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Petitioner: Haji Abdur Rehman VS Respondent: Umar Farooq Miankhel and others
Court Name: Peshawar High Court Judge(s): Yahya Afridi, Qalandar Ali Khan Title: Haji Abdur Rehman vs Umar Farooq Miankhel and others Case No.: ICA No.3/2005 Date of Judgment:2018-02-13 Reported As: 2018 PHC 1323 Result: N/A
Judgment YAHYA AFRIDI, C.J.-Through this single judgment, we propose to dispose of four connected matters, as they all have common questions of law and facts involved therein. The particulars of the same are:- 1. ICA No.03/2005 (Haji Abdur Rehman and others...Vs...Umar Farooq Miankhel and others) 2. E.P.No.10/1998 (Umar Farooq Miankhel...Vs...Mughal Flour and General Mills etc). 3. C.Mis.No.45/2002 in E.P.No.10/1998 (Umar Farooq Khan...Vs...Mughal Flour and General Mills) 4. Cross Objection No.03/2007 in ICA No.03/2005 (Haji Abdur Rehman...Vs...Umar Farooq Miankhel) 2. The brief facts leading to the above petitions are that Haji Abdur Rehman, Haji Noor Muhammad, Umar Farooq Khan Miankhel and Fatehullah Khan Miankhel were the subscribers to the Memorandum of Association of M/S Mughal Flour and General Mills (Pvt.) Limited ("Company"); that after the incorporation of the Company, Haji Abdur Rehman was elected as the Managing Director of the Company, whereas Umar Farooq Miankhel was designated as the Executive Director; and that the Company availed a finance facility from Regional Development Finance Corporation ("RDFC"), and as per terms thereof, inter alia, share certificates of Umar Farooq Khan Miankhel and Fatehullah Khan Miankhel were pledged, as part of the collateral and stipulation that the same could not be transferred without RDFC's approval. 3. The events that follow have a chequered history . However , for disposal of the four matters, the relevant facts, in chronological order , are as follows:- 25.02.1992
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Umar Farooq Miankhel and his brother , Fatehullah Khan Miankhel, dissatisfied with the way Haji Abdur Rehman was running the affairs of the Company , filed CC No.2/1992 before the worthy Company Judge under Sections 158, 170, 178, 233 and 29 of the Companies Ordinance, 1984 ("Ordinance") , praying that:- a) holding of the Annul General Meeting of the Company for the year 1990-91 in terms of Section 158 of the Companies Ordinance; b) to present a balance sheet and the profit and loss account under the requirement of Section 233 of the said Ordinance before the Annual General Meeting of the Company; c) for declaration of the action taken, acts done or order passed by respondent No.2 after expiry of 18 months of the incorporation of the company , as illegal and without lawful authority; and d) for ordering the transfer of 55,000 shares by respondent No.2 in favour of respondent No.7 as illegal and ineffective. 06.05.1992 Haji Abdur Rehman filed Form 'A' and Form '29' of the Company, wherein Umar Farooq Miankhel and Fatehullah Khan Miankhel were neither recorded members nor directors. The shareholding reflected therein was as under:- i. Haji Abdur Rehman (170,000) ii. Haji Noor Muhammad (50,000) iii. Muhammad Ibrahim (30,000) iv. Saif-ur-Rehman (25,000) v. Fazal-ur-Rehman (125,000) vi. RDFC (130,000) 10.05.1992 The Deputy Registrar of Company Peshawar refused to accept Form 'A' and Form '29' filed by Haji Abdur Rehman and required him to provide the followings:- i. Copy of Minutes of the Meeting. ii. Copy of Notice of Meeting. iii. Copies of Transfer deed duly stamped. 19.05.1992 Haji Abdur Rehman responded to the directions of Deputy Registrar, Peshawar inter alia, stating that there was no need of Board meeting for transfer of shares, as provided under Section 76 of the Ordinance and clause 9 of the Articles of Association. 06.06.1992 The company case No.2/1992 was conte sted by the respondents, and was finally decided vide judgment dated 06.06.1992, in terms that:- "Consequently, while allowing this petitions, all the directors of the company are directed to hold the first Annual General Meeting as prayed for in accordance with law without any further loss of time and to proceed in the matter in accordance with the relevant provision of law and respondents 4 and 5 should force compliance of the relevant provision of law and the said respondents are further directed to correct the wrongs and illegalities which have resulted on account of non-compliance of the mandatory provisions of the Ordinance. It is further ordered that the petitioners be shown as share- holders in the relevant register and their old status of Directors of the company be restored. Respondents 2 and 3 would bear the cost of this litigation". 07.01.1997 Intra-Court Appeal No.01/1997, preferred against the abovementioned judgment, was decided in terms that:- "Consequently , the instant appeal is hereby dismissed in limine as time barred alongwith CM # 10/97". 08.10.1997 The aforesaid order was challenged before the Apex Court through CPLA No.850 of 1997, which too was decided vide judgment dated 08.10.1997, in terms that:-
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"For the above reasons even if first appeal was to be filed within 90 days, as claimed by the petitioners, same by any calculation or construction clearly suffers from bar of limitation. We, therefore, do not find any merits in the petition; leave is accordingly refused." 13.06.1998 Umar Farooq Miankhel and Fatehullah Khan Miankhel filed Execution Petition No. 10/1998, praying therein for the following:- "It is, therefore, humbly prayed that this Hon'ble Court may like to execute and enforce its order dated 06.06.1992 passed in CC No.2 of 1992 and a) force respondents 2, 3, 6 to hold the first Annual General Meeting of the company which ought to have been conveyed in the year 1990 and also the Annual General Meetings for the subsequent years till today within a period of one week and to lay before the petitioners in the said Meetings the audited and signed reports of accounts for the years 1990 onwards for discussion, examination and action alongwith a report regarding action taken by respondents No.2 and 3 in the Administrative/Managerial affairs of the Company ever since, b) direct respondents 4 and 5 to force compliance of the relevant provisions of law and correct the wrongs and illegalities which have been cause d so far on account of the non-compliance of mandatory provisions of law AND c) order the respondents to mention and record the names of the applicants as share holders of the Company in the relevant register and restore their status as Directors of the company. The applicants further pray that since the order dated 06.06.1992, granting the aforesaid reliefs is to execute as a decree of the Civil Court, the same may please be executed through the attachment and sale of the shares of respondents 2, 3, 6 in the respondent company and also through arrest and detention of the defaulting respondents with cost of these proceedings." Haji Abdur Rehman moved objection petition No.33/1999 before the worthy Company Judge hearing the Execution Petition No.10/98, wherein he prayed that:- "It is, therefore, respectfully prayed that on acceptance of this petition, this Hon'ble Court may graciously be pleased to allow the objectors to produce evidence and, after recording evidence, the objection petition be accepted and the application for the enforcement of order dated 06.06.92, being without merits, be dismissed with costs". 30.06.1998 till 01.01.1999 Haji Abdur Rehman, enhanced the share capital of the Company by 330,000 ordinary shares (valuing Rs.10/- each), thereby the total share equity of the Company was enhanced to 915,000 ordinary shares. These additional shares were finally issued in the names of Fazlur Rehman, Muhammad Ibrahim, Shah Jehan, Khalid Mehmood, Iftikhar Mehmood, Mst. Gulzar Bibi and Saifur Rehman. 12.07.1999 Execution Petition No.10/1998 was allowed and Objection Petition No.33/1999 was rejected by the worthy Company Judge vide decision dated 12.07.1999, in terms that:- "In the result, I allow E.P.No.10/98 and direct the respondents/directors of the company to hold Annual General Meeting on 21.07.1999 at 9.00 AM in the office of Registrar of the Companies. In case the respondents did not convene the meeting as ordered, the petitioners and respondents are to hold the election under the supervision of the Registrar of the Companies for the appointment of Managing Director of the Company. Respondent No.2 shall make available all the necessary record. The contesting respondents, in case of non-compliance of order, shall pay a fine of Rs. 5000/- and for further defying the order of the Court shall also be liable to punishment with imprisonment for three months and a fine of Rs. 2000/- and shall also cease to hold the office for five years. Consequently, the objection petition is answered in negative." 28.07.1999
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In compliance with the orders of the worthy Company Judge dated 12.07.1999, Annual General Meeting ("AGM") of the Company was held in the office and under supervision of Registrar of the Companies, with following in attendance at the commencement of the meeting:- 1. Mr . Fatehullah Khan 2. Mr . Umer Farooq Miankhel 3. Haji Noor Muhammad 4. Representative of RDFC (Mr. Yousaf Hasnain Naqvi) 5. Haji Abdur Rehman 6. Mr. Muhammad Ibrahim 7. Mr. Saif-ur-Rehman 8. Mr. Fazal-ur-Rehman Haji Abdur Rehman insisted that those who were issued additional shares be allowed to participate in the said meeting, which was refused by the Registrar of Companies, on the following grounds:- A) The issue of allotment of shares subsequent to the Order of Hon'ble Court dated 06.06.1992 was raised in objection petition No.C.M.33 of 1998 and it was, inter alia, stated that "the objectors issued 3,30,000 shares (Rs. 10/ per share) to three persons namely, Khalid Mehmood, Gulzar Bibi and Iftikhar Mahmood and enhanced the paid up capital of the objectors from Rs. 58,50,000/- to Rs.91,50,000/-". It was also stated therein that "the judgment/order dated 6.6.92, because of the events subsequent to the judgment/order and circumstances of the respondent's company have now been totally changed. Hon'ble Court dismissed the objection petition and held in the order dated 12.7.1999 that "consequently the objection petition is answered in negative". A clear inference can, therefore, be drawn from the aforesaid judgment that event subsequent to the Order dated 6.6.1992 of the Hon'ble Court shall have no impact on the Annual General Meeting held on 21.7.1999. B) In sub-para III of para 6 of his report to the Hon'ble Court in C.M.No.10/98 in CC No.2/92, Registrar of Companies has already reported that "any further allotment of shares by the management of the company and their transfer to other persons are unlawful". C) The Order dated 20.07.1999 of the Hon'ble Court in CM 345/99 is "without prejudice to the impugned findings of the Court, and without prejudice to the rights of parties". Rights of parties have already been determined by Hon'ble Court vide Order dated 6.6.61992 by directing rectification of Register of Members of the company and by answering in negative the objection that on account of events subsequent to 6.6.61992 (i.e. allotment of shares, etc), the Order of Hon'ble Court dated 6.6.1992 cannot be enforced. D) Order dated 20.07.1999 has been passed by the Hon'ble Court on the appeal filed by Haji Fazal-ur- Rehman. Haji Fazal-ur-Rehman is shareholder of the company and he has not been debarred from attending the Annual General Meeting. E) Annual General Meeting was being held, of course, "subject to final judgment of the Hon'ble Court in Appeal". Resultantly , only the shareholders, recognized by the worthy Company Judge in his decision dated 6.6.1992 were allowed to participate in the AGM. Haji Abdur Rehman, Saifur Rehman, Fazal-ur Rehman and Muhammad Ibrahim staged walk-out from the AGM without signing the attendance sheet. The shareholders, recognized by the Registrar of the Companies, were as follows:- i. Haji Abdur Rehman (70,000 shares) ii. Haji Noor Muhammad (50,000 shares) iii. Mr . Umer Farooq Miankhel (100,000 shares) iv. Mr. Fatehullah Khan (100,000 shares) v. Representative of RDFC (130,000 shares). Finally , Haji Noor Muhammad, Umar Farooq Miankhel and Fatehullah Khan Miankhel were elected as Directors for a term of three years, while Yousaf Hasna in Naqvi was accepted as nominee Director of RDFC. Further that, Umar
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Farooq Miankhel was appointed as Managing Director/Chief Executive of the Company for a period of three years. 01.02.2000 The order of the worthy Company Judge dated 12.07.1999 was assailed in ICA No.1/1999 by Haji Abdur Rehman, ICA No.2/1999 by Fazal-ur Rehman and ICA No.7/1999 by Muhammad Ibrahim etc. All the three ICAs were dismissed by the worthy Company Judge, in terms that:- "For the aforesaid reasons, we dismiss all the three ICAs and direct that the report of the Registrar , Joint Stock Companies alongwith the Minutes of the Meeting be placed before the Hon'ble Company Judge of this Court on 14.02.2000 for further proceedings. The respondents No.1 and 2 have also moved C.M.No.376/99 in ICA No.1/1999 for the appointment of a commission for spot verification and preparation of inventory with a direction to appellant No.2 not to remove the machinery etc. belonging to, installed in and lying within the premises of appellant No.1. As observed above, the learned Executing Court will still proceed in the matter in the light of the report of the Registrar , Joint Stock Companies for the purpose of fully implementing the impugned judgment and, therefore, we think that it would be just and proper in the circumstances if the respondents No.1 and 2 move the executing Court for grant of such relief, which can be allowed if the implementation of the impugned judgment still wants some time. All the CMs stand disposed off accordingly. The parties are left to bear their own costs." 27.07.2000 Pursuant to the order of this Court in the ibid ICAs, the District Food Controller , D.I.Khan alongwith Mr. Riaz Khan Mehsud, Magistrate 1st Class, visited the unit of the Company and prepared inventory of all the equipment, machinery , construction, registers, furnitu re and fixtures, etc. installed and lying therein in the presence of the witnesses. Thereafter , possession of the unit of the Company was handed over to Umar Farooq Miankhel and Fatehullah Miankhel. 21.05.2001 The decision of this Court rendered in the above ICAs was challenged before the Apex Court through CPLA No.553, 554 and 559 of 2000. The stance taken by Haji Abdur Rehman, which prevailed before the Apex Court was that the disputed purchase/sale of shares from Miankhel brothers was duly reported to the Deputy Registrar , Companies Peshawar; that he arranged for the payments to RDFC, being liquidated liability of the Company amounting to Rs. 6.188 Million, and for the three extra roller bodies installed in the unit of the Company costing Rs. 1.863 Million; that to meet these expenses, 330,000 further shares of the Company were issued; and that in the Objection Petition No.33of 1999,which he had filed, specifically prayed for addu cing evidence in support of the above contentions, the opportunity whereof was not allowed to him. While on the other hand, during the proceedings before the Apex Court, Miankhel brothers and Haji Noor Muhammad rendered an undertaking to the ef fect that:- "The respondents, Umer Farooq Miankhel, Fatehullah Khan and Haji Noor Muhammad, Directors of Mughal Flour Mills shall have no objection if Petitions No.553, 554 and 599 of 2000 are allowed and case is remanded to the Company Judge to provide an opportunity to prove that they have purchased shares of Umar Farooq Khan and Fatehullah Khan Miankhels against valid sale deeds". Finally , the Apex Court vide judgment dated 21.05.2001, decided all the three Civil Petitions in terms that:- "In view of the above statement of learned counsel for respondents the petitions are disposed in the following terms:- i. With consent of learned counsel for parties instant petitions are converted into appeals and allowed. ii. Order dated 1.2.2000 passed by Peshawar High Court in ICA Nos: 1, 2 and 7 of 1999 as well as order dated 12.7.1999 passed by learned Company Judge are set-aside. iii. The case is remanded to the Company Judge of Peshawar High Court for fresh decision of the execution application No.10 of 1998 after impleading Fazlur Rehman, Muhammad Ibrahim, Shah Jehan, Khalid Mahmud, Iftikhar Mehmood, Mst. Gulzar Bibi, Saif-ur-Rehman as respondents and allowing them opportunity to substantiate their pleas relating to order dated 6th June 1992, if any .
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iv. Pending decision of execution application No.10 of 1998 the respondents Umar Farooq Miankhel and Fatehullah Khan Miankhel shall remain possession of the Mill and they shall keep it functioning accordingly . v. The final disposal of execution application No.10 of 1998 will regulate future status of the parties in the business/af fairs of Mughal Flour and General Mills. vi. Learned Company Judge shall try to dispose of the case expeditiously ." 01/07/2005 The worthy Company Judge, on remand of the cases, proceeded with the matter, and in compliance with the directions of the Apex Court, the names of Fazal-ur-Rehman and others, who were issued shares, were impleaded as respondents No.8 to 14 in Execution Petition No.10/1998, and they were permitted to plead their view point. After hearing the parties, the worthy Company Judge passed the impugned decision dated 01.07.2005, in terms that:- "25.In view of the above discussion:- a) E.P .No.10/1998 is partially allowed, as:- i. The transfer of share of the petitioners No.1 and 2 in favour of respondents No.2 and 7 is directed to be void. In terms of Section 152 of the Companies Ordinance, their share hold status be restored and the register of members may be accordingly rectified. The Company (i.e. respondent No.1) is required under Section 154 of the Ordinance to file the notice of rectification with the Registrar (i.e. respondent No.5) within fifteen days. The respondent No.5 shall ensure the rectification of register of members and submit compliance report to this Court within a month. The respondents No.2 and 7 may seek their remedy for the recovery of payment alleged to have been made as consideration for the alleged transfer. ii. The request of the petitioners in C.C No.2/1992 for holding the first Annual General Meeting and the subsequent Annual General Meeting is dismissed being impracticable and inexecutable after 15 years. iii. Similarly , the request for restoratio n of the status of petitioners No.1 and 2 as Directors is dismissed because after three years, the Directors have to be elected afresh and those who were holding the status of Directors in 1990 or 1992 cannot be restored to the said status through the order of the Court. The election will be held in the Annual General Meeting as stated hereinafter . iv. With regard to the prayer in C.C No.2/1992 and the decision dated 06.06.1992 for rectification of wrongs committed by non-compliance of mandatory provisions of law, the matter is being referred to respondent No.4 with a direction to appoint Inspectors, including a Chartered Accountant, in terms of Section 265(a)(ii) read with Section 265(b)(i) to (vi) of the Companies Ordinance for detailed investigation into the affairs of the Company including the inspection of accounts, audit, handling of the shares and the capital (for the entire period of 1989 till 2005). The cost incurred for such investigation shall be borne by the Company to the extent as may be prescribed by the respondent No.4. The Inspectors shall furnish their report within a period of three months in terms of Section 269 of the Ordinance. v. The Inspectors shall also examine the record of the Company , the record of the bank account and the availability of machinery and equipment (this will dispose of C.M.No.10/2002, C.M.No.21/2003 and C.M.No.6/2005). vi. They shall examine the situation under which the shares of Malik Ashiq Saleem (respondent No.7) were transferred and similarly, the need for the enhancement of share capital and the issue of shares to the respondents No.8 to 14. Since the legal requirements were not followed, therefore, the report may also contain the suggestions about the measures to be taken for rectification of irregularities committed during the said process. vii. The matter of respondent No.2 Haji Noor Muhammad also needs consideration by them that how, if any, his shares were reduced or mortgaged/transferred without his consent C.C No.1/2005 is thereby disposed of). b) The Inspector shall, in addition to the above points, look into:- i. The position of accounts of the Company from 1989 to 2005,
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ii. The inventory of equipments, machinery, construction, registers, furniture and fixture, iii. The present share holding status of the respondents No.2,3 and 6 to 14 and petitioner No1 and 2 and the report about compliance of rectification of register of members as per Para-25 (a)(i) above. 26. During the proceedings of investigation by the Inspectors, respondents No.8 to 14 shall be entitled to participate as members as if they are validly entitled to the shares allotted to them. This shall be subject to the final determination of their status as per report of Inspectors and its ratification by the Annual General Meeting. 27. All the present and past officers, Directors, Managing Directors, Secretaries, employees and agents of the Company and all the persons who have been dealing with the company are required to provide all assistance to the Inspectors in terms of Section 268 of the Ordinance. 28. On the receipt of the final report from the Inspectors, the respondent No.5 shall arrange the holding of the Annual General Meeting preferably by the consent and participation of all the shareholders, and in case of non cooperation, the respondent No.5 shall supervise and hold such meetings of all the share holders for:- i. the election of Directors, ii. the ratification of irregularities. iii. the rectification of the report of Inspectors. 29. In case of non-cooperation of either of the parties or the parallel groups, at any stage, or the failure to achieve the end result as per Para 28 above, the respondent No.4 shall initiate the case for winding up of the Company under Section 305(i)(iii) and (iv) read with Section 309 of the Ordinance with particular reference to clause (C) of Section 309. 30. C.M.No.45/2002. The request of Haji Abdur Rehman for return of management of the Mills to him is adjourned for four months to be fixed in November , 2005 (after the compliance of above). Similarly , C.M.N.7/2005 for registration of a criminal case is also adjourned to November , 2005". 4. Having gone through the facts of the case, it would now be appropriate to review the specific prayers sought in the four matters, particulars of which are as follows:- ICA No.3/2005 By way of this petition, the appellant, Haji Abdur Rehman etc., seek the following relief:- "It is, therefore, respectfully prayed that on acceptance of this appeal, the judgment of the learned Company Judge dated 01.07.2005 be set aside and modified in the light of the submissions made in the aforementioned grounds of appeal and the execution petition No.10 of 1998 be dismissed and the Miscellaneous application made by the appellants and dismissed by learned Company Judge be accepted and orders pass accordingly by this Hon'ble Court". E.P.No.10/1998 Through this petition, petitioners, Umar Farooq Miankhel and Fatehullah Khan Miankhel, seek the following relief:- `It is, therefore, humbly prayed that this Hon'ble Court may like to execute and enforce its order dated 06.06.1992 passed in CC No.2 of 1992 and a) force respondents 2, 3, 6 to hold the first Annual General Meeting of the company which ought to have been convened in the year 1990 and also the Annual General Meetings for the subsequent years till today within a period of one week and to lay before the petitioners in the said Meetings the audited and signed reports of accounts for the years 1990 onwards for discuss ion, examination and action alongwith a report regarding action taken by respondents No.2 and 3 in the Administrative/Managerial affairs of the Company ever since, b) direct respondents 4 and 5 to force compliance of the relevant provisions of law and correct the wrongs and illegalities which have been caused so far on account of the non-compliance of mandatory provisions of law AND
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c) order the respondents to mention and record the names of the applicants as share holders of the Company in the relevant register and restore their status as Directors of the company. The applicants further pray that since the order dated 06.06.1992, grantin g the aforesaid reliefs is to execute as a decree of the Civil Court, the same may please be executed through the attachment and sale of the shares of respondents 2, 3, 6 in the respondent company and…
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