Mehr Textile Mills Ltd. vs The Investment Corporation of Pakistan and others
This matter concerns an appeal against orders of the Lahore High Court regarding winding-up proceedings initiated against the petitioner-company. The core legal question was whether the petitioner-company was duly served with notices in accordance with the prescribed procedure, specifically whether service was attempted at the company's registered office address at Mandra Road, Chakwal, and whether publication in newspapers was sufficient given the lack of direct service. The Supreme Court found that the respondents failed to justify that proper service had been effected at the correct registered address. Emphasizing that courts should encourage decisions on merits rather than disposing of cases on technicalities, the Court held that the petitioner had been denied a proper opportunity to defend the winding-up proceedings, resulting in injustice. Consequently, the Court set aside the impugned orders and remanded the case to the Company Judge for a decision on the merits, subject to the payment of costs. The key principle laid down is that procedural requirements for service of notice must be strictly adhered to, particularly in winding-up proceedings, to ensure a fair opportunity to defend.
- Is service of notice by publication sufficient if the company was not served at its registered office address?
- Should courts prioritize decisions on the merits over technical dismissals in winding-up proceedings?
- Does failure to serve notice at the correct registered address constitute a denial of the opportunity to defend?
- Rule 76, Companies (Court) Rules 1997
ORDER
IFTIKHAR MUHAMMAD CHAUDHRY, J.--- Petition being No. 1371 of 1998 has been filed against the judgment dated 22nd September, 1998 passed by Lahore High Court, Rawalpindi Bench whereby Writ Petition No. 1835 of 1998 filed by petitioner-company has been dismissed. Whereas Civil Appeal No. 650 of 1997 has been filed against the judgment dated 5th May, 1997 passed by the Lahore High Court, Lahore whereby C.M. No. 1186-L/1997 filed by respondents has been dismissed.
2. We have heard the learned counsel appearing for parties at length. During course of arguments following points have arisen for consideration:-
(i) As to whether the appellant/petitioner was duly served with the notice, issued by the learned Company Judge and the publications were made in the Newspapers of the area where registered office of the petitioner-company is situated?
(ii) As to whether in ordinary procedure/method attempts were made to effect service upon the petitioner-company?
3. Learned counsel for respondents strenuously argued that appellants were duly served through publication in daily Dawn' and local Urdu Newspapers besides issuing direct notices to the company as per Rule 76 of the Companies (Court) Rules, 1997. We are not persuaded to accept his plea because it has not been justified by him with the support of documents available on record. It is also important to note that as per changed address of the registered office of the appellants notices were required to be sent to it at the company office situated at Mandra Road, Chakwal by ordinary post and, therefore, publication in Newspapers of the area where appellants run their business ordinarily. Admittedly no such notice was served upon the appellants its address of Chakwal. It may be noted that decisions of the cases on merits are always encouraged by the Courts instead of granting or refusing relief to the litigants on technical points. In our opinion in instant case injustice his been caused to appellants by not affording them proper opportunity to defend proceedings of winding-up against it.
4. In view of above observations learned counsel for the respondents Mr. Hamid Farooq Durrani instead of further stretching his arguments to support the impugned order agreed for accepting of appeal and setting aside the impugned orders operating against the appellants and remanding the case to the learned Company Judge of Lahore High Court for decision of Civil Original No. 121 of 1996 filed by respondents on merits subject to payment of costs.
5. Thus, in view of what has been stated above and also taking into consideration the concessional statement made by respondents' counsel we allow this appeal, as a consequence whereof impugned order dated 4th April, 1997 winding-up the appellant-company and orders dated 5th May, 1997 and order dated 22nd September, 1998 passed in Civil Miscellaneous No. 1186-L/1997 are set aside subject to payment of cost of Rs. 10,000/- by the appellant's company to respondents.
The case is remanded to learned Company Judge of Lahore High Court with direction to parties to appear before him on 22nd April, 2002 without issuance of fresh notice to them so the Company Judge may proceed with the matter and dispose it of expeditiously within statutory period of 90 days positively as the case is lingering on from 1995 onward. No order as to costs.