Case Summary & Legal Holding

This judicial decision was delivered by the Sindh High Court on 2025-03-18. The matter involves proceedings between A. Qutubuddin Khan (d/b/a "QM R Expert Consultants") and others and CHEC-Millwala Dredging Co. (Pvt.) Ltd., officially reported as 2025 SHC 618. The court reviewed applicable Pakistani statutes, procedural requirements, and governing case-law authorities. The full text below contains the complete facts, arguments, and legal reasoning rendered by the honorable bench.

Full Judgment Text & Judicial Ruling

Court Name: Sindh High Court Judge(s): Jawad Akbar Sarwana Title:A. Qutubuddin Khan (d/b/a "QM R Expert Consultants") and others vs

CHEC-Millwala Dredging Co. (Pvt.) Ltd. Case No.: Execution Application No.47 of 2019 (Suit No.1461/1998) Date of Judgment:2025-03-18 Reported As: 2025 SHC 618 Result: Application Dismissed Judgment

ORDER JAW AD AKBAR SARW ANA, J.: This Order articulates the reasons for the Short Order dated 25.02.2025 allowing CMA No.188/2024 (Decree-Holder's application to implead and hold the former directors of the J.D. Company liable for making payment of decretal amount along with interest up to date)[1] and CMA No.372/2019 (Decree-Holder's application to be orally examined as to whether any or what debts are owing to the judgment-debtor, etc.);[2] as well as the reasons for the Short Order dated 20.02.2025 dismissing CMA No.1100/2023 (Decree-Holder's Application for the annulment of illegal striking off and the restoration of the name of JD Company in the Register of Companies).[3] Arbitral award made Rule of the Court and High Court appeal First Round 2. By way of background, the Decree-Holder, A. Qutubuddin Khan, the Proprietor of "QMR Experts Consultants" (hereinafter referred to as "QMR") had initiated an arbitration against CHEC Millwala Dredging Co. (Pvt.) Ltd. (hereinafter referred to as "CHEC") in the year 1997, which culminated in the filing of an arbitral award dated 06.12.1997 (hereinafter referred to as "the first arbitral award") docketed in the High Court of Sindh at Karachi as Suit No.1733/1997. The first arbitral award filed before the Court to be made a rule of the court was opposed by CHEC, and by a consent order dated 13.08.1998, the matter was referred to arbitration yet again. Thereafter, another arbitral award dated 11.11.1998 (hereinafter referred to as "the second arbitral award") was announced, which was filed in the High Court of Sindh at Karachi as Suit No.1461/1998. However, the said award was once again subject to objections, except that such objections were barred by limitation, and

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although the second arbitral award was made rule of the court by order dated 05.09.2000, the said order making the award a rule of the court was subject to appeal in HCA No.311/2000 filed by CHEC. The High Court, by its appellate order dated 19.03.2003, directed the learned Single Judge in Suit No.1461/1998 to re-examine the second arbitral award. Aggrieved by the said appellate order, QMR challenged the appellate order before the Supreme Court of Pakistan, culminating in Civil Appeal ("CA") No.319/2004. CHEC DISSOLVED under CEES without informing Supreme Court 3. The case record of CA No.319/2004, available on the Supreme Court website, shows that the said civil appeal was listed before the Supreme Court in Islamabad on 28.09.2011, 16.02.2012, 09.04.2012, 10.07.2012 and on 22.01.2014, when the matter was finally heard on the last date by a three-member Bench of the Supreme Court and reserved for Judgment. The record shows that the Respondent's Counsel, Mr. Bilal A. Khawaja, ASC, and Advocate-on-Record (AOR), Mehr Khan Malik, had been appearing on behalf of CHEC in CA No.319/2004 and were also present before the apex Court on 22.01.2014. Yet, four (4) months after 10.07.2012, when CA No.319/2004 was being listed in the Supreme Court and adjourned, CHEC on 29.11.2012 filed an application with the Securities and Exchange Commission of Pakistan ("SECP") under the Company Easy Exit Scheme ("CEES") launched in 2012 under the framework of the Companies Ordinance, 1984, for removal of CHEC's name from the Register of Companies and got itself "dissolved" as of 18.09.2013.[4] Suffice it to say that when CHEC filed its application under the CEES 2012 with SECP on 27.11.2012, CHEC was well aware that CA No.319/2004 filed against it by QMR was still pending before the Supreme Court of Pakistan. 4. Although the CEES process took almost ten (10) months to complete on 18.09.2013, it included on 12.12.2012, SECP publishing a notice under Section 439(3) of the Companies Ordinance, 1984, informing the general public that unless cause is shown to the contrary, the name of CHEC and other companies listed in the said notice would at the expiration of three months of the date of this notice be struck off the register and the companies will stand "DISSOLVED",[5] yet neither CHEC's Counsel nor CHEC's AOR informed the Supreme Court about CHEC being struck off the Register and that it stood "DISSOLVED" as of 18.09.2013, nor did CHEC make any submission in writing about the non-existence of CHEC on the Register of Companies as of 18.09.2013, before the Supreme Court of Pakistan's announcement of Judgment on 03.04.2014. 5. In the absence of this material information, the Supreme Court, after hearing Counsel submissions on 21.01.2014, by a majority of two to one, about three (3) months later, announced its Judgment in CA No.319/2004 on 03.04.2014, setting aside the Order of the learned Single Judge dated 05.08.2000 in Suit No.1461/1998 and remanded the case to the learned Single Judge to decide whether to make the second arbitral award a rule of the Court after examining as to whether the said award is a nullity or prima facie illegal or not fit to be maintained or suffers from any other invalidity which is self-evident or apparent on the face of the record, notwithstanding that the objections filed by the Respondent ("CHEC") are time-barred.[6] Second Round - Arbitral award made Rule of the Court CHEC Counsel does not inform CHEC DISSOLVED under CEES 6. When proceedings before the learned Single Judge in Suit No.1461/1998 in the High Court recommenced post April 2014 in terms of the Supreme Court's Judgment dated 03.04.2014, from April 2014 to September 2015, none appeared on behalf of CHEC, and no intimation was received from them by the Court, nor was there any mention of the removal of CHEC's name from the Register of Companies by any of the parties. Even Counsel Mr Bilal M Khawaja did not withdraw his earlier filed Vakalatnama on behalf of CHEC even though, arguably, his client, CHEC, stood "DISSOLVED" as of 18.09.2013, as the Court continued to issue notices to CHEC and its Counsel for another 15 months. Finally, on 30.09.2015, CHEC Counsel made an appearance and submitted to

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the Court that he would call his client and seek instructions regarding the controversy involved. CHEC Counsel still did not inform the Court on 30.09.2015 that his client, a corporeal entity, did not exist anymore and that its name had been removed from the Register of Companies under the CEES as of 18.09.2013. The Court diary shows that CHEC's Counsel again disappeared. On 19.05.2016, the Court observed that although the perusal of the record indicates that CHEC's Counsel had previously been contesting the matter, which had gone in High Court Appeal as also before the Hon'ble Supreme Court, yet he had had not been appearing for quite some time. Accordingly, the Court ordered notice be issued to Mr Bilal Khwaja, Advocate, as also the defendant directly by pasting its copy on the outer door of his premises. According to the Court's Order dated 04.05.2016, the clerk of CHEC's Advocate appeared before the Court and informed that they were no longer representing CHEC. Thereafter, on 19.05.2016, the Court observed that, as per the bailiff's report, he (Mr Bilal Khwaja) was no longer representing CHEC. Once again, on both occasions, i.e. on 04.05.2016 and 19.05.2016, neither CHEC nor CHEC's Advocate nor Court Clerk bothered to update the Court that CHEC had not been in existence on the Register of Companies being maintained by SECP since 18.09.2013. By 16.11.2016, service of notice of Suit No.1461/1998 had also been effected upon CHEC through publication in Daily Jung on 03.10.2016, Registered Post A.D., TCS and by the Bailiff, including by way of pasting. Yet, no one appeared for CHEC, and the matter was finally reserved for orders on 13.02.2019. The second arbitral award was made a rule of the Court as per the Judgment dated 24.04.2019 and the Decree dated 13.05.2019, assuming that CHEC was still in existence. Yet, from April 2014 to May 2019, the High Court was kept oblivious of the fact (as none informed the Court), that the Defendant, and now Judgment-Debtor, CHEC through the CEES, had got itself removed from the Register of Companies and "DISSOLVED" during the pendency of the court proceedings before the Supreme Court of Pakistan, and thereafter before the learned Single Judge of the High Court of Sindh. Continuing silence in Execution Proceedings until 29.10.2020 when two Directors of CHEC inform CHEC DISSOLVED under CEES 7. The Decree-Holder, QMR, initiated execution proceedings against CHEC on 08.08.2019 through Execution Application No.47/2019. The Court continued to attempt to effect service on CHEC when on 16.10.2019, Counsel for Decree-Holder, QMR filed the instant CMA No.372/2019, and the Court issued notice on the said application. On 25.11.2019, the Executing Court was informed that the notice issued to CHEC was returned unserved with the endorsement of the process server that the office clerk of the Judgment-Debtor Firm, after consultation with his master, namely Munir [I. Millwala] refused to receive the notice, saying that the Company (Judgment-Debtor) no longer exists. Following the update, another year went by. Meanwhile, the Court ordered service on CHEC through publication in Daily Dawn and Daily Jung Karachi, and thereafter, the matter kept being listed for filing objections in the Execution Application and hearing of CMA No.372/2019 and other CMAs until September 2020. 8. During the Coronavirus (Covid-19) pandemic, on 10.09.2020, Counsel for Decree-Holder, QMR obtained orders from the Court for issue of notices of service on the judgment-debtor/CHEC through its Directors (i) Farazdak F. Millwala and (ii) Munir I. Millwala, under Order 21 Rule 50 CPC (which provision ordinarily relates to suits against firms and persons carrying on business in names other than their own, such, as partner(s) of a firm). According to the Bailiff's Report dated 29.09.2020, Farazdak F. Millwala, Owner of Base Wedding Company, 13, West Wharf Road, Karachi, personally received the Court Notice; whereas the Court Notice for Munir I Millwala, Millwala Manzil, Steel House, West Wharf Road, Karachi (adjacent to Allied Bank) was received by Fawaad Hussain Bhaiji, the Group Chief Accountant & Company Secretary, who also provided the bailiff with his professional card. During arguments, on pointation of QMR Counsel, I examined the original professional card attached to the bailiff's report which was handed to the bailiff in September

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2020. I noted that the top portion of the professional card has four (4) logos, one of which logo is a green colored logo with the letter "M" and an inverted letter "W" appearing slightly diagonally underneath the "M" and right below this logo the company name: "MILLWALA DREDGING CO. (PVT.) LTD." is printed in green color font in the professional card. It appears that the officer who received the court notices still used a professional card indicating CHEC's company name and logo even after almost seven (7) years after the company's dissolution. 9. According to the Court's Order of 30.09.2020, one Mr. Ghulam Hussain, an associate of Mr Bilal A Khawaja, filed power on behalf of the Judgment-Debtor/CHEC on the said date of hearing, however no such power is available on record, except that a Vakalatnama of Mr. Bilal A Khawaja signed by both the Millwalas on behalf of the JudgmentDebtor/CHEC dated 05.10.2020 and duly signed as accepted by Mr. Bilal A. Khawaja is available in the record of Ex.App.No.47/2019 as presented on 05.10.2020. The record also reflects that on 15.10.2020, yet another Vakalatnama was filed by the associates of Mohsin Tayebaly & Co. on behalf of Judgment Debtor No.2 (Munir I Millwala) followed by another Vakalatnama of the same Law Firm on behalf of Judgment Debtor No.1 (Farazdak F. Millwala) was filed on 29.10.2020. All three Vakalatnamas of Bilal A. Khawaja and Mohsin Tayebaly & Co. representing Farazdak Millwala and Munir Millwala, are still available on record in Ex.App.No.47/2019, and none have been withdrawn. 10. On 29.10.2020, the Counsel of the Judgment-Debtor Nos.1 and 2, namely from the Law Firm of Mohsin Tayebaly & Co. filed a Statement of even date formally informing the Executing Court for the first time that that CHEC had been dissolved and attached a copy of the SECP's Notice dated 12.12.2012 (mentioned in paragraph 4 above). Following the aforementioned Statement, the Counsel for QMR/Decree-Holder submitted to SECP, between 02.12.2020 and 15.08.2022, several letters of complaint, including an application to set aside the dissolution of CHEC, whereafter the Registrar of Companies after hearing QMR/Decree-Holder, by its Order dated 29.07.2022, dismissed the said application in the following terms: "10. In order to conclude the matter, hearing was held on May 18, 2022, when the applicant appeared and reiterated the stance already submitted in the application. The applicant stated that the defunct company was in litigation when they submitted the application to dissolve the company under CEES and hence, the declaration submitted by the C.E.O and other directors regarding pending cases in any court of law is false and attracts penal provisions as provided under Section 496 of the Act. During the course of hearing, the applicant was informed that the Act separately provides the provision under Section 425(5) of the Act for any criminal or civil liability of director(s) and the pending litigation in the subject matter does not necessitate restoration of the defunct company. Accordingly, the arguments were heard and the record was perused. 11. Section 425(5) of the Act provides that: Section 425. Registrar may strike defunct company off register... (5) At the expiration of the time mentioned in the notice the registrar may, unless cause to the contrary is previously shown by the company or the liquidator, as the case may be, strike its name off the register, and shall publish notice thereof in the official Gazette, and, on the publication in the official Gazette of this notice, the company shall be dissolved: Provided that the liability criminal, civil or otherwise (if any) of every director, officer, liquidator and member of the company shall continue and may be enforced as if the company had not been dissolved: 12. The registrar concerned in his comments also endorsed that in light of the provisions under Section 425(5) of the Act, the liability criminal, civil or otherwise (if any) of every director, officer, liquidator and member of the defunct company shall continue and may be enforced as if the company had not been dissolved and the restoration of the defunct company in the subject matter is not necessitated.

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13. Keeping in view the aforementioned facts, comments of the registrar concerned, documents as provided by the applicant, and in light of the supra provision of the Act, it is clear that the liability of every director, officer, liquidator and member of the company, criminal, civil or otherwise (if any) shall continue and may be enforced as if the company had not been dissolved. Accordingly, it appears that the pending litigation against the defunct company does not require restoration of the defunct company and the instant application is hereby dismissed. However, this office shall comply with any direction regarding restoration of the defunct company passed by the Honorable Court, if deemed appropriate. 14. The order shall be without prejudice to any civil and criminal proceedings or any other inquiries or proceedings initiated by any authority or agency regarding the affairs of the defunct company, if any." (Underlining added) 11. QMR/Decree-Holder did not file any appeal or review against the Order dated 29.07.2022 passed by the Registrar of Companies. Instead on 07.04.2023, he moved the instant application, i.e. CMA No.1100/2023 seeking orders from the Executing Court to direct the Registrar Companies (SECP) for the annulment of illegal striking off and the restoration of the name of the Judgment-Debtor Company, CHEC, in the Register of Companies and declare the dissolution void. The said application was followed by QMR/Decree-holder filing another application, i.e. CMA No.188/2024 praying that under the several provisions of the Companies Act, 2017 (and the repealed Companies Ordinance, 1984) stated therein and further reasons stated in the accompanying affidavit both the Directors who are before this Hon'ble Court namely Mr Farazduk F. Millwala and Munir I Millwala be held responsible for making payment of decretal amount along with interest up to date. 12. The instant CMA Nos.372/2019, 1100/2023 and 188/2024 have been listed on several dates of hearing after Mr Farazduk F. Millwala and Munir I Millwala have entered appearance in September 2020, and according to the Orders passed by the Executing Court, copies of the said applications were also supplied to Counsel, yet they have filed no Counter-Affidavit. None is available on record. The said Judgment-Debtors Nos.1 and 2 only challenge to the Ex. App. No.47/2019 is recorded in their Statement dated 29.10.2020 and the Objections on behalf of the Ex-Directors, namely Farazdak Millwala and Munir I Millwala, to the Reply filed by the QMR/Decree-Holder to their Statement dated 29.10.2020 filed on 31.03.2021. QMR/Decree-holder filed the CMA Nos.1100/2023 and 188/2024 after the Judgment-Debtors had filed their above statement/objections. The applications remained unrebutted at the time of the hearing, notwithstanding that same was the case with CMA No.372/2019 (no counter-affdavit was filed), when I heard all three (3) applications. 13. Counsel for QMR/Decree-Holder has argued that CHEC and its directors have played a fraud with the Court(s) and the SECP. He contended that CHEC, its CEO and its directors as well as their Counsel, Bilal A Khawaja, all misrepresented to (i) the Supreme Court in Civil Appeal No.319/2004 on 22.01.2014, and (ii) the High Court in Suit No.1461/1998 on several dates, when they concealed from the both forums the fact that CHEC stood dissolved under the CEES as of 18.09.2013. He argued that all eight (8) directors of CHEC knowingly, false to their knowledge, submitted a sworn affidavit to SECP claiming that the Company had no liabilities to any private parties, even though they all knew that an arbitral award had been passed against CHEC. Further, they also made a false declaration in the said affidavit affirming that no case was pending against the company before any court of law when the Supreme Court of Pakistan Civil Appeal No.319/2004 was still pending hearing in the apex Court. He contended that the Shareholders' Resolution dated 27.11.2012 submitted to the SECL was also false. He submitted that in view of the foregoing, CHEC's dissolution under the CEES was liable to be set aside, and the two

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named Directors were liable for the decretal amount claimed by QMR/Decree-holder in Ex.App.No.47/2019. 14. Counsel for the two Judgment-Debtors submitted that the Company, CHEC, alone was liable for the decretal amount and none else. The directors of the Company could not be held liable. QMR/Decree-Holder's claim to pierce the corporate veil and to hold the two Directors liable was subject to proof, and this could not be agitated in the Execution proceedings. QMR/Decree-holder would have to file a separate suit against the directors of CHEC alleging fraud. Yet such a claim is now barred with the demise of the sole-proprietor of QMR, and the legal heirs would have no cause against the former Directors of CHEC. Counsel defended that no fraud was played with the Court, and the dissolution of CHEC involved a public notice published by SECP, and the entire exercise was well-known to the general public. Thus, all the parties, including the Court, were well aware of the dissolution of CHEC under the CEES. QMR/Decree-Holder's application to set aside the dissolution had been rejected by the Registrar of Companies Order dated 29.07.2022, and he did not prefer any appeal to the said Order. Therefore, he could not agitate the same relief before the Executing Court. When the Court made the second arbitral award a rule of the Court by Judgment dated 24.04.2019 and Decree dated 13.05.2019, the Judgment-Debtor did not exist, and the said Judgment and Decree could not be enforced against the former Directors of the Judgment-Debtor Company, CEES. 15. I have heard Counsel, perused the record available in the Ex.App.No.47/2019 and Suit No.1461/1998. 16. All three CMA Nos.372/2019, 1100/2023 and 188/2024, in addition to the provisions of the civil procedure code, also turn on, inter alia, the interpretation of the Company Easy Exit Scheme ("CESS") under Section 439 of the Companies Ordinance, 1984. It is pertinent to mention that CHEC stood dissolved on 18.09.2013, under the CEES Circular No.23/2012 dated Islamabad, 20.06.2012, issued by SECP (Company Law Division), Corporatization & Compliance Department.[7] Although this CEES 2012 was operative for a period of two months from 02.07.2012 to 31.08.2012, its period was extended vide Circular No.34/2012 dated 01.11.2012. CHEC filed its application to strike off its name during this extension period of CEES 2012.[8] Ultimately, the CEES was incorporated into the parent statute, the Companies Act 2017, under Sections 425 and 426 and its regulations framed thereunder. The QMR/Decree-Holder's application to set aside the dissolution of CHEC was heard by the Registrar of Companies under the Companies Act, 2017. 17. The selected provisions of the CEES 2012, as they stood in November 2012, are reproduced herein below. Clause (b): The companies not having any assets and liabilities, not carrying on any business and are not in operation shall be eligible to make application under the scheme to get their names struck off the register of companies in terms of Section 439 of the Ordinance. Format of the application is provided at Annexure-I. Clause (c) The scheme shall be applicable to only private and non listed companies. However, the scheme shall not apply to the following companies: i. . . . ii. . . . iii. Companies which have any assets and liabilities or are carrying on any business are in operation, iv. Companies having liabilities outstanding in relation to loan(s). . .or any obligations towards. . .private parties; v. . . . vi. . . . vii. Companies against which any matter is pending before the Court of law,

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viii. . . . . Clause (e): The application shall be supported by a resolution of the shareholder of the company. In case of resolution passed with simply majority, view point of the dissenting shareholders shall also be furnished. The format of resolution is given at Annexure-II. Clause (g): Majority of the directors including chief executive of the company shall also furnish a declaration/ indemnity duly verified by an affidavit administered before the Class I Magistrate/ Oath Commissioner/ Notary Public that company has no assets or liabilities and that it is not carrying on any business or any operation; and that it has no liabilities outstanding in relation to any loan(s) obtained from the banks/ financial institutions, taxes, utility charges, or any obligations toward government departments or private parties, and they indemnify to pay any claim if any complaint comes to surface. The format of declaration/ undertaking is given at Annexure-III." Clause (k): If no objection is received. . .the registrar shall strike off the name of the company from the register and shall send notice thereof for publication in the Official Gazette in terms of Section 439(5) of the Ordinance and on the publication of this notice in the Official Gazette, the company shall be dissolved: Provided that the liability criminal, civil or otherwise (if any) of every director, officer, liquidator and member of the company shall continue and may be enforced as if the company had not been dissolved; Provided further that nothing in this scheme shall affect the powers of the Court to wind up a company the name of which has been struck off the register. (underlining added) 18. While in ordinary circumstances a liability of a company operates to the extent of the Company and cannot be transferred to the directors or its member, it may be noted that CEES 2012 provided that as the directors had certified that there were no liabilities outstanding against CHEC and there was no obligation towards private parties, they had indemnified the Company to pay any claim if any complaint comes to surface. 19. Before proceeding further, it would be appropriate also to reproduce Section 439 of the Companies Ordinance, 1984,…

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