Legal Principle & Question Decided

Ruling Summary: This decision was rendered by the Lahore High Court (Honorable Mr. Justice Abid Aziz Sheikh), officially reported as 2026 LHC 3691. In this matter between Exterran Services (U.K) Limited through Gohar Ali Khan and Jamshoro Joint Venture Limited, 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.

Full Judgment Text & Judicial Ruling

COURT: Lahore High Court (Honorable Mr. Justice Abid Aziz Sheikh) DECISION DATE: 11-06-2026 TAGLINE: A conjoint reading of Sections 391 and 306 of the Companies Act, 2017 ("Act") demonstrates that while Section 391 regulates transfers and alterations effected after the commencement of the winding up proceedings, Section 306 merely identifies the point in time from which such commencement is to be reckoned. By itself, Section 306 of the Act neither invalidates nor does render void any transfer, disposition, or alteration in the status of a member of the company. The legal consequence contemplated by Section 391 of the Act is not attracted merely upon the filing of a winding up petition; rather, the provision becomes operative upon the passing of a winding up order. A transfer of shares made after the presentation of a winding up petition but prior to the passing of a winding-up order does not ipso facto becomes void under Sections 306 and 391 of the Act, as the presentation of a winding up petition cannot be treated as equivalent to a winding up order so as to automatically invalidate bona fide transactions undertaken during the intervening period. CASE DETAILS: C.O. (Commercial) 3907/24 ============================================================ Form No: HCJD/C-121 ORDER SHEET IN THE LAHORE HIGH COURT, LAHORE JUDICIAL DEPARTMENT

Civil Original No.3907/2024

Exterran Services (U.K.) Limited Vs. Jamshoro Joint Venture Limited etc.

S. No. of order/ proceedings Date of order/ proceedings Order with signature of Judge, and that of parties or counsel, where necessary.

11-06-2026

M/s Mansoor Hassan Khan and Barrister Noman Ahmad Langrial, Advocates for the applicant/petitioner. M/s Khawaja Ahmed Tariq Rahim, Hissam Tariq Rahim and Muhammad Azhar Siddique, Advocates for respondent No.1-JJVL. M/s Ruman Bilal and Syed Asad Haider , Advocates for respondent No.2-SECP. Mr. Muhammad Ali Malik, Advocate for the purchaser- LSE Capital Limited. Barrister Hamid Azim Leghari, Advocate for Sui Southern Gas Company Limited (SSGCL). Ms. Shagufta Siddiqui, Senior Manager Pakistan Stock Exchange Limited (PSX).

C.M. No.15/2025 The applicant/petitioner -company has filed the instant application under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure, 1908 (" CPC"), read with Section 391 of the Companies Act, 2017 (" Act"), seeking the interim injunctive relief with the following prayer:- "In the light of the above-mentioned facts and legal submissions, it is most respectfully prayed that this Honourable Court may be pleased to: a. Grant a temporary injunction restraining Respondents No.1 and 2 from dealing with JJVL’s shares or assets and to order status quo ante till the final disposal of the Winding -Up Petition;

b. Declare Respondent No.1’s act of selling 10% of its shares to Respondent No.2 void for being in violation of section 391 of the Companies Act;

Civil Original No.3907/2024 (-2-)

c. Direct Respondent No.3 to refrain from registering any change in the shareholding structure of JJVL; and

d. Grant any other relief that this Honourable Court deems just and proper in the circumstances of the instant Application."

2. Learned counsel for the applicant /petitioner submits that 10% shareholding of respondent No.1, namely Jamshoro Joint Venture Limited (hereinafter referred to as " JJVL"), originally held by one of its subscribers , Mr. Jamal Akbar Ansari ("shareholder"), has allegedly been transferred and sold to LSE Capital Limited (hereinafter referred to as the "purchaser- company"). Learned counsel contends that such transfer is ex facie unlawful and devoid of legal effect in view of the provisions of th e Act. Elaborating his submissions, he argues that Section 391 of the Act unequivocally provides that every transfer of shares and every alternation in the status of a member made after the commencement of winding up proceedings shall, unless duly approved in accordance with law by the liquidator, be void and of no legal effect . He further submits that under Section 306 of the Act, the winding up of a company by the Court is deemed to commence from the date of presentation of the winding up petition. He contends that in the present case, the winding up petition i.e. Civil Original No.3907 of 2024, was instituted on 18. 01.2024 and notice therein was issued on 19. 01.2024. He points out that according to a letter dated 05. 08.2025 addressed by the purchaser -company to the Pakistan Stock Exchange Limited ( hereinafter referred to as "PSX"), the purchaser -company itself acknowledged and informed the PSX that it had completed the acquisition of 10% shareholding in JJVL. He submits that since the alleged transfer was admittedly effected after the commencement o f the winding-up proceedings, the same is directly hit by the statutory prohibition contained in Section 391 of the Act and is, therefore, void ab initio, unenforceable in law and incapable of conferring any legal rights upon the purchaser -company. Civil Original No.3907/2024 (-3-)

Learned counsel submits that the factum of the alleged transfer of 10% shareholding has not been specifically denied or disputed either by JJVL or by the purchaser -company in their respective replies filed before this Court but the only reservation has been expressed by respondent No.2 i.e. Securities and Exchange Commission of Pakistan ( hereinafter referred to as "SECP"), which has stated that no such transfer is reflected in its official record, as the last Form-A was filed on 15.03.2025 i.e. prior to the alleged transfer. He argues that the absence of any corresponding statutory filing or regulatory disclosure further fortifies the applicant’s stance that the alleged transfer has neither attained legal recognition nor been validly incorporated into the cor porate record of the company. In support of his submissions, he placed reliance on "Ch. Shoukat Ali etc V . Tahzeeb Bakers etc ." (2024 CLD 115 ) and the judgment dated 22. 04.2026, passed by the Supreme Court of Pakistan in Civil Appeal No.125 of 2025 , titled "Abdul Razzaq V. Registrar of Companies ". Further submits that as per settled law, a transfer of shares does not attain legal efficacy unless and until the same is duly entered in the register of members maintained by the company in accordance with law. According to him, any purported transfer remaining unrecorded in the statutory register cannot be recognized as having validly altered the membership structure, shareholding pattern, or proprietary rights within the company . Learned counsel adds that Clause 6 of the Articles of Association and Memorandum of Association of JJVL imposes restriction upon the transfer of shares held by its subscribers and mandates prior written consent of the remaining subscribers before any such transfer can lawfully be effected. He submits that Mr. Jamal Akbar Ansari, being one of the subscribers of JJVL , was not legally competent to alienate or transfer his shares in favour of the purchaser -company without obtaining the requisite prior consent of the other subscribers. He lastly submits that the applicant /petitioner has Civil Original No.3907/2024 (-4-)

also filed C.M. No.8 of 2026 seeking a direction to JJVL to produce and place on record a certified copy of its register of members, which document is essential for determining the legality and validity of the alleged transfer. He, therefore, prays that C.M. No.8 of 2026 may also be taken up and decided along with the instant application. 3. Learned counsel for respondent No.1-JJVL, on the other hand, submits that Section 391 of the Act can only be invoke d after the passing of a winding up order in the winding up petition, notwithstanding that, by virtue of law, the winding -up proceedings are deemed to commence from the date of the presentation of the petition. He adds that the phrase "subject to approval of the liquidator", employed in the said provision, makes this interpretation more obvious, as the involvement of a liquidator necessarily presupposes the passing of a winding -up order and the appointment of a liquidator. Further submits that Section 306 of the Act, being a deeming provision, can become operative only upon the occurrence of the event expressly contemplated therein, which is passing of a winding up order and the consequent appointment of a liquidator. According to him, until such stage is reached, the legal fiction created by the statute cannot be extended beyond its legitimate field of operation, nor can the legal consequences envisaged by the provision be attracted. He placed reliance on "Begum Anwar Sultana represented by Legal Heirs V. A.B.M. Associates Ltd., Faisalabad and 6 others" (PLD 1993 SC 404 ), "Begum Anwar Sultana and others V. Mian Fazal Ahmad and others " (PLD 1986 Lahore 18 ) and "Geol (A.C.) V. First National Bank " (AIR 1980 P unjab 476). It is further argued that the instant application (C.M.A. No.15 of 2025) is, in substance and effect, a second stay application and is, therefore, not maintainable in law, as the earlier stay application filed the applicant/petitioner i.e. C.M.A. No.1 of 2014, is still pending adjudication and has neither been withdrawn nor finally decided; hence, the filing of Civil Original No.3907/2024 (-5-)

a subsequent application seeking substantially identical relief is impermissible and liable to be dismissed on the ground of non - maintainability alone. 4. Learned counsel for the SECP as well as learned counsel for the purchaser-company reiterated and supplemented the submissions advanced in their respective replies and prayed for dismissal of the instant application. 5. Arguments heard. In this application seeking interim injunctive relief, it is asserted that the purchaser -company, vide letter dated 05.08.2025, informed the PSX that it had completed the acquisition of 10% shareholding of JJVL. In the prayer clause of this application, chall enging the act of sale of shares and seeking status quo ante prove that the sale of shares by the shareholder is not in dispute. The main contention advanced on behalf of the applicant is that the said sale and transfer of 10% shareholding of JJVL in favou r of the purchaser -company are void ab initio and of no legal effect, inasmuch as they were effected after the filing of the winding up petition and in violation of the mandatory provisions contained in Sections 391 and 306 of the Act. The determination of the controversy raised in the present application, as well as the question whether a prima facie case for the grant of interim relief is made out, substantially depends upon the interpretation and application of Sections 391 and 306 of the Act. For the purpose of ready reference, Sections 391 and 306 of the Act are reproduced hereunder:- "391. Avoidance of transfers. Except when an order to the contrary is passed by the Court— (a) every transfer of shares and alteration in the status of a member made af ter the commencement of winding up shall, unless approved by the liquidator, be void;

(b) any transfer or disposition of property, including actionable claims of the company, not being a transfer or delivery made in the ordinary course of its business or in favour of a purchaser or encumbrancer in good faith and Civil Original No.3907/2024 (-6-)

for valuable consideration, if m ade within a period of one year before the presentation of a petition for winding up by the Court or the passing of a resolution for voluntary winding up of the company, shall be void.

306. Commencement of winding up by Court . A winding up of a company by the Court shall be deemed to commence at the time of the presentation of the petition for the winding up."

6. A plain reading of Section 391(a) of the Act reveals that every transfer of shares and every alteration in the status of a member made after the commencement of winding up proceedings shall, unless approved by the liquidator, be void. Under Section 306 of the Act, the winding up of a company by the Court is deemed to commence at the time of the presentation of the winding up petition. A conjoint reading of these provisions demonstrates that while Section 391 regulates transfers and alterations effected after the commencement of the winding up proceedings, Section 306 merely identifies the point in time from which such commencement is to be reckoned. By itself, Section 306 of the Act neither invalidates nor does render void any transfer, disposition, or alteration in the status of a member of the company . The legal consequence contemplated by Section 391 of the Act is not attracted merely upon the filing of a winding up petition; rather, the provision becomes operative upon the passing of a winding up order. Once such an order is made, it relates back to the date of presentation of the winding up petition, thereby bringing within its fold the transactions undertaken during the intervening period ; hence, the mere presentation of a winding up petition does not automatically render every subsequent transfer or alteration void ab initio. The expression "void" employed in Section 391 of the Act cannot be construed to mean that every transfer or disposition effected after the presentation of a winding up petition is an incurable nullity from its inception. Such an Civil Original No.3907/2024 (-7-)

interpretation would be inconsistent with the qualifying expressions contained in the said provision i.e. "except when an order to the contrary is passed by the Court" and " unless approved by the liquidator ". These qualifying words clearly indicate that transactions entered into during the pendency of winding up proceedings are not non est in the eyes of law ; rather, they remain operative and effective, though vulnerable to be declared void upon the making of a winding up order, unless validated by the Company Court or approved by the liquidator in accordance with law. The ob ject underlying the provision is to preserve the assets and corporate structure of the company pending adjudication of the winding up petition, while at the same time safeguarding bona fide commercial transactions entered into in the ordinary course of business. Any interpretation treating every post -petition transaction as automatically void from the very moment of its execution would not only defeat the statutory power of validation expressly conferred upon the Court and liquidator but would also paralyze the business of company and lead to serious commercial uncertainty and hardship for third parties dealing with the company in good faith, after filing of winding up petition. 7. The p rovisions substantially analogous to Sections 391 and 306 of the Act are contained in Sections 441 and 536 , respectively, of the Indian Companies Act, 1956. The scope and effect of those provisions came up for consideration before the Supreme Court of India in the case "Pankaj Mehra V. State of Maharashtra" (AIR 2000 SC 1953 = 2000 (2) SCC 756 ), wherein it was authoritatively held that the disposition made during the period between the presentation of a winding up petition and the passing of a winding up order are not void ab initio; r ather, such transactions continue to remain valid and operative unless and until they are avoided upon the making of a winding up order, subject always to the power of the Civil Original No.3907/2024 (-8-)

Company Court to validate them. The relevant extract from the said judgment is reproduced hereunder for ready reference:- "20. It is difficult to lay down that all dispositions of property made by a company during the interregnum between the presentation of a petition for winding up and the passin g of the order for winding up would be null and void. If such a view is taken the business of the company would be paralysed, for, the company may have to deal with very many day-to-day transactions, make payments of salary to the staff and other employees and meet urgent contingencies. An interpretation which could lead to such a catastrophic situation should be averted. That apart, if any such view is adopted, a fraudulent company can deceive any bonafide person transacting business with the company by stage-managing a petition to be presented for winding up in order to defeat such bonafide customers. This consequence has been correctly voiced by the Division Bench in the impugned judgment."

8. There is a clear and well -recognized distinction in company law between the 'commencement of winding up ' and the 'making of a winding up order '. Section 306 of the Act merely determines the deemed date from which winding up proceedings are regarded as having commenced by providing that, in a winding up by the Court, the winding up shall be deemed to commence from the date of presentation of the winding up petition, however, the 'winding up order' constitutes the operative judicial act whereby the Court, upon examination of the merits of the petition and being satisfied that a case for winding up has been made out, directs that the company be wound up. It is this judicial determination that attracts the legal consequences contemplated by Section 391 of the Act and brings the relevant statutory restrictions into operation . If the mere presentation of a winding up petition were to be construed as rendering every transfer of shares or disposition of property immediately void, as contended by the learned counsel for the applicant, the consequences would be both impractical and inequitable. Such an interpretation would effectively prevent a Civil Original No.3907/2024 (-9-)

company from carrying on its ordinary business, managing its affairs, and entering into bona fide commercial transactions during the pendency of the petition , notwithstanding the fact that the petition may ultimately be dismissed . It would further enable the filing of a winding up petition, even before its merits are judicially examined and adjudicated upon by the Court , to be employed as an oppressive instrument for paralyzing the business operations of a company and undermining its commercial viability. Such a consequence could not reasonably be attributed to the legislative intent. The law must, therefore , be construed in a manner that balances the protection of creditors and contributories with the legitimate interests of the company in continuing its business until judicial determination is made. 9. A harmonious, purposive and contextual reading of Sections 306 and 391 of the Act leads to the conclusion that a transfer of shares effected after the presentation of a winding up petition, but before the passing of a winding up order, does not ipso facto or automatically become void merely by reason o f the pendency of such petition. Rather, such transfer remains valid and operative during the intervening period, subject, however, to scrutiny and supervision by the Company Court upon the subsequent making of a winding up order, and to such orders as may be passed in accordance with law for the protection of the interests of creditors, contributories, and the company in liquidation. Any other interpretation would amount to treating the filing of a winding up petition as equivalent to an order of winding u p itself, thereby obliterating the distinction consciously maintained by the legislature between the commencement of winding up proceedings and the actual making of a winding up order. Such an approach would not only be inconsistent with the statutory sche me but would also defeat settled principles governing corporate insolvency and winding up proceedings. The case -law relied upon by the Civil Original No.3907/2024 (-10-)

learned counsel for the respondents also lend support to the foregoing interpretation, whereas the case -law relied upon by the applicant’s counsel are distinguishable and inapplicable to the present controversy. 10. Regarding t he next argument advanced by the learned counsel for the applicant/petitioner that the instant application (C.M.A. No.15 of 2025) cannot be adjudicated upon unless C.M.A. No.8 of 2026 is first decided, suffice it to note that the relief sought in the latter application is confined to a direction requiring JJVL to produce before this Court a certified copy of its register of members . Prima facie, the said relief has no material bearing upon the issues arising for determination in the present application, wherein acquisition of 10% shares of JJVL by the purchaser -company is not disputed . The adjudication of the instant application does not appear to be dependent upon the production of the aforesaid record, nor has it been demonstrated that the absence thereof would occasion any prejudice affecting the determination of the question presently before the Court. The documents sought through C.M.A. No.8 /2026 may, if considered necessary, be examined at the appropriate stage, if a winding up order is ultimately passed and all transactions during the winding up proceedings would liable to be scrutinized under the applica ble provisions of law. In these circumstances, the pendency of C.M.A. No.8 of 2026 does not constitute a legal impediment to the adjudication of the instant application, nor can it s prior determination be regarded as a condition precedent or prerequisite for deciding the issues presently requiring adjudication . The objection raised in this regard is, therefore, misconceived and does not merit acceptance. 11. In view of the foregoing discussion, no prima facie case for the grant of temporary in junction as prayed for is made out at this stage ; accordingly, the instant application, being devoid of merit, is dismissed. Civil Original No.3907/2024 (-11-)

MAIN CASE 12. Let the main case along with all pending CMAs be listed for hearing on 21.09.2026.

ABID AZIZ SHEIKH JUDGE Approved for reporting.

JUDGE Arsalan*

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