ZAKIR LATIF ANSARI Versus PAKISTAN INDUSTRIAL PROMOTERS Ltd.

1. This petition under section 152 of the Companies Ordinance, 1984 is filed by the two shareholders of the company with the prayer that the respondent No. 1 by incorporating 1,45,210 shares therein allegedly held by them jointly. The petition is opposed by the respondents. It is contended on behalf of respondents that the allegations made by the petitioners regarding transfer of 94,210 shares belonging to respondent No. 2 in their favour 'is concocted and false as respondent No.2 neither agreed to the transfer of the shares in favour of petitioners nor he signed any transfer deed as alleged in the petition. With regard to issue of shares certificate in respect of these 94,210 shares in favour of petitioners by respondent No. 1, it is claimed that the alleged shares certificate dated 16th February, 1986 produced by the petitioners is a forged document as it was fraudulently filled in by the petitioners on one such blank certificate which was available in the Company. The respondents No. 2 and 3 also claimed that the original scripts of these 94,210 shares which the petitioners claimed were surrendered by respondent No. 2 in their favour, are still available with them. After hearing the learned counsel for the petitioners and the respondents at length I am of the view that serious dispute relating to the title of these 94,210 shares is raised in the present proceedings and quite complicated questions of law and facts need determination before rectification or otherwise of the shares register of the company could be ordered in these proceedings. A reading of the petition would show that the petitioners claim transfer of 94,210 shares belonging to respondent No. 2 in the company (respondent No. 1) in pursuance of a settlement arrived at between petitioner No. 1, respondent No. 3, A.W. Ansari and R.L. Ansari on 28‑9‑1985 by his settlement which in the minutes of a meeting held on 27‑9‑1985 by the abovenamed four persons is not disputed and is dated 28‑9‑1985 it is in the nature of a family settlement through which petitioner No. 1 and his two brothers, (respondent No. 3 and R.L. Ansari) alongwith their father A.W. Ansari, settled various disputes in relation to management and control of number of companies including respondent No. 1 in which they held shares. It is an admitted position that respondent No. 2 did not attend the above meeting dated 27‑9‑1985 in which it was allegedly agreed to transfer her 94,210 shares held in respondent No. 1, in favour of petitioners. It is also clear from the copy of the document dated 28‑9‑1985 which is produced at page 223 of the file that it makes no reference to the transfer of shares of respondent No. 3 held in the company (respondent No. 1). On the contrary this document shows that as a result of the settlement petitioner No. 1 relinquished his responsibilities towards respondent No. 1 and another company known as M.I.L. took over control of another company known as P.F.L. to the exclusion of other shareholders. Learned counsel for the respondents further urged that it is claimed by the petitioners that shares numbering 94,210 belonging to respondent No. 2 in the company (respondent No. 1) were allegedly readjusted/transferred in favour of the petitioners as a result of the agreement dated 28‑9‑1985, while the copy of alleged transfer deed filed by petitioners along with their rejoinder affidavit shows that it is dated 24th September, 1985, which means that the transfer was allegedly agreed by respondent No. 2 earlier to settlement dated 28‑9‑1985. It is further contended by the learned Counsel for the respondents jointly that although it is alleged that 94,210 shares of respondent No. 2 in the company were transferred as a result of arrangement dated 28‑9‑1985 but in a circular resolution of the company dated 1st October, 1985, which is signed by petitioner No. 1, respondent No. 2, who according to the contention of petitioners held no shares in the company on the above date, was appointed as a director of the company in the vacancy caused as a result of resignation of A.W. Ansari as a director and she has continued as such, thereafter, without being challenged by any member of the company. In addition to above, learned counsel for the respondents also contended that the distinctive numbers of shares held by respondent No. 2 in the company as shown in the transfer deed allegedly signed by her are totally different from those which are given in the shares certificate dated 16‑2‑1986 produced by petitioners and as such no nexus is established between the shares held by respondent No. 2 and those allegedly transferred to petitioners. Although all the above contentions of respondents are contraverted by the petitioners but it cannot be denied that in order to decide the petition one way or the other, evidence both oral and documentary has to be recorded in the case and quite complicated questions of facts and law would need determination in this regard. In this background the point which requires determination before me is whether these questions of law and facts which arise in this case be directed to seek decision thereon first in appropriate civil proceedings. The contention of the learned counsel for the petitioners is that after enforcement of the Companies Ordinance 1984, this Court is competent to decide all these questions in proceedings under section 152, and therefore, this Court should decide these questions itself instead of referring the parties to Civil Court. In support of his above contention the learned counsel for the petitioners referred to the cases of Shri Gulabrai Kalidas Naik and others. v. Shri Laxmidas Lallubhai Patel Boarda 1978 Vol. 48 Companies cases page 4387 and Mathew Michael and others. (1983 Companies cases Vol. 54 page 88) decided under section 155 of the Indian Companies Act which is analogous to section 152 of Companies Ordinance, 1984, which is similar to section 38 of Old Companies Act, 1913, provides a speedy and summary remedy for rectifications of Companies register in a case where facts are simple and title to the share is not disputed and, therefore, Courts both in India and Pakistan consistently took the view that where complicated questions of facts and law are raised in a petition under section 38 of the Companies Act, the parties should seek resolution of such disputes in appropriate civil proceedings. The learned counsel referred to the decisions in the cases of Mrs. Yasmin Lari v. Lahore Investment Ltd. P L D 1981 Lah. 90; Yousuf v. Valiks Textile Mills P L D 1964 West Pakistan Karachi 31: Khurshid Ahmed Khan v. Pak Cycle Manuf. Company Ltd. P L D 1987 Lah 1,Baghat Singh v. Payar Bus Service AIR 1959 Punb. 352 and M.K. Sugar Mills v. LK, Sugar Mills AIR 1965 Allahabad 135. The ratio decidendi laid down in the above cited cases seems to be that the jurisdiction of the Company Judge in proceedings for rectification of shares register of a limited company being in the nature of summary jurisdiction, it should be exercised only in cases which did not involve disputed and complicated questions of title between the parties. 1t is further laid down in these cases that where such disputed and complicated questions arise in rectification proceedings, the parties may be directed to seek decision on such disputed points in a Civil Court. The jurisdiction of this Court in relation to proceedings for rectification of shares register is now governed under section 152 of the Companies Ordinance, 1984, which reads as under:‑

2. "152. Power of Court t o rectify register‑(1) if (a) the name of any person fraudulently or without sufficient cause entered in or omitted from the register of members or register of debenture‑holders of a company; or

(b) default is made or unnecessary delay takes place in entering in the register of members or register of debenture‑holders the fact of the person having become or ceased to be a member or debenture‑holder:

3. The person aggrieved, or any member or debenture‑holder of the company, or the company, may apply to the Court for rectification of the register.

(2) The Court may either refuse the application or may order rectification of the register on payment by the company of any damages sustained by any party aggrieved, and may make such order as to costs as it in its discretion thinks fit.

(3) On any application under subsection (1) the Court may decide any question relating to the title of any person who is a party to the application to have his name entered in or omitted from the register, whether the question arises between members or debenture‑holders or alleged members or debenture‑holders, or between members or alleged members or debenture‑holders or alleged debenture‑holders on the one hand and the company on the other hand, and generally may decide any question which it is necessary or expedient to decide for rectification of the register.

(4) An appeal from a decision on an application under subsection (1), or on an issue raised in any such application and tried separately, shall lie on the grounds mentioned in section 100 of the Code of Civil Procedure, 1908 (Act V of 1908)‑

(a) if the decision is that of a Civil Court subordinate to High Court to the High Court, and

(b) if the decision is that of a Company Bench consisting of a Single Judge, to Bench consisting of two or more Judges of the High Court."

4. No doubt subsection (3) of section 1.52 of Companies Ordinance, 1984, 1 confers discretion on the Company Court to decide any question relating to the' title of any person who is party to the application to have his name entered or omitted from the register whether the question arises between members or debenture‑holders or alleged members or debenture‑holders or alleged debenture‑holders, on the one hand and the Company on the other hand, and also decide generally any other question which is necessary and expedient for decision of rectification of the register. There is however, a long line of decisions both pre‑partition and post‑partition wherein the Courts both in India and Pakistan consistently took the view that the proceedings for rectification of shares register is in the nature of a summary procedure, and therefore, such jurisdiction will be exercised by the Company Judge in a case where facts arc simple and undisputed and did not involve decision on intricate and disputed question of title E between the parties in which case parties may be left to settle their dispute in appropriate civil proceedings. Most of these decisions arc under section 38 of Old Companies Act, 1913 but it is not disputed that there is no marked difference, between section 38 of the old Companies Act, 1913, and the present section 152 of the Companies Ordinance, 1984. It is also significant that under the new Companies Ordinance, 1984, section 9 is introduced for the first time. No such provision either existed in the old Companies Act, 1913 or in the Indian or English law applicable in this regard. A careful examination of Section 9 of the Companies Ordinance 1984, will show that the intention of the legislature in introducing this new provision in the Ordinance is to provide a very expeditious and summary disposal of petition/application filed under the provisions of the Ordinance. This lends further support to the conclusion that intricate and complicated question of title between the parties could not appropriately be subject‑matter of decision in a petition under section 152 of the Companies Ordinance. The learned counsel for the petitioners lastly urged that in case I am not inclined to go into the questions raised in the present proceedings the case may be adjourned until such time the parties are able to obtain appropriate decision from the Civil Court as was done in the case of Manzoor Ahmed Bhatti v. Haji Neval Khan 1986 CLC 2560. This case was decided by me under section 38 of old Companies Act 1913 and while declining to go into the disputed question of fact raised in the case I had stayed the proceedings until such time the dispute between the parties was decided in a competent Civil Court. The learned counsel for respondent No. 3 however, contended that under section 152 of the Ordinance the Court can either reject the application or allow the same. It is also contended by the learned counsel that keeping alive the proceedings by adjourning the same to allow the parties to have a decision of Civil Court may be; deterimental to the working of the company and this may also be not compatible with the object of Companies Ordinance, 1984. 1 think the contention of the learned counsel for the respondent No. 3 appears to be correct as keeping of the proceedings for rectification alive while directing the parties to have recourse to a Civil Court to determine the question of title first may in certain cases produce deterimental result on the working of a company. I accordingly dismiss the petition under section 152 of the Companies Ordinance, 1984 but leave it open to the parties to approach appropriate Civil Court for determination of their respective rights in this regard as claimed by them. The dismissal of this petition will be no bar to the filing of another petition under section 152 of the Companies Act after decision of the dispute finally by the Civil Court. It is also clarified here that any observation made by me in this order on the merits of dispute between the parties is purely of a tentative nature and is intended only to point out the nature of dispute between the parties and as such the Court deciding these disputes will not be influenced by these observations in any manner. There will be no order as to costs in the circumstances of the case.

5. AA./2‑61/K

6. Petition dismissed.