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Official Citation: 2025 SHC 1734
Court / Jurisdiction: Sindh High Court
Petitioner: Judicial Companies Misc. 12/2025 (S.B.) Sindh High Court, Karachi - Muhammad Ziaullah Khan Chishti (Applicant)
Ruling Summary: This decision was rendered by the Sindh High Court, officially reported as 2025 SHC 1734. In this matter between Judicial Companies Misc. 12/2025 (S.B.) Sindh High Court, Karachi - Muhammad Ziaullah Khan Chishti (Applicant) and the Respondent, the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.
Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.
COURT: Sindh High Court CASE NO: Judicial Companies Misc. 12/2025 (S.B.) Sindh High Court, Karachi CITATION: 2025 SHC KHI 1734 PARTIES: Muhammad Ziaullah Khan Chishti (Applicant) ORDER DATE: 20-JUN-25 BENCH: Hon'ble Mr. Justice Adnan Iqbal Chaudhry(Author) A.F.R: Yes ------------------------------------------------------------ Page 1
THE HIGH COURT OF SINDH, KARACHI [COMPANY BENCH]
J.C.M. No. 12 of 2025 In the matter of the Companies Act, 2017 And of TRG Pakistan Limited
Petitioner : Muhammad Ziaullah Khan Chishti son of Attaullah Khan Chishti through M/s. Barrister Sarfaraz Ali Metlo, Barrister Fayaz Ali Metlo, Athar Hussain, Advocates along with Ms. Adeela Ansari and Ati ya Manzoor, Advocates.
Respondent No.1 : TRG Pakistan Limited through M/s. Abid S. Zuberi, Ayan Mustafa Memon, Muhammad Nawaz Khan, Saif Sohail and M . Arif Ansari , Advocates.
Respondent No.2 : The Resource Group International Limited through M/s. Arshad M. Tayebaly, Sameer Tayebaly and Aitzaz Manzoor Memon, Advocates.
Respondent No. 3 : Greentree Holdings Limited through M/s. Ali Almani, Furqan Mushtaq and Sami-ur-Rehman, Advocates.
Respondent No. 4 : Securities and Exchange Commission of Pakistan through M/s. Muzaffar Mirza, Imran Ahmed Shamsi, Syed Ebad-ur-Rehman, Advocates along with Mr. Sabeel S hah, Deputy Director (Listed Companies), SECP.
Respondent Nos. 5-8 : Nemo.
Respondent No. 9 : AKD Securities Limited through M/s. Mayhar Kazi, Ahmed Imran Dewan and Sheheryar Malik, Advocates.
Applicants/Interveners : Abdul Qadir son of Muhammad Ilyas and Muhammad Yaqoob son of Muhammad Yousuf through M/s. Syed Ghulam Shabbir Shah, Irtafa - ur-Rehman, Mukesh Kumar Talreja, Agha Shahzaib and Anas Habib Magoon, Advocates.
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Dates of hearing : 07-04-2025, 10 -04-2025, 15 -04-2025, 17-04-2025, 23-04-2025, 24 -04-2025, 28-04-2025, 05 -05-2025, 06 -05-2025 & 08-05-2025.
Date of decision : 20-06-2025
O R D E R
Adnan Iqbal Chaudhry J . - Overview: The Petitioner holds 16% shares in TRG Pakistan Ltd. [ TRGP - Respondent No.1], a public- listed company incorporated in Pakistan. Greentree Holdings Ltd. [Greentree - Respondent No.3], a Bermuda company, also holds 29.7% shares in TRGP. On 17.01.2025, Greentree made a public announcement of offer [public offer] 1 under Regulation 7 of th e Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations 2017 [Takeover Regulations] , read with section 111 2 of the Securities Act 2015, to acquire an additional 35% voting shares of TRGP to take its shareholding to 65% thus giving it control of TRGP. The Petitioner contends inter alia that all shares of TRGP purchased by Greentree and now the public offer as we ll, is funded by TRGP‘s own money i.e. ‗financial assistance ‘ by TRGP to buy its own shares which is prohibited by section 86(2) of the Companies Act 2017. The Petitioner submits that such maneuver by directors of TRGP to deliver control of the company to Greentree is unlawful, fraudulent and oppressive of the members of TRGP, hence this petition under section 286 of the Companies Act.
1 The ‗public offer‘ under Part IX of the Securities Act 2015 is defined in section 108(f) to mean ―the public offer for acquisition of voting shares of a target company and includes any competitive bid or bids made for this purpose.‖ 2 111. Acquisition of voting shares beyond prescribed limits or control of a company.— No person shall, directly or indirectly,— (a) acquire voting shares, which (taken together with voting shares, if any, held by such person) would entitle such person to more than thirty per cent voting shares in a listed company; or (b) acquire additional voting shares in case the acquirer already holds more than thirty per cent but less than fifty-one per cent of the voting shares of a listed company: Provided that such acquirer shall not be required to make a fresh public offer within a period of twelve months from the date of the previous public offer; or (c) acquire control of a listed company, unless such person makes a public offer to acquire voting shares of the listed company in accordance with this Part.
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2. Upon the petition, an interim order was passed by this Court on 24.03.2025 that upon close of the acceptance period of the public offer, TRGP and the Manager to the Offer (Respondent No.9) shall maintain status quo . Such order was extended during the hearings, however, with the observation that Greentree would be free to extend the acceptance period of the public offer, wh ich it did from time to time.
Parties to the dispute:
3. Greentree, the acquirer3, was incorporated in Bermuda in 2020 as a wholly owned subsidiary of The Resource Group International Ltd. [ TRGIL - Respondent No.2], also a company incorporated in Bermuda. TRGIL is an investment holding company that was funded initially with Pakistani capital. It is invested in a portfolio of companies in technology -enabled services sector primarily in the USA. While Greentree is controlled by TRGIL, the target company 4 i.e. TRGP holds 69% ‗Series B Preferred Shares ‘ in TRGIL albeit with voting rights restricted to 45% by a Stock Purchase Agreement [SPA] between the shareholders of TRGIL. Pursuant to that SPA, TRGP appoints 3 of the 7 directors of TRGIL. Per para 5.1 of TRGP‘s financial statement for year ended 30.06.2024 , TRGP‘s shareholding in TRGIL represents: “This represents investment in TRGIL, an associate incorporated in Bermuda having par value and additional paid up share capital of US$0.01 and US$ 0.99 per shar e respectively. The registered office of TRGIL is situated at Crawford House 50, Cedar Avenue, Hamilton HM I I, Bermuda. The Company holds 60,450,000 shares in TRGIL representing 68.8% of the total shares in issue (June 30, 2023: 68.8%), but with voting power of 45.3% (June 30, 2023: 45.3%). Furthermore, the Company does not control the composition of the Board i.e. it does not have the power to appoint a majority of directors on TRGIL‟s board nor does it exercise or control more than fifty percent of TRGIL‟s voting power as per the contractual arrangements in place, thereby making TRGIL an associate. The percentage holding for share of associate accounting is calculated after taking into account the features of each class of shares and assets that have been earmarked for respective shareholders, which has
3 Section 108(a) of the Securities Act 2015: ―acquirer‖ means any person who, directly or indirectly, acquires or intends to acquire voting shares or voting rights in, or control of the target company, either by himself or through any person acting in concert. 4 Section 108(i) of the Securities Act 2015: ―target company‖ means a listed company or holding company of a listed company whose voting shares or control are directly or indirectly acquired or intended to be acquired.
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resulted in 100% effective beneficial interest over its residual net assets after taking into account the interest accruing to other shareholders (June 30, 2023: 100%).”
4. The management of TRGP and TRGIL is overlapping. Six directors of TRGIL are amongst the ten directors of TRGP. The Chairman of the Board of TRGP is the CEO of TRGIL. The CEO of TRGP is the Chief Investment Officer and director of TRGIL. Thus, the directors of TRGIL are in majority on the Board of TRGP. However, directors of TRGP themselves hold less than 1% shares in the company . The sole material asset of TRGP, which also constitutes the principal line of its business, is its shareholding in TRGIL.
5. The Petitioner was the founder /sponsor, shareholder and director of both TRGP and TRGIL. He was also the CEO of TRGP and Chairman of the Board of TRGIL. In 2019, he was embroiled in a sexual harassment scandal in the USA leading to legal proceedings that drew negative publicity and pressure from investors. Therefore, on 29.11.2021, the Petitioner was impelled to resign from office in TRGP and TRGIL. Per the Respondents 1 -3, the Petitioner has since been trying to get back control of TRGP . They have highlighted said scandal in their pleadings to insinuate that if the Petitioner were to find his way back into control of TRGP, that would not fare well for the company. But even so, I do not see how that aspect can prejudice rights and remedies provided to the Petitioner by the Companies Act as shareholder of TRGP.
Chronology of events:
6. The events leading to Greentree‘s public offer to acquire control of TRGP and the events leading to this petition are as follows.
6.1 In December 2021, TRGIL offered to buy -back/redeem its shares from certain proceeds and liquid assets allocated to its shareholders. Such offer was also made to TRGP. However, t he Board of TRGP decided against it and requested TRGIL to park
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TRGP‘s share of the liquid assets in a special purpose vehicle [SPV] abroad. TRGIL accepted. On 20.12.2021, TRGP made a disclosure to the Pakistan Stock Exchange [PSX], as a requirement of sections 96 and 131 of the Securities Act, that an SPV of TRGIL will utilize liquid assets of TRGP to purchase its shares . Later, Greentree emerged as the designated SPV. This arrangement between TRGP, TRGIL and Greentree is alleged to be the ‗financial assistance‘ given by TRGP to purchase its own shares in violation of section 86(2) of the Companies Act.
6.2 On 10.03.2022, Greentree made a public disclosure under section 110 5 of the Securities Act, 2015 that it had acquired 10% shareholding in TRGP by purchases made at the PSX.
6.3 In May 2022, the SECP issued a show-cause notice to TRGP to explain a lleged violation of section 86(2) of the Companies Act. Against that, TRGP filed Suit No. 1584/2022. By an interim order dated 21.10.2022 the Court restrained the SECP from taking coercive action against TRGP.
6.4 In October 2022, TRGP filed Suit No. 158 9/2022 against its shareholders namely the JS Group 6, the Petitioner and others, to injunct them from a hostile take -over of the company. It was alleged that said defendants, acting in concert, had cumulatively acquired more than 30% shares without adherin g to the provisions of the Securities Act. By an interim order dated 19.10.2022, the Court restrained those defendants from acting on voting shares of TRGP in excess of the 30% threshold. The JS Group retaliated by Suit No. 1599/2022, contending that the i nterim order in Suit No. 1589/2022 had been obtained surreptitiously to deprive them of voting in the
5 110. Acquisition of more than ten per cent voting shares of a company.— (1) Any acquirer who acquires voting shares, which, taken together with voting shares, if any, held by the acquirer, would entitle the acquirer to more than ten per cent voting shares in a listed company, shall disclose the aggregate of his shareholding in that company to the said company, the securities exchange on which the voting shares of the said company are listed and the Commission as provided in subsection (2). 6 Jahangir Siddiqui & Co. Ltd., JS Bank Ltd., JS Infocom Ltd., Energy Infrastructure Holding (Pvt.) Ltd., JS Global Capital Ltd., Trustees of JS Bank Ltd.-Staff Gratuity Fund and certain individuals in that group.
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AGM of TRGP scheduled for 25.10.2022. By order dated 24.10.2022, the Court then restrained TRGP from holding the AGM till further orders.
6.5 On 06.01.2023, TRGIL filed Suit No. 19/2023 against the Petitioner and the JS Group contending that the Petitioner had pledged shares of TRGP with the JS Group in violation of the SPA. By an interim order the Court restrained the JS Group from creating third-party interest in those shares.
6.6 In January 2023, TRGIL invoked the arbitration clause of its SPA with the Petitioner and filed a claim against him before the Judicial Arbitration and Mediation Center (JAMS), New York [Arbitrator], contending that the Petitioner had breached the SPA in transferring shares of TRGP and TRGIL without the consent of the investor-party to the SPA.
6.7 In February 2023, the Petitioner filed a counter -claim before the Arbitrator, contending that it was TRGP and TRGIL who had breached the SPA in December 2021 while redeeming shares of TRGIL. However, upon a suit filed by TRGP in the U.S. Federal District Court, Southern District of New York, the arbitration was stayed by an order dated 02.02.2024 on the submission that the Petitioner had earlier waived legal action against TRGP and TRGIL by executing a Release Agreement.7
6.8 In June 2024, the Petitioner filed Suit No. 695/2024 against TRGP, TRGI and their directors as a shareholder‘s derivative action against breach of t he SPA. The suit was however withdrawn by the Petitioner on 13.09.2024 apparently to comply with an anti -suit injunction dated 10.09.2024 ordered by the U.S. Federal District Court, Southern District of New York on a motion by TRGIL contending that the dispute was covered by arbitration.
7A brief of those proceedings appears in para 26.1 of the financ ial statement of TRGP for the year ended 30.06.2024.
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6.9 In September 2024, the JS Group holding 14.45% shares in TRGP, filed JCM No. 22/2024 under section 286 of the Companies Act, alleging mismanagement in the affairs of TRGP inter alia by violation of section 86(2) of the Companies Act. This JCM was prior to Greentree‘s public offer.
6.10 In the meantime, Greentree continued to purchase shares of TRGP from the open market, and by December 2024 it had built its shareholding in TRGP to 29.7%.
6.11 On 26.12.2024, Greentree made a public announcement of intention under Regulation 6 of the Takeover Regulations to acquire further shares and control of TRGP. Following up on that, Greentree made the impugned public offer on 17.01.2025 under Regulation 7 of the Takeover Regulatio ns stipulating the closing date as 12.03.2025. The purchase price offered was Rs. 75 for each share of TRGP. However, due to a restraining order passed by the Islamabad High Court in Writ Petition No. 731/2025 filed by another shareholder, the time-line for the public offer could not be followed. That petition was eventually dismissed on 12.02.2025 for want of territorial jurisdiction. Thereafter, by notice dated 20.03.2025, the Manager to the Offer (Respondent No.9) extended the closing date of the public offer to 04.04.2025, which was then extended by the Manager from time to time owing to this petition.
6.12 The three-year term of directors of TRGP was set to expire on 14.01.2025. On 02.01.2025, Greentree filed JCM No. 01/2025 under section 286 of the Co mpanies Act to restrain TRGP from hold election of directors on the ground that newly elected directors may impede Greentree‘s public offer. No restraining order was passed . Also pending is another JCM No. 05/2025 by Greentree, again under section 286 of t he Companies Act complaining that shareholders of TRGP are impeding the public offer.
6.13 On 27.01.2025, the Arbitrator gave an Interim Award restraining the Petitioner from transferring his shares in TRGP contrary to section 8.6(a) of the SPA, except ing shares purchased
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between 04.10.2005 and 10.10.2022. That award was then reissued on 04.02.2025 as a Partial Final Award. For enforcement of said awards under the Recognition and Enforcement (Arbitration Agreement and Foreign Arbitral Awards) Act 2011, TRGIL has filed JM No. 5/2025 and JM No. 23/2025. In JM No. 5/2025 the Court passed an interim order restraining the Petitioner in terms of the award.
Submissions by the Petitioner:
7. To allege that affairs of TRGP are being conducted unlawfully it is averred in the petition and was submitted by Mr. Sarfraz Metlo Advocate: that TRGP has failed to hold an AGM for three consecutive years from 2022 to 2024; that the Directors of TRGP, who hold less than 1% stake in the company, have caused considerable loss to the company; that on 10.12.2021, TRGP had made a public disclosure that TRGIL owed to it funds/dividend of USD 195 million; but instead of receiving those funds , TRGP made another public disclosure on 17.12.2021 that they had decided to reinvest those funds in TRGIL , and through it in Greentree, specially for purchasing shares of TRGP from TRGP‘s own money, thereby violating section 86(2) of the Companies Act; that Greentree therefore used TRGP‘s money to build its shareholding to 29.7% and the pu blic offer now made by Greentree is from the same money; that refusal by TRGP ‘s directors to hold election of director s after 14.01.2025 is violative section 158(2) of the Companies Act; that the delay is deliberate, malafide, aimed at ensuring that Green tree takes control of TRGP so that the present directors can re -elect themselves by exercising their vote on the Board of TRGIL which controls Greentree; that the public offer by Greentree falls within the definition of ‗merger‘ under Regulation 3(c) of th e Competition (Merger Control) Regulations, 2016, which requires prior approval of the Competition Commission under section 11 of the
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Competition Act, 2010; and that the public offer is also contrary to the provisions of the Securities Act; that minutes of meetings of TRGP‘s Board held in December 2021, coupled with public disclosures made by them manifest that shares of TRGP acquired by Greentree and the public offer as well is from TRGP‘s funds in the hands of TRGIL; that after the last substantial share holder of TRGIL and taken the offer of redemption of shares, TRGP was the sole beneficial owner of all assets of TRGIL, thus for all intents and purposes TRGIL was a subsidiary of TRGP; that the decision taken by TRGP to reinvest in in TRGIL/Greentree was beneficial for TRGIL, not for TRGP , especially in light of the fact that all other shareholders of TRGIL had taken the offer of redemption of shares, even Mr. Mohammad Khaisghi who was the Chairman of TRGP ; that majority directors of TRGP who were also directors of TRGIL were clearly acting in the interest of TRGIL; that by giving consent to reinvest in TRGIL and to amend the SPA , the directors of TRGP compromised the rights of the company ; that the decision to reinvest also by -passed the condition imposed on TRGP by the SBP vide letter dated 07.04.2003 which required dividends on investments to be repatriated to Pakistan forthwith.
8. In its rejoinder -affidavit, the Petitioner took additional legal grounds. The Respondents were therefore permitted to respond by an affidavit of sur -rejoinder. Upon the additional ground s, Mr. Sarfraz Metlo, learned counsel for the Petitioner submitted:
that the decision by TRGP‘s Board to reinvest funds in TRGIL, and through it in Greentree, was investment in a subsidiary which required a special resolution by members of TRGP as mandated by section 199 of the Companies Act which was never obtained;
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that TRGP has never disclosed to public shareholders that Greentree‘s public offer is funded by TRGP‘s own money which is also a violation of Regulation 6(8) of the Takeover Regulations; that directors of TRGP who were also on the Board of TRGIL were in a situation of conflict of interest in deciding to reinvest in TRGIL; the se d irectors breached fiduciary duty owed to shareholders of TRGP under section 204(4) of the Companies Act and violated Regulation 24(3) of the Takeover Regulations.
Submissions by TRGIL (Respondent No.2):
9. Apart from objections to the maintainability of the petition which are discussed separately infra, the pleadings of TRGIL and arguments advanced in support thereof by its counsel, Mr. Arshad Tayebaly, were as follows:
that Greentree‘ public offer is in the interest of TRGP‘s shareholders, therefore is no question of oppression of minority shareholders; that the arrangement between TRGIL and TRGP did not violate section 86(2) of the Companies Act as explained under: “Respondent No.2 [TRGIL] offered to redeem, in whole or in part, or not to redeem at all, the shares held by Respondent No.1 [TRGP] in Respondent No.2 in December 2021 (an offer that Respondent No.2 had made to each of its shareholders), Respondent No.1 never took that offe r and thus never received any of Respondent No.2‟s assets. Instead, Respondent No.1 voted for an alternative arrangement by a vote of nine votes to one in the meeting of the board of directors in December 2021 — opting to reject the redemption and instead co nvey a request to Respondent No.2 to continue to own and manage the assets and find a different mechanism to provide liquidity and value to Respondent No.1‟s shareholders. Respondent No.2 then proceeded to do exactly that through a foreign Special Purpose Vehicle, Respondent. No.3, which has already provided about $86 million in liquidity to Respondent No.1‟s shareholders through purchase of its shares in the open market. These funds have been remitted by Respondent No.3 to Pakistan through normal banking channels provided foreign exchange in the national interest and have benefited a large number of minority shareholders of Respondent No.1 by providing them liquidity of $86 million”;
that the petition is malafide and frivolous; it is to settle a personal s core with directors of TRGP; that matters agitated
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are subjudice in other proceedings which have been suppressed; therefore , the Petitioner is not entitled to any equitable relief under section 286 of the Companies Act (reliance placed on PLD 1988 Lah 1; 2 021 CLD 578; 2015 CLC 877); that election of directors could not be held by TRGP due to the restraining order dated 24.10.2022 in Suit No. 1599/2022; that pursuant to the public offer by Greentree, over 200 million shares of TRGP have been received in acce ptance by the Manager to the Offer thus creating third-party rights; that the Petitioner cannot participate in the public offer as the arbitration award against him imposes a restriction on share - transfers by him.
10. Mr. Arshad Tayebaly , learned counsel for TRGIL further submitted that violation of section 86(2) of the Companies Act does not constitute oppression or mismanagement within the meaning of section 286 of the Companies Act (reliance placed on 2021 CLD 7); and since election of directors of TRG P was stayed by a Court order, the existing directors continued by virtue of section 158 (1) of the Companies Act. He submitted that the petition is on the misconception that TRGIL is a subsidiary of TRGP; that since TRGP holds only 45% voting shares in TRGIL, the latter does not fall within the definition of ‗subsidiary‘ in section 2(68) of the Companies Act; in fact, as body incorporated abroad, TRGIL also does not fall within the definition of ‗company‘ in section 2(18) of the Companies Act. He submitted that dividend s unless declared by a company cannot be claimed by a shareholder as a right ( reliance placed on 1987 CLC 1408; 2007 CLD 1210); that section 199 of the Companies Act was not attracted as TRGP had simply decided not to take the offer of redemption of shares; and that the books of TRGP do not reflect money owed by TRGIL but only share s held in TRGIL, therefore there was no financial assistance by the former to the latter.
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Submissions by TRGP (Respondent No.1):
11. TRGP‘s reply to the petition is the same as TRGIL‘s, however with additional objections to the maintainability of the p etition which are discussed separately infra. On the merits , Mr. Abid S. Zuberi, learned counsel for TRGP supported the arguments of Mr. Tayebaly while adding that the facts alleged do not make out a case of winding-up as required by section 286 of the Com panies Act; that TRGIL‘s letter dated 09.12.2021 was not a declaration of dividend s but only a proposal to see if TRGP wanted to sell its shares back to TRGIL; that the Board of TRGP deliberated and a decision was taken in the best interest of shareholders viz. to continue with the investment in TRGIL; th erefore, no money was due to TRGP ; consequently, there is no question of violating section 86(2) of the Companies Act.
Submissions by Manager to the Offer (AKD Securities – Respondent No.9):
12. Per the counter-affidavit of the Manager to the Offer (Respondent No.9) , the…
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