Full Judgment Text & Judicial Ruling

2026 C L D 533 [Lahore] Before Shahid Karim, J Mian WAQAR UD DIN ---Petitioner Versus UNITED INDUSTRIES LIMITED through Chief Executive Officer and others ---Respondents C.O. No. 6859 of 2025, decided on 24th December, 2025. (a) Companies Act (XIX of 2017)--- ----Ss.131, 132, 134(2), 136, 286, 287, 288, 290, 397, 398, 399 & 400---Financial statements of company for past years---Approval in EGM, challenge to---Company failing to hold AGMs for preceding financial years---Such conduct constituting oppression, allegation of---Subsequent convening of EGM to approve audited financial statements of past years---Legality---Statutory lapse and its legal consequence---Moot point---Whether, upon expiry of statutory period for holding AGM, the company is legally competent to transact AGM business through an EGM---Appointment of auditors for subsequent years through EGM---Permissibility---Non-holding of AGM attracting regulatory consequences but not rendering subsequent EGM proceedings void---Briefly, the petitioner was a minority shareholder holding approximately 22.5% shares in the respondent company who invoked the jurisdiction of the High Court under the Companies Act, 2017, complaining of prolonged non-holding of Annual General Meetings (AGMs), non-approval and filing of financial statements for multiple past years, and subsequent steps taken by the board of directors to approve audited accounts for earlier periods and to appoint auditors for later periods through an Extraordinary General Meeting---The petitioner participated in and voted at the said EGM, where resolutions were passed by majority---The core issue before the High Court was whether, in the absence of timely AGMs, the company could lawfully transact the business of approval of past financial statements and appointment of auditors through an EOGM, and whether such acts amounted to unlawful conduct or oppression of minority shareholders requiring interference under the Companies Act, 2017? ---Held: Subsequent auditors were to be appointed by the company in the annual general meeting on the recommendation of the board---In the present case, it had been done in an extraordinary general meeting for which a special resolution was required to be passed in terms of S.2(66) of the Act---Doubtless, the necessary majority for a special resolution was conspicuously missing in the present case for appointment of auditors---Only course open to the company was for convening an extraordinary general meeting which had duly been done yet the foremost requirement of special resolution had not been fulfilled---Members of the company could in any EGM consider the financial statements of previous financial years as well as the reports of the Board and auditors---This was precisely what was considered and approved by the members of respondent company in the EGM under challenge in the present petition---Law provided for the transaction of a business in an EGM which could have been transacted in an AGM but was not so done at the relevant time---If such transaction through an EGM was disallowed then this would have given carte blanche to the directors to simply evade their duty to place the financial statements before the members of the company by deliberately failing to hold an AGM---This could not be the intention of the legislature under the law---As regards the plea of oppression taken in the petition, same did not make out an actionable claim---Since the petitioner did not challenge the proceedings of the general meeting within time (thirty days), he could not bring the present petition alleging oppression of the minority shareholders---Instead of bringing a separate petition to challenge the EGM (of 23.5.2024), the petitioner ought to have added this as a ground to C.O.24829/2023 (whereby challenge to the election of Board held on 01.02.2023 in an EOGM was made) to seek winding up of respondent company---On this basis too, the instant petition was an abuse of the process of the court---Though no case for oppression was made out, in order to streamline the future affairs of the respondent company, it was directed that (i) the audited accounts were to be completed expeditiously and placed before a general meeting for consideration soon thereafter; ii) The AGM for the upcoming financial year to be held on time and according to law; iii) The petitioner and other shareholders were to have access to financial statements, directors reports, audited reports etc. as and when same were prepared and presented---Holding of EGM of 23.5.2024 and other factors mentioned in the petition did not give rise to unlawful and fraudulent acts by the respondents Nos. 2-6 to constitute oppression---The petition to that extent was dismissed, in circumstances. (b) Companies Act (XIX of 2017)--- ----S.223---Financial statements---Statutory duty of Board to lay the same before the company in general meeting---Time-frame---Scope and obligation---Board of every company has to lay before the company in AGM its financial statements for the period since the preceding financial statements made up to the date of close of financial year adopted by the company---The financial statements must be laid within a period of one hundred and twenty days following the close of financial year of a company. (c) Companies Act (XIX of 2017)--- ----Ss.2(66) & 204(8)---Breach of duty, default or negligence by a director, ratification of---Procedure---Special resolution, holding of---Requirement---Any breach of duty, default or negligence by a director in contravention of the articles of the company or any of its policy may be ratified by the company through a special resolution and the Commission may impose any restriction as may be specified---The requirements of special resolution have been spelt out in S.2(66)---A special resolution can only be passed by a majority of not less than three-fourths of such members of the company entitled to vote as are present in person or by proxy at a general meeting---The connotation is that past acts of default of a director may be ratified by a company if it chooses to do so and by a special resolution only. (d) Companies Act (XIX of 2017)--- ----Ss.131 & 132---Statutory meeting---Mandatory compliance---Holding of Annual General Meeting (AGM), obligation of---Statutory timeframe---Failure to hold AGM---Consequences---Extraordinary General Meeting (EGM), resort to---Mechanism---Board s power to convene EGM---Scope---Every public company having a share capital is obligated to hold a general meeting of members of the company within a period of one hundred and eighty days from the date of which the company is entitled to commence business or within nine months from the date of its incorporation whichever is earlier---This shall be called a statutory meeting---Section 132 is about annual general meetings of a company and provides that every company shall hold an annual general meeting within sixteen months from the date of its incorporation and thereafter once in every calendar year within a period of one hundred and twenty days following the close of its financial year---Thus, by the tenor of S.132 every company is obliged under the law to hold an annual general meeting once in every calendar year within a period of one hundred and twenty days following the close of its financial year---Time for holding an AGM cannot be extended beyond a period of thirty days from the original one hundred and twenty days provided by law---That period has come to pass in respect of financial years till 2024---It was under these circumstances that the respondents resorted to calling of extraordinary general meeting as contemplated by S.133---A reading of S.133 indubitably leads to the conclusion that all meetings of the members of the company shall be referred as general meetings of a company---Further, all general meetings of a company other than the annual general meeting referred in S.132 and statutory meeting mentioned in S.131 shall be called extra ordinary general meetings for the precise reason that an EGM is held under special circumstances and by subsection (2) the Board may at any time call an extraordinary general meeting of the company to consider any matter which requires approval of the company in a general meeting---Doubtless, subsection (2) of S.133 confers power on the Board to call an EGM and any matter may be considered in an EGM which requires the approval of a company in a general meeting. (e) Companies Act (XIX of 2017)--- ----Ss.131, 132 & 134(2)---Financial statements---Reports of the board and auditors---Annual General Meeting, non-holding of---Effect---Holding of an Extraordinary General Meeting instead---Permissibility---In case an AGM is not held on time as provided by law for any reason whatsoever and no extension can be granted by the Commission, the only option left is for an EGM to be held for transaction of a business. (f) Companies Act (XIX of 2017)--- ----Ss.131, 132 & 204---Breach of duty by a director, ratification of---Mode of ratification---Special resolution, holding of---In case the company considers that a director is in breach of his duties in contravention of the articles of the company or any of its policy or decision of a board, it may proceed to convene an EGM for the purpose of ratification of the act of a director and for which a special resolution would be required---Thus, the company has firstly to form an opinion that any of its directors has committed a breach of duty or is in default of its policies or decision of the board and thereafter it may further decide to ratify that act by a special resolution---That opinion can only be formed by the Board of Directors of a company and none else. (g) Companies Act (XIX of 2017)--- ----Ss.131, 132 & 204---Company failing to hold an Annual General Meeting (AGM)---Whether directors of a company can be held liable for such failure---Power of company to ratify its own default---Scope---Failure to hold AGMs is the act of the company and not of an individual director, therefore, the default of the company will have to be ratified in contradistinction to the default of an individual director---Section 204 does not deal with such species of default---Any default by a company will be for the Securities and Exchange Commission of Pakistan (SECP) to determine and fix liability---The company itself cannot be conceived to have power to ratify its own defaults or breach of duty. (h) Companies Act (XIX of 2017)--- ----Ss.131, 132 & 286---Oppression and mismanagement, allegation of---Ratification of acts/omissions---Scope---There can conceivably be no oppression in respects of acts which, under the law, can be ratified. (i) Companies Act (XIX of 2017)--- ----Ss.136 & 286---General meeting proceedings---Court s power to invalidate---Limitation---Failure to challenge within time, effect of---Subsequent oppression petition---Maintainability---Court is empowered to declare the proceedings of a general meeting including an EGM, invalid---This would require a petition by members having not less than 10% of the voting power in the company and may be declared invalid by reason of a material defect or omission in the notice or irregularity in the proceedings of the meeting---Therefore, the law itself provides an alternate remedy to the members having not less than 10% of the voting power---Petition shall be made within thirty days of the impugned meeting---If a minority shareholder does not file the petition within time he cannot allege oppression of the minority shareholders. Samar Masood Soofi, Ahmad Raza Mirza and Salman Hanif Rajput for Petitioner. Adil Umar Bandial, Sajjad Ali and Taimoor Sultan for Respondents. Sikandar Bashir Mohmand for Respondents Nos. 2 to 6. Ruman Bilal for SECP. Dates of hearing: 2nd and 3rd December, 2025. JUDGMENT SHAHID KARIM, J.---This petition under Sections 286, 287, 288, 290, 397, 398, 399 and 400 of the Companies Act, 2017 ( the Act ) raises a raft of issues. The prayer clause seeks a declaration from this Court that the respondents Nos. 2 to 6 have acted in an unlawful and fraudulent manner and in a manner oppressive to its members. That a further declaration be issued that these respondents are guilty of misfeasance and breach of trust, in that, the affairs of the company have been conducted in a fraudulent manner. These prayers are based on the grounds stated in the petition which, in the estimation of the petitioner, should constrain and compel this Court to make the requested declarations. Overview/ Background: 2. The background facts as narrated in the petition state that: 2. The Petitioner owns and controls 1,239,445 shares share in United Industries Limited ("Respondent No. 1" or "Company"), representing 22.54% of its total paid-up share capital as of the date of this Petition. The Petitioner is neither a director of Respondent No. 1 nor part of its management. 3. The Petitioner is currently involved in separate litigation with Respondents Nos. 1, 2, 3, 4, 5, and 6, however, those proceedings are entirely distinct from the subject matter of this Petition. This Petition has been filed to address the management's conduct in the Company, which has been carried out in a manner oppressive to the minority shareholders, including the Petitioner, and has adversely impacted their rights and interests. The management has failed to maintain transparency in its operations, leaving minority shareholders without access to critical and accurate information about the Company's affairs. This lack of transparency raises serious concerns regarding the decision-making processes and governance within Respondent No. 1. The Petitioner, therefore, seeks the intervention of this Honorable Court to address these issues, ensure the protection of minority shareholders' rights, and restore transparency and accountability in the management of Respondent No. 1. 4. Under the provisions of the Act, the Petitioner, as a minority shareholder, is vested with statutory 4. rights designed to protect him from the unlawful and oppressive actions of the Company's management and directors. In exercise of these rights, the Petitioner has made repeated and formal requests under specific provisions of the Act, including Sections 152, 198, 199(5), 209, and 235, seeking necessary information and intervention to address his concerns regarding the Company's governance. Furthermore, the Petitioner, in accordance with Section 238 of the Act, has approached Respondent No. 7 to seek appropriate action and relief as mandated under the law. However, despite the explicit provisions of the Act and the Petitioner's rightful and repeated attempts to invoke these protections, the Respondents have failed to take any action or provide any response to the matters raised. 5. Some of the specific violations committed by Respondents Nos. 2 to 6, constituting acts of mismanagement, oppressive conduct, and fraudulent practices, which are unlawful under the provisions of the Act, are as follows:

No Annual General Meeting for the years 2023 and 2024 has been held.

Failure to submit annual returns under Section 130 of the Act.

Failure to allow inspection of any records of resolutions and meetings under Section 152 of the Act.

Failure to allow inspection of any register of directors, officers etc. under Section 197 of the Act.

Failure to allow inspection of any records of investments in associated undertakings under Section 199 of the Act.

Violation of Section 220 of the Act.

The Petitioner has not been provided any financial statements for the years 2014-2024.

The Respondents Nos. 2-6 as directors of the Company have not prepared and furnished the director s reports for the years 2022 till 2025.

Breach of the Articles of Association.

Lack of approvals from shareholders for the filing of Financial Statements.

The Petitioner's inability to access financial information, registers, resolutions, and participate in the AGM has led to a severe lack of transparency, significantly hindering his ability to make informed decisions regarding the company's affairs. To address this critical issue, the Petitioner seeks appropriate remedies to ensure strict compliance with the Articles of Association, the timely preparation and distribution of financial statements, and the proper holding of AGMs as mandated by law. The Petitioner respectfully requests the indulgence of this Honorable Court to exercise its powers under Section 286 of the Act on the following grounds of unlawful and fraudulent conduct, breach of the legal obligations which are indicative of an oppressive) management being undertaken by the Respondents Nos. 2-6: The nub of the case: 3. The case of the petitioner is divided into two periods and primarily revolves around the act of Board of Directors in seeking approval of the audited accounts of the company for the period from 2006 to 2015 and for the subsequent period of 2016 to 2023. The petitioner moved an application C.M No.1 of 2025 which seeks to restrain respondent No.7, Securities and Exchange Commission of Pakistan (SECP) from accepting any further statutory filings from respondent No.1 United Industries Limited (United) since no AGM/ EOGM was held to approve the appointment of auditors as per the requirements of law. It is further contended in C.M No.1 of 2025 that since respondents Nos. 2 to 6 are already conducting the affairs of the company in fraudulent manner, if these respondents were allowed to furnish the financial statements and annual accounts for the financial years 2016 to 2024 it will cause an irreparable harm to the petitioner in his trust as a minority shareholder. This application and other application too will be decided along with the main petition. 4. As explicated, the arguments of the petitioner s counsel in this Court centered on two periods for which audited accounts have been prepared by the auditors appointed by Board of Directors. By agenda item No.1 in the minutes of the meeting of Board of Directors held on April 17, 2024 (BOD meeting) it was resolved that: RESOLVED that, it is legally necessary and an in the best interest of the Company to urgently have all of its financial statements for the period from 30-06-2006 to 30-06-2023 audited and then placed for approval by majority of the Board of Directors as well as shareholders of the Company in their respective meetings and then also filed with the Securities and Exchange Commission of Pakistan. II. FURTHER RESOLVED that, upon careful review, subject to the caveat and decision of the Board as noted above in these minutes in paragraphs 3(x) and 3(xi) above on construction placed by contesting Appellants in ICA 10/2016 on certain audit qualifications in the report(s) of the Auditor submitted in C.O. 35/2006, the financial statements of the Company for the period 30-06-2006 to 30-06-2015 which have already been audited by the Auditor appointed pursuant to the consent order(s) of the Lahore High Court passed in C.O. 35/2006 and as said audited accounts have been submitted to the High Court, be and are hereby re-affirmed, re-approved and adopted unanimously by the Board of Directors and it is directed that the same be signed by Chief Executive Officer and Mr. Jahangir Muggo (Director) as per applicable law and submitted to the Auditor for endorsement on the Audit reports issued thereon and that, thereafter, the same be placed before the shareholders of the Company in an Extraordinary General Meeting duly convened for approval through an ordinary shareholders resolution. III. FURTHER RESOLVED that, Mr. Akbar Muggo (Chief Executive Officer) and Mr. Jahangir Muggo (Director) be and are hereby authorised and empowered to sign, subject to the caveat and decision of the Board in paragraphs 3(x) and 3(xi) above, the financial statements along with all other relevant documents of the Company for the period 30-06-2006 to 30-06-2015 which financial statements have already been audited by the Auditor appointed pursuant to the consent order(s) of the Lahore High Court passed in C.O. 35/2006 and as said audited accounts have been submitted to the High Court. IV. FURTHER RESOLVED that, Mr. Akbar Muggo, Chief Executive Officer or Mr. Babar Rashid, Director Finance and Company Secretary are directed, empowered and authorised to convene and issue notice, on behalf of the entire Board of Directors, for an Extraordinary General Meeting of the shareholders of the Company subsequent to endorsement of the relevant financial statements of the Company for the period 30-06-2006 to 30-06-2015 so as to seek approval and adoption of said audited financial statements through ordinary resolution of the shareholders. FURTHER RESOLVED that, the Company Secretary be and is hereby directed, authorized and empowered to do all acts, deeds and things to give full effect to resolution I, II, III and IV above. 5. The above resolution was preceded by narration of historical facts which contained a summary for deliberation of the Board and its resolution as encapsulated above. A reference was made to the orders passed by this Court in C.O No.35 of 2006 (C.O 35) in terms of the consent orders dated 27.06.2011 and 31.12.2014 whereby Chartered Accountant was appointed to ascertain share valuation of the company until the period ended 31.12.2014 starting from FY 2006 and to calculate profits till the date of final order of the Court in that petition. Since the financial statements of the company for the period 30.06.2006 to 30.06.2015 had already been audited by the auditor appointed pursuant to the orders of this Court in C.O 35, which audited accounts had been submitted to the High Court according to the resolution, these audited financial statements were placed before the members in the extraordinary general meeting of the company held on 23.05.2024 (EGM). Upon consideration of the matter, the agenda item No.1 was put to voting by poll. The minutes of EGM provided for its approval in the following manner: With a majority of 61.31% of total votes presented by all the members present in person or through proxy, the resolutions recorded in the opposite column were passed and approved and hence stood approved as a 'general resolution' under the Companies Act, 2017 binding the Company and all of its shareholders. It was for the avoidance of any doubt underscored by the shareholders approving the resolutions that the same was subject to the same caveats, qualifications and conditions as those recorded by the Board of Directors in paragraphs (x) and (xi) of the minutes of its meeting of 17-4-2024 (quoted above). 6. It is clear that with a majority of 61.31% of total votes presented by all the members present in person or through proxy the resolution was passed and approved and hence stood approved as a general resolution under the Act binding the company and its shareholder. 7. As regards the above, it is contended by the learned counsel for the petitioner that the provisions of section 223 of the 2017 Act have been breached in the approval of resolution above. Section 223 provides that: 223. Financial Statements. (1) The board of every company must lay before the company in annual general meeting its financial statements for the period, in the case of first such statements since the incorporation of the company and in any other case since the preceding financial statements, made up to the date of close of financial year adopted by the company. (2) The financial statements must be laid within a period of one hundred and twenty days following the close of financial year of a company: Provided that, in the case of a listed company the Commission, and in any other case the registrar, may, for any special reason, extend the period for a term not exceeding thirty days. (3) Subject to the provision of subsection (2), the first financial statement must be laid at some date not later than sixteen months after the date of incorporation of the company and subsequently once at least in every calendar year. (4) The period to which the statements aforesaid relate, not being the first, shall not exceed one year except where special permission of the registrar has been obtained. (5) The financial statement shall be audited by the auditor of the company, in the manner hereinafter provided, and the auditor s report shall be attached thereto: Provided that nothing in this sub-section shall apply to a private company having the paid up capital not exceeding one million rupees or such higher amount of paid up capital as may be notified by the Commission. (6) Every company shall send in the form and manner specified audited financial statements together with the auditors report, directors report and in the case of a listed company the chairman s review report to every member of the company and every person who is entitled to receive notice of general meeting, either by post or electronically at least twenty-one days before the date of meeting at…

Read the unabridged text and precedent citation network on Al Wakeelo Legal Research Platform.

Related Legal Research & Directories

• Browse all judgments from Lahore High Court
• Search Pakistani statutes: Constitution of Pakistan 1973, PPC, CrPC, CPC & Family Laws
• Analyze this case with Al Wakeelo AI Legal Assistant