ahmad Ishaque and others (A.I.R. 1955 S.C. 233) the principle was expressed differently in the words "when the law prescribes that the intention (of the voter) should be expressed in a particular manner, it can be taken into account only if it is so expressed. An intention not duly expressed is, in a Court of Law, in the same position as an intention not expressed at all."

8. The other principle which deserves mention is that when an affirmative direction is followed by a negative or limiting provision the negative or limiting provisions makes the statute mandatory. The following exposition of the principles of law in corpus Juris Secundum is of relevance:‑

9. "It is a general rule that a statute which is negative or prohibitory, even though it provides no penalty for non compliance, or which contains peremptory and exclusive terms, shows a legislative intent to make the provision' mandatory, and it has been said that negative words in a grant of power are never construed as directory; but a provision framed in negative language has been construed as merely directory. On the other hand, while the use of affirmative words only is a circumstances to be considered in determining whether the statute is mandatory or directory, an intention that it shall be directory is not conclusively drawn from the absence of negative words, since affirmative words may and often do imply a negative of what is not affirmed. So, affirmative words, if absolute, explicit, and peremptory, showing that no discretion was intended to be given, render the statute mandatory. The rule that an affirmative statute, without any negative expressed or implied, is directory merely and leaves the common law in force has more special reference to statutes giving a new remedy. In the final analysis, the intention of the Legislature must control irrespective of the use of affirmative or negative words, where such intention can be otherwise ascertained."

10. The learned counsel for the respondents have relied on the quotation from Corpus Juris Secundum reproduce above in support of their contention that the time limit mentioned in Section 9 is mandatory and not directory.

11. In the case of Chairman, District Council Jhelum v. Ali Akbar, it was held by the Court that where a statute is repealed and re‑enacted and in the re‑enacted provision some change is brought out, the intention of the legislature is to be presumed to give effect to that change. In Brendra Mohindas v. Aminuddin Malik it was held that a action taken under a special statute must fulfil condition of the statute to gain validity. Similarly in the case of Government of Pakistan v. Akhlaq Hussain, it was found that where the words are clear and unambiguous, it would not be open to the Court to adopt any hypothetical construction. Article 269 of Crowford's book on Statutory Construction relied by the learned counsel for the respondent reads as under:‑

12. "269. Time for performance of official duties.‑As a general rule, a statute which specifies a time or the performance of an official duty will be construed as directory so far as the time for performance is concerned, especially where the statute fixes the time simply for convenience of orderly procedure.

13. But there are various exceptions for instance, the language may be such that the performance of the act within or at the specified time, is imperative. As a result, if the statute contains prohibitive or negative words relating to the time within which the act is to be performed, it will be considered mandatory. Furthermore, a statute may even make time the essence of the official act. In such a case, the requirement as to the time of performance is also mandatory. Moreover, the consequences of failing to perform the official act within or at the designated time may be considered, as indicative of the legislative intention even the nature of the act is entitled to consideration.

14. Furthermore, it may be asserted, as a general rule that where a statute imposes upon a public officer the duty of performing some act relating to the interests of the public and fixes a time for the doing of such act, the requirement as to time in to be regarded as directory, and not as a limitation of the exercise of the power, unless it contains negative words, denying the exercise of the power after the time named, or unless from the character of the act to be performed, the manner of its performance, or its effect upon public interests or private rights, it must be presumed that the legislature had in contemplation that the act had better not be performed at all than be performed at any other time than that named."

15. Mr. Mohammad Ali Sayeed, the learned amicus curiea urged that the provision of section 9 providing a time limit for final disposal of petitions and applications filed under the Ordinance is to be read as directory only aimed at to secure a expeditious and early disposal of the same. The learned amicus curiae further urged that there is no provision in the Ordinance which provided for the consequences of failure to decide the cases within the time‑ limit provided under section 9 ibid and in the absence of such a provisions the Court shall normally presume that the legislature did not intend to make such provision mandatory but only directory in nature. The learned counsel for the petitioner who supported the view of learned amicus area also contended that after filing of an application or a petition under the Ordinance the petitioner has no control over its further proceedings and adjudication which is to be taken or done by the Court according to its own convenience. It is accordingly urged that in such circumstances if the final decision on the application or petition so filed is not reached by the Court within the time limited by law, the party who has no control over the proceeding cannot be made to suffer for non‑observance of the time limit on the principle that no one should suffer for the act of Court. The learned amicus curiae and the learned counsel for the petitioner in support of their contentions relied on the cases of Hotel Metropole Karachi v . Employees Union (PLD 1964 SC 633), M/s. Amin Agencies Ltd. v. Pakistan (1973 SCMR 194), Niaz Mohammad Khan v. Mian Fazal Rakib (PLD 1974 SC 134), Sutlej Cotton Mills. v. Industrial Court (PLD 1966 S.C. 472), Kazi and Kazi v. 5th Labour Court (PLD 1976 Kar. 79), Pakistan v. Amin Agencies Ltd. (PLD 1962 Kar. 467), Muller and Phipps (Pakistan) Ltd. v. District Magistrate, Karachi and 4 others OLD 1974 Karachi 261), Chief Commissioner Karachi v. Jamil Ahmed (PLD 1961 S.C. 145) Pakistan Petrolieum Workers Federation, Karachi v. Burmah‑Shell (PLD 1961 S.C. 479) and Zain Noorani v. Secretary, National Assembly (PLD 1957 S.C. 46).

16. In Hotel Metropole's case the court was concerned with the interpretation of section 5 (4) of the Industrial Dispute Ordinance, 1959. The above section provided that a conciliation office under the Ordinance should try to bring about a settlement of dispute between the employer and the employees and if he failed to bring any settlement within 28 days he must issue a failure certificate. It was contended before the Supreme Court in the above case that a failure certificate under the above provision of law by conciliation officer could be issued upon close of 28 days and if such a failure certificate was not issued then there was no industrial dispute within the meaning of the Ordinance between the parties. The contention was repelled by the Supreme Court and it was held that the process of law cannot be defeated by applying the most restricted meaning to the provision for intermediate proceedings. Similarly in Cotton Mills Ltd.'s case (PLD 1966 S.C. 472), the Supreme Court once again while considering the scope of section 5 (4) of Industrial Dispute Ordinance held as follows: ‑

17. "This section does not itself provide the consequence of such failure on the part of the conciliation officer nor have the parties before the conciliation officer any control over his actions. In the circumstances, the direction in the statute as to the time within which the conciliation officer is to perform a public duty cannot be regarded as a mandatory provision. This principle is well settled, vide Maxwell on Interpretation of Statutes, page 364:

18. 'Where powers, rights or immunities are granted with a direction that certain regulations, formalities or conditions shall be complied with, it seems neither unjust nor inconvenient to exact a rigorous observance to them as essential to the acquisition of the right or authority conferred, and it is therefore probable that such was the intention of the Legislature. But when a public duty is imposed and the statute requires that it shall be performed in a certain manner, or within a certain time, or under other specified conditions, such prescriptions, may well be regarded as intended to be directory only in cases when injustice or inconvenience to others who have no control over those exercising the duty would result if such requirements were essential and imperative. '

19. In the case of Hotel Metropole Ltd. v. Employees Union (PLD 1964 S.C. 633) also this Court has already indicated that the failure certificate may be issued at any time after the close of the period mentioned in subsection (4) of section 5 of the Ordinance".

20. In the case of M/s. Amin Agencies Ltd. v. Pakistan (1973 S.C.M.R. 194) which arose from the decision in the case of Pakistan v. Amin Agencies Ltd. (PLD 1962 Karachi page 467),the Karachi Bench of the then High Court of West Pakistan, while considering the validity of a contract under section 175 (3) of Government of India Act and disagreeing with the view of Supreme Court of India in this regard observed as follows:‑

21. "The Court came to the conclusion that such contracts, though not void, could not be enforced against the Union or the State, because they were not in proper form. With all due respect to their Lordships, we are unable to agree with the views expressed by them, because in somewhat similar circumstances, in a number of cases, it has been held by this Court that the provisions of section 175 (3) or similar provisions which require that a certain instrument, on document, should be in a particular form, or in the name of a particular person are not of a mandatory nature and their non‑compliance does not render the document, or instrument void."

22. In the appellate judgment of Supreme Court in the same case the objection regarding validity of the above contract under section 175 (3) of the Government of India Act 'was dealt with by the Supreme Court as follows at page 201 of the report:‑

23. "We have heard Mr. Shah Jamil Alam in support of the appeal. After being taken by him through a number of the judgment which have received examination in the judgments of the Court below, we were left with the feeling that the decisions which support his view, viz, that unless a contract made by or with the Central Government during the period when the Government of India Act, 1935 was in force, was made in writing, was expressed to be made in the name of the Governor‑General, and was executed in the name of the Governor‑General there would be no contract in law to which the Courts could give effect, do not take sufficiently into account the important fact that section 175, subsection (3) being in affirmative terms, it cannot be allowed the same destructive effect in respect of agreements not made in total compliance therewith as could be claimed had it been expressed in the negative. Requirements in relation to legal actions which are set out in the affirmative are ordinarily to be regarded as directory. Particularly in a case where the basic requirements of the law of contract are satisfied in relation to offer and acceptance, and where performance is shown to have been attempted and a plea has been made on factual grounds to be excused from such performance, the fundamentals of justice in such matters are apt to be thrown over board, if the conclusion is reached that, for non‑fulfilment of a legal requirement, expressed in affirmative terms, there was no contract at all."

24. In Niaz Mohammad's case (PLD 1972 S.C. 134) the provision of section 23 (4) of the N.‑W.F.P. pre‑emption Act of 1950 were held to be mandatory and as such furnishing of security by a plaintiff after expiry of the period fixed by the Court in the absence of an application for extention of time was held to be of no avail. In the above the Court while lying down a test for discovering whether a particular provision of law was mandatory or directory in nature held as follows:‑

25. "As a general rule however, a statute is understood to be directory when it contains matter merely of direction, but not when those directions are followed up by an express provision that, in default of following them, the facts shall be null and void. To put it differently, if the act is directory, its disobedience does not entail any invalidity; if the act is mandatory disobedience entails serious legal consequences amounting to the invalidity of the act done in disobedience to the provision."

26. In Kazi and Kazi v. 5th Labour Court the provision regarding decision of a case within 7 days provided in section 25‑A of the IRO, 69 were construed as only directory. In the case of Muller & Phipps (Pakistan) Ltd. Karachi v. District Magistrate, Karachi and 4 others (PLD 1974 Karachi 261) it was held that Martial Law Order 52 Zone B of 1972 which required the Arbitrator to announce the award within 7 days after holding enquiry was only directory in nature. While repelling the argument of the learned counsel for the petitioners in the above case with regard to validity of award which was announced after 7 days period mentioned in paragraph 7 (1) of the said order the following observations were made by the Court:‑

27. "The learned counsel in both the petitions impugned the respective awards on the ground that they were not made within seven days of the appearance of the petitioners before the arbitrator. In this connection they relied on para 7 (1) of the Order, which reads:‑

28. 'An arbitrator shall, after holding such inquiry as he deemed fit, make an award, in writing, and announce it within seven days of the appearance of the parties before him.'

29. According to the learned counsel, the object of this order was to make a provision for speedy disposal of certain labour disputes, and in this context, the provision as to time should be strictly construed. Therefore, the violation of the period, within which the awards were to be announced, would make them invalid. While prescribing the time limit, no consequence is provided for not complying with it. Therefore, in spite of the use of the word 'shall' the direction as to the time, within which the public official has to perform his duty according to it, should be construed as directory. If authority is needed, it will be found in the judgment of the Supreme Court in Chief Commissioner, Karachi v. Jamil Ahmad (PLD 1961 S.C. 145) and Sutlej Cotton Mills Ltd., Okara v. Industrial Court West Pakistan, Lahore (PLD 1966 S.C. 472). Again the Supreme Court in Pakistan Petroleum Workers' Federation, Karachi v. Burmah Shell Oil Storage and Distributing Co. of Pakistan Limited and others (PLD 1961 S.C. 479) while construing section 15 (1) of the Industrial Disputes Act XIV of 1947, which prescribed time limit in relation to an award which was made after three months, held that the consideration of time will not operate to take away the jurisdiction, which is intended for the purpose of securing expedition of the adjudication. The instant cases are on different footing as the emphasis on time is on a successful conclusion of the inquiry having regard to the object underlying the promulgation of the Order. The case of Saleemsons Ltd. v. The Second Sind Labour Court (PLD 1973 Karl) is distinguishable as in that case a Division Bench of this Court held that the word 'shall' in Standing Order 18 of the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 is mandatory according to the accepted principle of interpretation as that provision creates new rights and obligation and prescribes the mode of its enjoyment or enforcement. Such is not the case here as para 7 (1) concerns the performance of duty by a public officer which is construed on a different footing as afore-stated. Since this objection does not affect the jurisdiction of the arbitrator to make the award, no exception can be taken to it, for Article 281 (2) of the Interim Constitution gives protection to it. Again Article 269 (2) of the present Constitution, which repealed the Interim Constitution, gives to it a blanket protection to an extent that the Court cannot enquire into the legality of the non‑observance of the direction relative to them".

30. In the case of Chief Commissioner v. Jamil Ahmad an omission to mention the date of general election in the notification issued under Section 280 (1) of City of Karachi Municipal Act, was held as only an irregularity which did not affect the validity of election on ground that the provision were directory in nature.

31. In Pakistan Petroleum Workers' Federation Karachi v. Burmah Shell Oil Storage and Distributing Co. of Pakistan Limited and others (PLD 1961 S.C. 479) the period of three months mentioned in Section 15 of Industrial Dispute Act 1947 for making of an award by the tribunal was construed as directory. It was found that the provision was meant to secure a expeditious resolution of dispute and did not affect the jurisdiction of tribunal to make the award after expiry of the time limit. In Zain Noorani v. Secretary National Assembly (PLD 1957 S.C. 46) Article 141 of the 1956 Constitution of Pakistan which fixed time limit for filling in a casual vacancy in the National Assembly was held to be only directory in nature intended to secure prompt holding of bye election.

32. On a review of above discussion and the case‑law cited at the bar, it follows that mere use of negative or affirmative words in a statute which prescribed performance of a public duty within a specified time, is not decisive to hold the provision as 'directory' or 'mandatory'

33. The key to interpretation of such a provision of law lies in discovering the real intention of legislature in this regard. A well settled rule of interpretation consistently followed by the Courts in this behalf is that where a statute prescribed performance of a public duty within a specified time such direction in the statute is generally understood as directory in nature is the consequence of non‑observance of the prescription are not provided in the statute. However, where the statute besides, prescribing the manner of performance of public duty also provides the consequences of non‑observance of the prescription and the consequences so provided are such that it would amount to denial of the exercise of the power by the public officer after the prescribed time limit, then such provision will be treated as mandatory in character. The above stated rule of interpretation is based on a more general principle that where prescription in a statute relate to performance of public duty and invalidation of the act done in disregard to such prescription would work to great injustice and hardships to persons who have no control over those entrusted with the performance of such public duty, the direction in the statute is to be treated as only directory. In many view the above stated principles of interpretation are fully attracted in the present case. No doubt Section 9 is couched in a mandatory language and it also used negative words to prescribe the maximum time limit of 90 days for disposal of a winding up petition but as pointed out earlier these factors alone are not decisive to held the provision as 'mandatory'. It is not disputed that neither in Section 9 nor elsewhere in the Ordinance, any consequence is provided for non‑observance of the prescribed time limit. It also cannot be disputed that the prescription with regard to time in Section 9 of the Ordinance is directed to the Court which hears the petition and over which the petitioner possesses no control in so far the conduct of the petition after its presentation is concerned. It is therefore, quite obvious that the intention of the legislature in prescribing 90 days period for disposal of all petitions and applications filed under the Ordinance was meant, only to secure a expeditious and early disposal of proceeding but it certainly did not affect the jurisdiction of Court in the event to non‑observance of the prescribed time limit. The legislature are presumed to be aware of the existing rules of interpretation of such provision and if they still intended to make the observance of time limit prescribed in Section 9 mandatory they could have provided so in the Ordinance.

34. The above interpretation of section 9 by me fully harmonizes with the objects of legislature as stated in the preamble of the Ordinance. If this interpretation is not followed and the contention of learned counsel for the respondents is accepted and it is held that the provision of section 9 are mandatory then no order for winding up of a Company howsoever, defunct and commercially enviable it may, could be made in the event of failure of the Court to pass a final order within the prescribed time limit. Such a result could not promote healthy growth of corporate enterprise, protection of investors and creditors, promotion of investment and development of economy which are the declared objectives of the Ordinance. I therefore, hold that the time limit of 90 days prescribed in Section 9 of the Ordinance for final disposal of all applications and petitions filed under the Ordinance is only directory and intended to provide for an early and expeditious disposal of these proceedings but it did not affect the jurisdiction of the Court to pass a final order in the above cases on account of expiry of the period of 90 days from the date of their presentation. I accordingly overrule the preliminary objection raised by the respondents. The office is directed to fix these cases according to roster for further proceedings.

35. A . A . / M‑300 / K Prliminary objection overruled.