Dr. YASIN RIZVI Versus STATE BANK OF PAKISTAN
This order shall dispose of C.M. No. 406/L‑80 moved by Dr. Yasin Rizvi. The facts which led to the tiling of this civil misc. application are that in C.O. No. 45/79, for winding up of the Company by the name of Express Commercial Finance Limited, which is under hearing in this Court, the name of the applicant has been included in the list of the Directors and that of the shareholders appended therewith. The O.L. and the Joint O.L., after verification of the applicant's status as a shareholder and a Director, from the record of the Registrar, Joint Stock Companies, served him with notices requiring him to pay the value of the qualification shares, amounting to Rs. 50,000. The applicant thereupon moved the instant civil misc. application praying that as the inclusion of his name in the lists aforesaid, is false and incorrect, it may be ordered to be deleted. His case as disclosed in the civil misc. application and as argued by him A at the Bar is that Ehsan Ullah Khan Batalvi, who was at the helm of the affairs of the Company pursuaded him to accept the assignment of Managing Director on 2‑10‑1979 but on the next day he resigned. During these 24 hours he neither attended any meeting of the Board of Directors nor performed the duties of the Managing Director nor received any benefit from the Company. It was categorically asserted that the applicant did not acquire any share, lie was never appointed as Director and the return submitted to the office of the Registrar, Joint Stock Companies on behalf of the Company, showing him as Co‑opted Director w.e.f. 26‑9‑1979 and Managing Director w.e.f. 29‑9‑1979 is patently false.
2. In order to evaluate the submissions of the applicant, I have examined the record produced by the Assistant Registrar Joint Stock Companies, heard the O.L., Kh. Muhammad Akram counsel for Ehsan Ullah Khan, the counsel for the State Bank and Manzoor Ahmad Bhatti ex‑Director who filed the C.O.
3. The record reveals that on 7‑10‑1979, the latter sent Form XII to the Registrar alongwith a covering letter. In both these documents, the applicant was shown as Co‑opted Director w.e.f. 26‑9‑1979 and Managing Director w.e.f. 29‑9‑1979. These documents further disclose that the former Managing Director namely, Mian Hameed Ahmad resigned on 29‑9‑1979. As per these documents he was replaced by the applicant. There is, however, another Form XII dated 26‑9‑1979 on the record of the Registrar, which does not make mention of the applicant's name. If w.e.f. 26‑9‑1979, he was really appointed as Co‑opted Director, normally his name should have figured in Form XII aforesaid. This omission is not without significance. The Form dated 26‑9‑1979 further demonstrates that w.e.f. 26‑9‑1979, Ehsan Ullah Khan was appointed as Co‑opted Managing Director vice Mian Hameed Ahmad who resigned on the same day. Thus, in case, on 29‑9‑1979 the applicant was actually appointed as Managing Director, he should have replaced Ehsan Ullah Khan and not Mian Hameed Ahmad, but according to the Form dated 7th October 1979 the resignation was submitted by the latter and not by Ehsan Ullah Khan, who as stated above, w.e.f. 26‑9‑1979 had been acting as Co‑opted Managing Director. The entries in the Form dated 26‑9‑1979 cast serious doubt on the veracity of the contents of Form dated 7‑10‑1979, qua the applicant, on the basis whereof he is sought to be saddled with the liability. Kh. Muhammad Akram as well as Manzoor Ahmad Bhatti could not offer any plausible explanation in respect of these marked contradictions, obtaining in Forms X11 furnished to the Registrar by the defunct Company.
4. It is contended by the applicant that the Head Office of the Company was sealed by the Crime Branch Police on 6‑10‑1979 and, therefore, on 7‑10‑1979 Manzoor Ahmad Bhatti was not possessed of any record for filing the letter and the Form XII both dated 7‑10‑1979, in the Office of the Registrar. The sealing of the Company's office by the police is affirmed by the Official Liquidator. Even Manzoor Ahmad Bhatti does not deny it. In reply to a question put to him by the Court as to what was the material for inclusion of the applicant's name in Form XII he stated that it was prepared on the strength of the information conveyed to him by the Secretary of the defunct‑Company. In this state of affairs hardly any reliance can be placed on the entries in such a Form. The applicant categorically asserts that no resolution regarding his appointment as Director was passed and his name was never entered in the register of the share‑holders, as he did not acquire any share. There is nothing on the record to controvert this assertion.
5. Article 86 of the Articles of the Association of the Company, prescribes the qualification of a Director. It ordains that a Director must hold 500 ordinary shares in his own name or hold such shares beneficially, unless determined otherwise by a general meeting. My attention has also been drawn to Article 87 to contend that a person could act as Director without holding a share qualification, provided he acquired the same, within two months of the first allotment made by the Company. As a matter of fact this Article coincides with the provisions of Section 85 of the Companies Act, 1913. Article 87 was relied upon, for canvassing that for the short duration the applicant remained as Director, he could validly act as such, even without attaining the requisite qualification.
6. On the facts obtaining in this case, I am not persuaded by this argument. The crucial point is that of the applicant's appointment as Director. The conflicting entries in the Forms XII do not lend support to the management's claim as to the applicant's being Director of the Company. There is no other material to substantiate such a contention. Even the applicant's affidavit has remained uncontroverted. The applicant admits to have held the office of Managing Director for one day only. According to him, as already observed, it was on the persuasion of Ehsan Ullah Khan that he had agreed to accept this assignment, which carried a salary of Rs. 3,500 per month besides some other fringe benefits, but on learning that the Company. had lost the confidence of the creditors and earned ill repute, he tendered his resignation just after one day.
7. It remains to be seen as to how the appointment of the Managing Director was to be made. Article 4 which deals with such appointment lays down:
"The company may appoint a Chief Executive Officer for carrying on the affairs of the company. He may be styled as Managing Director as well and shall hold this office at the pleasure of the Board of Directors."
Obviously, the applicant's appointment as Managing Director was to be made under a resolution. The Minutes Book is, however, not forthcoming. I have already dilated upon the entries in Forms XII, which depict replacement of Mian Hameed Ahmad the former Managing Director by Ehsan Ullah Khan and from this office the resignation of the latter is not demonstrated by the record. I, am therefore, inclined to hold that the applicant's appointment as a Managing Director was not a valid appointment envisaged by the Articles of the Company.
8. For the foregoing reasons this civil misc. application is allowed and it is directed that the name of the applicant shall be deleted from the list of shareholders/Directors of the company, forming part of the record of C.O. 45/79 and the connected C.O. 22/80 filed by the State Bank of Pakistan.
M.I./3203/L
Application accepted.