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Official Citation: 2026 LHC 2968
Court / Jurisdiction: Lahore High Court (Honorable Mr. Justice Abid Aziz Sheikh)
Ruling Summary: This decision was rendered by the Lahore High Court (Honorable Mr. Justice Abid Aziz Sheikh), officially reported as 2026 LHC 2968. In this matter between the Petitioner 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: Lahore High Court (Honorable Mr. Justice Abid Aziz Sheikh) DECISION DATE: 05-05-2026 TAGLINE: The requirement of production of succession certificate or lawful award under Section 78 of the Companies Act, 2017 is not merely a procedural formality; rather, it serves the substantive purpose of determining entitlement of the legal heirs vis-a-vis movable assets of the deceased, including shares and securities, thereby protecting the company from exposure to conflicting claims, multiplicity of proceedings, and future litigation. CASE DETAILS: C.O. (Commercial) 34135/24 ============================================================ Stereo.HCJDA.38 JUDGMENT SHEET IN THE LAHORE HIGH COURT LAHORE JUDICIAL DEPARTMENT
Civil Original No.34135/2024
Mst. Sultana Tajammal Ch. Vs. M/s United Industries Ltd. etc.
JUDGMENT
Date of hearing 05-05-2026 Petitioner by Raza Imtiaz Siddiqui, Jamshid Alam and Ali Umarao, Advocates. Respondents No.1 and 2 by M/s Adil Umar Bandial and Sajjad Ali, Advocates. Respondent No.3 by Mr. Sikander Bashir Mohmand, Advocate. Respondent No.4 by M/s Muhammad Ahsan Bhoon, Muhammad Ayyaz Awan, Barrister Asad Rahim Khan, Faiz-e-Azhar, Mian Ali Tariq Rehman and Ms. Nimra Arshad, Advocates. Respondent No.5 by M/s Rashid Mehmood Gill, Ali Waqar Bosal, Rana Haseeb Ahmad Khan, Abdul Rehman Goraya, and Irfan Dawood Advocates. Respondents No.6 and 7 by M/s Ruman Bilal , Qari Zuhaib -ur-Rehman Zubairi and Zulfiqar Ali Shah, Advocates.
ABID AZIZ SHEIKH, J. This Civil Original Petition has been instituted under Section 126 of the Companies Act, 2017 (the "Act"), seeking rectification of the register of members of respondent No.1, namely M/s United Industries Limited (hereinafter referred to as the "respondent-Company"). 2. Relevant facts are that the respondent-Company, a public limited company, is engaged in the business of manufacturing ghee, and it has paid up capital of Rs.55,000,000/ - divided into 5,500,000 ordinary shares of Rs.10/- each. Several disputes arose between the shareholders of respondent -Company; resultantly, Civil Original No.35 of 2006 was filed, inter alia , seeking winding up of the respondent -Company, however, the aforesaid Petition was dismissed by this Court vide judgment dated 02.03.2016, reported as " Mian Waqar-ud-Din and others V. M/s United Indu stries Limited and others " (2017 CLD 696 ). Now, Civil Original No.34135 of 2024 -2-
ICA No.02 of 2015 and ICA No.10 of 2016 are pending before Division Benches of this Court. When Civil Original No.35/2006 was filed, one shareholder namely Mst. Begum Parveen Hameed Muggo had 808,500 shares of the respondent -Company and she was also one of its Directors ; she passed away on 20.08.2021. Subsequently, the Board of Directors of respondent -Company (hereinafter referred to as the "Board"), vide Resolution dated 30.11.2022 (hereinafter referred to as "impugned Resolution"), transferred and registered shares of the deceased (Mst. Begum Parveen Hameed Muggo) to her legal heirs under Section 78 of the Act. Being aggrieved thereof, the petitioner has filed this Petition. 3. Learned counsel for the petit ioner (Mr. Raza Imtiaz Siddiqui, Advocate) contends that Begum Parveen Hameed Muggo (hereinafter referred to as the " deceased") was the registered holder of 808,500 shares in the respondent-Company and passed away on 20.08.2021. Submits that the petitioner is the deceased’s daughter; respondent No.4 namely Muhammad Khurram Hameed Muggo is her son; and respondent No.5 namely Mst. Mehr Bano Sethi is her maternal granddaughter through her predeceased daughter, Mst. Neelofur Sethi. He submits that shortly prior to her demise, i.e. on 10.08.2021, the deceased made an oral gift of her entire shareholdings in favour of the petitioner and, in furtherance thereof, delivered the physical share scrip s to her . Learned counsel adds that proceedings for the issuance of succession certificate were pending before the Civil Court and, during the pendency thereof, a meeting of the Board was convened on 30.11.2022, wherein it was specifically brought to the notice of the Board that the succession certificate had not y et been issued and that the petitioner had asserted exclusive entitlement to the entire shareholding of the deceased on the basis of oral gift. Submits that although the Board did not accept or recognize the petitioner’s claim founded upon the alleged oral gift, it Civil Original No.34135 of 2024 -3-
nonetheless proceeded , without awaiting the outcome of the succession proceedings, to distribute the shares of the deceased between the petitioner and respondent No.4 in accordance with their purported respective shares under the law of inheritance, whereas, the share to the extent of entitlement of respondent No.5 was deferred till the decision of the Court, vide impugned Resolution dated 30.11.2022. Further contends that subsequent to the passing of the impugned Resolution , the petition er instituted a civil Suit on 26.12.2022 seeking a declaration to the effect that she is the sole lawful owner of the entire shareholding of the deceased, which matter is presently sub judice before the Civil Court. He maintains that notwithstanding the p endency of the said Suit, the main grievance raised in this Petition pertains to the alleged violation of the statutory provisions, particularly Section 78 of the Act, which mandates that shares or other securities of a deceased member can only be transferred on an application duly supported either by a valid s uccession certificate or by a lawful adjudication/award determining the rights and entitlements of the successors, whereupon their names may be entered in the register of members to the extent of their respective shares. Learned counsel submits that in the present case , admittedly, neither any succession certificate had been produced nor any lawful adjudication or award existed in favour of respondents No.4 and 5 at the relevant time , therefore, the Board lacked lawful authority and jurisdiction to effect transfer of the shares of the deceased through the impugned Resolution . Learned counsel further submits that even otherwise, in terms of Section 74 of the Act, a valid instrument of transfer is sine qua non for transfer of shares inter vivos ; however, no such instrument was ever produced in the instant case , which according to him remains in possession of the petitioner ; rather, the Chief Executive Officer (CEO) of the respondent -Company was purportedly authorized to endorse the shareholdings, a course of action which, according to learned counsel, is wholly alien to the statutory scheme and Civil Original No.34135 of 2024 -4-
devoid of legal sanction . Lastly s ubmits that although the disputed questions of fact regarding the respective entitlements of the petitioner and respondents No.4 and 5 are pending adjudication before the Civil Court, yet in this Petition , the petitioner only seeks enforcement of the mandatory provisions of law, particularly Section 78 of the Act , which stand glaringly violated by the impugned Resolution. 4. Mr. Muhammad Ahsan Bhoon, Advocate, appearing on behalf of respondent No.4 (Muhammad Khurram Hameed Muggo, son of the deceased ), submits that the deceased had passed away on 20.08.2021 and the petitioner’s assertion that the deceased, merely ten days prior to her demise, i.e., on 10.08.2021, had allegedly made an oral gift of the entirety of her shareholding in favour of the peti tioner, gives rise to serious and highly disputed questions of fact , and the said controversy is presently sub judice before the Civil Court by way of Suit, instituted by respondent No.4 and, therefore, the same is not amenable to adjudication in the insta nt proceedings. Regarding the production of succession certificate, learned counsel submits that when the petitioner herself had earlier filed C.M. No.4 of 2021 in ICA No.10/2016 to implead the legal heirs of the deceased, thereby unequivocally acknowledgi ng their status as legal heirs, the insistence upon the production of a succession certificate for the purposes of establishing the status of legal heirs and determination of shareholding is wholly unwarranted and redundant , particularly when such status already stands admitted through the petitioner’s own conduct before this Court. Mr. Muhammad Ayyaz Awan, Advocate, also appearing on behalf of respondent No.4, further contends that the order dated 31.01.2022 passed by the Division Bench of this Court in I CA No.10 of 2016 sufficiently satisfies and fulfills the legal requirements for passing of the impugned Resolution. 5. Mr. Sikander Bashir Mohmand , Advocate appearing on behalf of respondent No.3 (M. Akbar Muggo) submits that the Civil Original No.34135 of 2024 -5-
impugned Resolution has b een validly and lawfully passed by the Board in exercise of powers conferred under Section 78 of the Act, inasmuch as the order dated 31.01.2022 passed by the Division Bench of this Court in ICA No.10/2016 constitutes a lawful award/order within the contem plation of the aforesaid provision. He submits that the said order is self -executing in nature and, by operation of law, the shares devolved upon and stood transferred in favour of the legal heirs of the deceased shareholder; hence, the production or issua nce of share certificate(s) was not required, such requirement being a condition precedent only in proceeding governed by Section 74 of the Act and not in matters falling within the ambit of Section 78 ibid. He further submits that C.M. No.5 of 2021 had be en filed by Mian Waqar -ud-Din and others in ICA No.10 of 2016 seeking payment of dividend to the shareholders, and it was in the said application that the orders dated 25.01.2022 and 31.01.2022 were passed with the express consent, concurrence, and participation of the present petitioner. 6. Mr. Adil Umar Bandial , Advocate, learned counsel appearing on behalf of respondents No.1 and 2, has reiterated the submissions advanced earlier and contends that subsequent to the impugned Resolution, the petitioner ha s continuously been receiving dividends thereunder without raising any objection, therefore, having acquiesced in the said Resolution and having derived benefit therefrom over a considerable period of time , the petitioner is now estopped, by her own conduc t, from assailing the validity thereof at this belated stage. 7. In rebuttal to the arguments advanced on behalf of the respondents, learned counsel for the petitioner submits that a Winding-up Petition (Civil Original No.35/2006) had earlier been instituted by the petitioner, along with other shareholders, against the respondent -Company, which stood dismissed vide judgment dated 02.03.2016, reported as " Mian Waqar -ud-Din and others V. M/s United Industries Limited and others " (2017 Civil Original No.34135 of 2024 -6-
CLD 696). He submits that in the ensuing Appeal (ICA No.10 of 2016), the appellants, including the present petitioner who was arrayed as appellant No.4, filed C.M. No.4 of 2021 seeking impleadment of the legal heirs of Begum Parveen Hameed Muggo, who had expired on 20.08.2021 and the said application was allowed vide order dated 09.12.2021. Learned counsel contends that thereafter one of the appellants filed C.M. No.5 of 2021, seeking distribution of the dividend amongst all shareholders, which was also allowed vide order dated 25.01.2022. He maintains that neither in the aforementioned proceedings nor in the orders passed therein, was the controversy involved in the present matter either adverted to or finally adjudicated upon. He adds that the impugned Resolution was specifically assailed in ICA No.10/2016 through C.M. No.1 of 2023; however, vide order dated 25.01.2023 passed by the Division Bench of this Court in the said ICA, the application seeking setting aside of the impugned Resolution was not entertained; n evertheless, liberty was expressly granted to the petitioner to seek appropriate relief by filing an application under Section 126 of the Act, if so advised; hence, this Petition has been instituted. 8. Arguments heard. In the instant Petition instituted under Section 126 of the Act, the petitioner seeks rectification of the register of members of the respondent -Company, primarily on the ground that the Board of Directors, through the impugned Resolution dated 30.11.2022, transferred the shares standing in name of the deceased shareholder in favour of the petitioner as well as respondents No.4 and 5, being the legal heirs of the deceased, allegedly without fulfilling the statutory requirements envisaged under Section 78 of the Act. For the ready reference and proper appreciation of the controversy involved in the matter, Section 78 of the Act is reproduced hereunder:- "78. Transfer to successor -in-interest.—The shares or other securities of a deceased member shall be Civil Original No.34135 of 2024 -7-
transferred on application duly supported by succession certificate or by lawful award, as the case may be, in favour of the successors to the extent of their interests and their names shall be entered in the register of members."
A plain reading of the above -quoted provision manifests that the shares or other securities of a deceased member shall be transferred upon an application duly supported either by a succession certificate or by a lawfu l award, as the case may be, in favour of the successors to the extent of their respective shares and interests, whereupon their names shall be entered in the register of members of the company. Section 78 of the Act regulates the transmission of shares or other securities standing in the name of a deceased member and provides that such transmission shall be effected upon an application either by a succession certificate or by a lawful award, as the case may be. The said provision, thus, contemplates and re cognizes two distinct documentary bases for the transmission of shares or other securities of a deceased member. While the expression "succession certificate" is a well -recognized and ascertainable term governed by the provisions of the Succession Act, 192 5 ("Succession Act") however, the expression "lawful award" has neither been defined in the Act or in the repealed Companies Ordinance, 1984 ("Ordinance"), nor likewise in any subordinate legislation framed thereunder. Consequently, the scope and import of the said expression are required to be gathered from its ordinary legal connotation, accepted juristic meaning, and the legislative intent underlying the provision. Prima-facie, it appears that the legislature, in its wisdom, consciously employed the broader expression "lawful award" instead of restricting the provision merely to a decree or judgment, thereby manifesting legislative intent to encompass adjudicatory determinations emanating from forums acting within lawful jurisdiction and in accordance wit h law. The expression, therefore, cannot be Civil Original No.34135 of 2024 -8-
construed in a narrow or restrictive sense so as to limit its applicability only to decrees passed by Civil Courts. Rather, the use of the said terminology indicates legislative recognition of determinations made by judicial, quasi-judicial, arbitral, or other legally constituted adjudicatory forums, provided that such determinations possess lawful authority and binding effect. In this regard, Black’s Law Dictionary (Eleventh Edition) defines the term "award" as " to grant by formal process or by judicial decree". Likewise, Words and Phrases (Permanent Edition), Volume 4B, explains that the term "award" is generally used to denote "any decision or determination rendered by arbitrators, commissioners, or other privat e or extrajudicial deciders upon a controversy submitted to them". Similarly, P. Ramanatha Aiyar, in The Major Law Lexicon (4th Edition 2010), states that the expression "award" envisages "a binding decision of a judicial or quasi-judicial authority" and further observes that the expression cannot be confined merely to contractual arbitration, as it contemplates adjudicatory intervention by a third party for the resolution of a dispute. The common thread , emerging from the above ordinary dictionary meanings of the expression "award", is that it ordinarily signifies a binding and enforceable determination rendered by a competent adjudicatory authority in respect of a dispute or matter requiring formal determination. 9. In the present case, there is no dispute that the deceased died on 20.08.2021, and respondent No.4 is her son; respondent No.5 is her maternal granddaughter; and the petitioner is her daughter. The aforesaid relationship inter se the parties stands unequivocally admitted by the petitioner herself in C.M. No. 4 of 2021 filed in ICA No.10 of 2016, whereby impleadment of the aforesaid persons as legal heirs of the deceased was sought, which application was allowed by the Division Benc h of this Court vide order dated 09.12.2021. However, for incorporation of the names of the legal heirs in the register of members of the respondent-Company under Section 78 of the Act, the mandatory Civil Original No.34135 of 2024 -9-
requirement of law is that the application must be accom panied by a succession certificate or a lawful award in favour of the successors specifying their shares and interests. Admittedly, respondent No.4 and the petitioner instituted a petition for issuance of succession certificate on 26.01.2022, which is stil l pending adjudication before the competent forum; hence, no succession certificate presently exists in the field authorizing either the transfer of the shares standing in the name of the deceased or the incorporation of the names of the legal heirs in the register of me mbers of the respondent -Company. T he requirement of production of succession certificate under Section 78 of the Act is not a mere procedural formality; rather, it serves the substantive purpose of judicially determining entitlement of the legal heirs vis-à-vis movable assets of the deceased, including shares and securities, thereby protecting the company from exposure to conflicting claims , multiplicity of proceedings, and future litigation. Moreover, the Board, while exercising powers relating to maintenance and rectification of the register of members, acts in a fiduciary and quasi -administrative capacity and it is neither vested with jurisdiction to determine disputed questions of inheritance nor empowered to adjudicate competing proprietary claims inter se the legal heirs in absence of lawful succession documentation. In such circumstances, any incorporation of names of the legal heirs in the register of members without fulfillment of the statutory requirements contemplated under Section 7 8 of the Act would not only be against the mandate of law but may also prejudice the rights of other claimants , if any, whose entitlement is yet to be finally determined by the competent Court of jurisdiction. 10. The next question requiring determination is whether there existed any "lawful award" for the transfer of the shares in favour of the legal heirs of the deceased. Perusal of the record reveals that in ICA No.10/2016 there were four appellants, including th e present petitioner, who was arrayed as appellant No.4. One of the Civil Original No.34135 of 2024 -10-
said appellants (Mian Waqar-ud-Din) signed and filed C.M. No.5 of 2021 seeking distribution of 40% of the profit after tax as dividend amongst the applicants/appellants as well as the respondents for the Financial Year 2020 –2021. The said application was allowed vide order dated 25.01.2022. Thereafter, through a subsequent order dated 31.01.2022 in ICA No.10 of 2016, the legal heirs of the deceased i.e. Neelofur along with the appellants and respondents were specifically recognized for the purposes of distribution of dividend. For ready reference, the aforesaid order dated 31.01.2022 is reproduced hereunder:- "Pursuant to order dated 25.01.2022, learned counsels apprised that earlier shares in the name of deceased Begum Parveen Hameed Muggo devolved upon her legal heirs – Khurram (son), Sultana Tajammul (daughter) and Neelofur (daughter). And later Neelofur died, represented by legal heirs namely Mahar Bano (daughter), Khurram (brother) and S ultana Tajammul (daughter). It is requested that dividend be distributed, in accordance with the transitory arrangement in place, consistently followed, to the legal heirs of deceased Neelofur, amongst others. Shareholding of the legal heirs of deceased Neelofur is as follows:-
Sr. No. Name of Shareholder Relationship with Begum PHM Share Inherited Existing Shareholding Total Shares Held (New Position) UIL Share Holding % 1. Khurram Son 471,625.00 - 471,625.00 8.58 2. Sultana Tajammul Daughter 235,812.50 539,000.00 774,812.50 14.09 3. Mahar Bano Neelofur’s (Deceased) Daughter 101,062.50 - 101,062.50 1.84
2. Order dated 25.01.2022 shall read the inclusion of legal heirs of deceased Neelofur, along applicants and respondents, and dividend be accordingly distributed."
Undoubtedly, the aforesaid order did not emanate from any adjudication upon the respective claims and contentions of the parties; nevertheless, it constituted an interim arrangement governing the distribution of dividend amongst the sharehol ders in accordance with the transitory mechanism then holding the Civil Original No.34135 of 2024 -11-
field during pendency of the lis. It is a settled principle that any interim arrangement made for distribution of dividend during the pendency of proceedings neither confers any proprietary or vested rights upon the parties nor operates as res judicata with regard to the question of title, succession or entitlement to shares, particularly where the underlying rights and interests of the parties remain disputed and are yet to attain final adju dication by a Court of competent jurisdiction. In such circumstances, the impugned Resolution of the Board entering the names of the shareholders in the register of members of the respondent - Company was only for the limited and specific purpose of facilitating distribution of dividend in terms of the above - reproduced order passed by the Division Bench of this Court, however, the said order could not be construed, treated or equated by the Board with a succession certificate or a lawful award within the con templation of Section 78 of the Act, which alone constitute the legally recognized modes for transmission of shares and securities of a deceased member. 11. The Sindh High Court, in " NP Waterproof Industries (Pvt.) Ltd. and 4 others V. NP Spinning Mills Limited and 2 others" (2023 CLD 33 ), held that a successor intending to take advantage of any shareholding left by a deceased shareholder has to follow the procedure prescribed under Section 78 of the Act, which provides that shares or securities of the de ceased shall be transferred on application duly supported by succession certificate or by lawful award. The Court further held that the shares do not automatically devolve upon the legal heirs of deceased shareholder unless and until the procedure prescribed in Section 78 of the Act has been duly followed. In the present case, no doubt, C.M. No.4/2021 in ICA No.10/2016 was filed by the petitioner, being one of the appellants, for impleadment of the legal heirs of the deceased, which was allowed on 09.12.202 1 and thereafter, C.M. No.5/2021 in the said ICA was filed by one of the appellants for distribution of the dividend, which was also Civil Original No.34135 of 2024 -12-
allowed on 25.01.2022. However, both the aforesaid orders are required to be read strictly in the context of limited relief sought in the said applications. Neither in the said applications nor in the orders passed thereon, there was any adjudication after recording contentions of the parties pertaining to the entitlement to the shares of the deceased inter se the legal heirs nor was there any determination concerning rectification of the register of members of the respondent -Company in respect of the shares standing in the name of the deceased; hence, the aforesaid orders cannot be construed as a "lawful award" in terms of Section 78 of the Act. 12. It is also pertinent to observe that, in respect of the same subject matter, including 808,500 shares of the deceased in the respondent-Company, the following multiple proceedings are presently pending before the Civil Courts betwee n the petitioner and respondents No.1, 3 and 4:- (i) a Suit for Declaration, Mandatory and Permanent Injunction along with consequential relief, instituted by the petitioner against respondents No.1, 3 and 4; (ii) a Suit for Declaration, Accounts, Adminis tration and Distribution of assets of the deceased among legal heirs, instituted by respondent No.4 against six defendants, including the petitioner and respondent No.5; and (iii) a Petition under Section 372 of the Succession Act seeking issuance of…
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