INVESTMENT CORPORATION OF PAKISTAN (I. C. P.) vs Messrs NOOR SILK MILLS

ORDER

' By this application under Order I, Rule 10, C.P.C., intervenor, United Bank Limited, seeks an order for impleadment as a party to the winding-up petition under section 305 read with section 309 of the Companies Ordinance, 1984 (hereinafter referred to as the Ordinance) for the reason that they have obtained a decree from this Court against the respondent mills in the sum of Rs,14,62,474.75.

2. The fact that the intervenor Bank is a decree-holder against the respondent mills per se is no ground to implead them as a party in the winding-up proceedings, as remedy by way of execution application is available to the intervenor and as stated at the Bar, an execution application was actually filed which has since been transferred to the Special Banking Court, Karachi, where it is fixed for hearing on 24-9-1996. Position of the intervenor, at best, is no better than that of a creditor, who are at liberty to seek their remedy without being joined as party to the present proceedings.

C.M.A. In the circumstances is dismissed.

Main Application.---By this petition, ICP, who granted a loan of Rs,10,00,000 to the respondent mills by an agreement, dated 6-8-1970, seeks an order for winding-up of the company on the grounds that it is unable to pay its debts, that in view of heavy financial liabilities, the substratum of the respondent mills seems to have disappeared and it has not completely accomplished its subjects, that it has violated the terms and conditions of loan agreement and trust deed and deliberately suppressed the material facts, that there is no likelihood of the assets and properties of the respondent mills being saved except by winding-up of the mills.

2. Respondent mills has filed a parawise detailed counter-affidavit to the petition admitting the agreement as well as trust-deed but opposing the winding-up proceedings on a number of grounds. According to the respondent notwithstanding serious adverse business conditions faced by the textile and silk industries for the last over 20 years they have been declared as a sick industrial unit by Federal as well as Provincial Government but they have struggled and carried on their business through this period with clean record. It is maintained that the shares of the mills are still on the list of the Karachi Stock Exchange enjoying goodwill and reputation, that the respondent mills has sufficient assets and liquidity to meet all just and lawful demands against them as would be reflected from their duly audited accounts and annual general reports for the years 1992, 1993 and 1994. The accounts of the mills are duly audited by a chartered accountants and auditors firm M/s. Muneef Ziauddin & Co. It is the grievance of the respondent that winding-up petition is mala fide, misconceived and intended to harass, humiliate and intimidate the mills. They have referred a letter issued by the petitioner corporation calling upon the respondent to confirm to their auditors M/s. A.F. Ferguson & Co. Chartered Accountants, the actual amount due and payable by the mills to the extent of Rs,12,92,968 as on 30-6-1994.

3. Main ground for winding-up advanced on behalf of the petitioner is that the respondents have not been able to pay the instalments of loan as undertaken in the loan agreement on the due dates and even failed to furnish annual reports to the petitioner. In paragraph 8 of the petition, the petitioner claimed that on account of agreement and trust-deed, respondent mills are liable to pay a sum of Rs,81,66,330 to the petitioner as on 30-9-1994 whereas according to the letter, Annexure "D" to the counter-affidavit addressed by ICP to the respondent mills outstanding amount against them as on 30-6-1994 was Rs,12,92,968 only. Authenticity of this document and correctness of the stand taken by the respondent mills in the counter-affidavit filed by their Managing Director has not been controverted by way of affidavit-rejoinder. It is thus, deemed to be admitted. It is difficult to understand as to how the liability amounting to Rs,12,92,968 as on 30-6-1994 could escalate to a sum of Rs,81,66,330. Be that as it may, notwithstanding the liability of the respondents to pay the amount outstanding against them on account of the loan agreement and the trust- deed, petitioner did not issue any notice calling upon the respondent mills to pay up the amount as shown in the petition.

4. From the trend of the counter-affidavit filed by the respondents as well as the arguments advanced at the Bar, it seems that textile and silk industries are passing through a financial and marketing crisis for the last about 10 years and the fact that there is a vast difference in the assets and liabilities of the mills as reflected in the annual reports for the year ending 31st December, 1994, it is neither just nor equitable to direct winding-up the mills who are trying their best to flourish and to make up the losses, if any. Simply because ICP have a huge claim against the respondent mills, in my view, it is not by itself a sufficient ground to direct winding-up of the affairs of the mills as remedy by way of a suit or a claim before the appropriate forum is always available to the petitioner corporation.

5. For the aforesaid facts and circumstances, I am not convinced with the grounds urged in support of this petition as it would neither be just nor fair and equitable to direct winding-up of the mills. The petition is accordingly dismissed.