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Petitioner: Syed WAJAHAT HUSSAIN ZAIDI VS Respondent: Messrs T.J. IBRAHIM & CO. through Official Assignee and 2 others
Court Name: Sindh High Court Judge(s): Qaiser Iqbal, Arshad Siraj Memon Title:Syed WAJAHAT HUSSAIN ZAIDI vs Messrs T.J. IBRAHIM & CO. through Official
Assignee and 2 others Case No.:Civil Appeals Nos. 1045 and 1221 of 1999 Civil Petition No,2450 of 2001 High Court Appeal No, 33 of 2007 Petition No,2450 of 2001 Appeal No, 33 of 2007 Appeals Nos. 1045 and 1221 of 1999 Date of Judgment:2009-04-01 Reported As: 2009 CLD 1225 Result: Appeal dismissed Judgment ORDER ' ARSHAD SIRAJ MEMON, J.--- This High Court Appeal has been preferred against the Order dated 12-2-2007 passed by the learned Single Judge of this Court in J.M.No,1 of 1989, through which C.M.A.No,697 of 2006 has been dismissed. The matter relates to auction proceedings pending before the learned Official Assignee of this Court, in respect of Bungalow No,C-121, Block-9, Gulshan-e-Iqbal, Karachi, admeasuring about 600 square yards. For the purposes of auction proceedings, the learned Official Assignee invited offer for the said property on "as is where is basis" through the advertisements published in Daily Jang Urdu, Karachi, Lahore, Daily Dawn English Karachi, Lahore and Islamabad and Daily Nawa-e-Waqat, Lahore. 1. In response to the said advertisements Mr. Muhammad Aftab Ashraf gave the offer for Rs,14,000,000. The said offer was received by the learned Official Assignee on 22-4-2006. Subsequently, two more offers were received one from Mr. S. Wajahat Hussain Zaidi (the Appellant in this High Court Appeal) for Rs,16,000,000 on 12-5-2006 and the other offer was received from Mr. Muhammad All Zia (Respondent No,3 in this High Court Appeal) for Rs,16,100,000 on 23-5-2006. From perusal of the record it appears that to obtain better offer, the learned Official Assignee called all the bidders on 23-5-2006 at 2-00 P.M and for improvement of their offers, the matter was put up on 24-5-2006. It has been averred in the Memo of Appeal by the appellant that the learned Official Assignee had sent a letter dated 17th May, 2006 to the appellant to attend his office on 23rd May, 2006 at 2-00 p.m. For improvement of offer.
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2. According to the appellant's learned counsel, the appellant attended the Office of the learned Official Assignee and was directed to compete with another bidder Mr. Muhammad Aftab Ashraf who did not come to improve his bid, resultantly, it has been argued that the offer of the appellant remained as highest bid. The perusal of the record shows that the proceedings were taken up by the learned Official Assignee on 24th May, 2006 for which the learned counsel for the appellant has contended that the appellant had no notice or intimation. Perusal of the record further shows that the learned Official Assignee received a bid of Rs,16,100,000 from respondent No,3 on 24th May, 2006, which was declared to be the highest bid. That in consequence of such confirmation of the bid in favour of respondent No,3 the present appellant filed an application under section 151, C.P.C., bearing C.M.A. No,697 of 2006 disputing the factum of proceedings conducted by the learned Official Assignee on 24th May, 2006. The learned Single Judge dismissed the aforesaid C.M.A. Vide Order dated 12-2-2007 which has been impugned in this appeal. Hence this appeal. 3. Mr. Abrar Hassan learned counsel for the appellant has vehemently challenged the impugned order dated 12-2-2007 and has contended that the bid of respondent No,3 has been accepted without any notice to the appellant and the proceedings were conducted behind his back for which he had no knowledge or notice. 4. Perusal of the earlier orders passed in the present appeal show that on 21-8-2007 Mrs. Sofia Saeed Shah, learned counsel for the respondent No,3 had objected to the maintainability of the appeal and placed reliance on the judgment of the Honourable Supreme Court of Pakistan reported in Ibrahim Shamshi v. Bashir Ahmed Memon 2005 SCMR 1450. A learned Division Bench of this Court vide Order dated 18-9-2007 was pleased to appoint Messrs Rizwan Ahmed Siddiqui, Farooq H. Naek and Abid S. Zubairi Advocates to assist the Court as Amicus Curiae. Subsequently, the matter was adjourned as it was informed by the learned Amicus Curiae that similar question in respect of maintainability of High Court Appeal under section 10 of the Companies Ordinance, 1984, (hereinafter referred as "the Ordinance") was sub judice before the Honourable Supreme Court of Pakistan and the matter was reserved by the Honourable Apex Court. 5. Today when the matter was taken up Mr. Rizwan Ahmed Siddiqui and Mr. Abid S. Zubairi Advocates placed before us judgment of Honourable Supreme Court of Pakistan in Civil Appeal Nos.1045 and 1221 of 1999, 378 of 2003, 320 of 2004 and Civil Petition No,2450 of 2001, which according ,to learned Amicus Curiae have resolved the controversy in respect of maintainability of the appeal under section 10 of the Companies Ordinance, 1984. 6. Before examining the merits of the present appeal, we would like to firstly consider the issue raised by Mrs. Sofia Saeed Shah learned counsel for the respondent No,3 in respect of maintainability of High Court Appeal with reference to section 10 of the Companies Ordinance, 1984. 7. In order to appreciate the issue in hand, it may be advantageous to reproduce section 10 of "the Ordinance" which reads as follows:-- "10. Appeals against Court orders.--(1)' Notwithstanding anything contained in any other law, an appeal against any order, decision or judgment of the Court under this Ordinance shall lie to the Supreme Court where the company ordered to be wound up has a paid up share capital of not less than one million rupee: and, where the company ordered to be wound up has a paid up capital of less than one million rupees, or has no share capital, such appeal shall lie only if the Supreme Court grants leave to appeal. (2) Save as provided in subsection (1), an appeal from any order made or decision given by the Court shall lie in the same manner in which and subject to the same conditions under which appeals lie from any order or decision of the Court. (3) An appeal preferred under subsection (2) shall be finally disposed of by the Court hearing the appeal within ninety days of the submission of the appeal."
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8. The scope and application of section 10 of "the Ordinance" in respect of maintainability of High Court Appeal against the order of the Company Judge exercising the jurisdiction of "the Ordinance" has been examined by various judgments of this Court and by the other Honourable High Court, and the Honourable Supreme Court of Pakistan. 9. In various cases including Ch. Jamil Ahmed v. Nippon Bobbin Company (Pakistan) Ltd. (PLD 1991 Lah.467), Messrs Industrial Development Bank of Pakistan v. Messrs Kamal Enterprises PLD 1995 Quatta 41, Ibrahim Shamsi v. Bashir Ahmed Memon 2005 SCMR 1450 and Lahore Development Authority v. Investment Corporation of Pakistan 2003 CLD 1764, point in issue whether after passing winding up order, the appeal against subsequent interlocutory order passed by the learned Company Judge shall lie to Honourable Supreme Court or before a Division Bench of High Court was considered and it was held that section 10(1) of "the Ordinance" provides that an appeal against any order, decision or judgment of the Court under the Ordinance shall lie to the Supreme Court where the company ordered to be wound up has a paid up share capital of not less than Rupee on million and where the Company ordered to be wound up has the paid up capital of less than Rupee one million or has no share capital, such appeal shall lie only if the Supreme Court grants leave to appeal. Thus, it was held in the cases referred supra that even the interlocutory orders passed after the winding up of the company, an appeal would lie against such orders before the Supreme Court of Pakistan. It was noted by us that in numerous cases similar view was taken, however, the matter came under the consideration before the Honourable Supreme Court of Pakistan in Zakauddin v. Dastgir Investment and Management Limited (Liquidation), reported in 2004 CLC 1037, where their lordships were pleased to grant leave to appeal to consider whether the appeal against the interlocutory order would be maintainable before the Division Bench of the High Court or it has to be filed before the Supreme Court of Pakistan under the provisions of section 10 of "the Ordinance". Leave to the same effect was also granted as in the case of Muhammad Bux v. Pakistan Industrial Credit Investment Corporation Limited reported in 1999 SCMR 25. It would be advantageous to reproduce the operative part for convenience and ready reference:-- "The question which, however, arises for determination is whether the words "whether the company ordered to be wound up" occurring in subsection (1) of section 10 of the Companies Ordinance have references only to the order relating to winding up of the company or they would refer to any order that is passed by the Court after the company has been ordered to be wound up. If such wide connotation is given to the said words, then any interlocutory order passed by the High Court after a company has been ordered to be wound up would become appealable to this Court by virtue of section 10(1). The judgment of the High Court has also been assailed on merits." 10. We have been able to lay out hands on a judgment authored by Sabihuddin Ahmed, J. (as his lordship then was) which is a Full Bench judgment of this Court in the case of Agha Fakhruddin Khan v. Messrs Ruby Rice and General reported in 2001 YLR 1997 [Karachi]. The facts of the said case are that the appeal was directed against the order of the learned Company Judge dated 24-12- 1999 wherein an earlier order dated 25-10-1995 accepting the bid of the appellant for purchase of the assets of Messrs Ruby Rice Engineering Mills Limited (Company in Liquidation) was recalled, the amount deposited by him was forfeited and the Official Liquidator was directed to re-advertise the sale of the property. In the said case the impugned interlocutory order was questioned by the appellant/auction-purchaser. The learned Official Liquidator as well as the respondent No,3 questioned the maintainability of the appeal contending that all appeals against order passed after the company had been ordered to be wound up could be preferred only before the Honourable Supreme Court either as of right or by way of special leave in terms of section 10(1) of "the Ordinance" and reliance was placed on a Division Bench judgment of this Court in Muhammad Farooq V.T.J. Ebrahim and Company and Alliance Motors PLD 1999 Karachi 246. On the other hand the counsel for the appellant had referred to an earlier Division Bench judgment in Mehboob
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Industries v. PICIC 1988 CLC 866, where certain observation appears to support the view that the appeal was maintainable before the High Court. Their lordship noticing the difference of opinion amongst the Division Benches, on the basis of principle laid down by the Honourable Supreme Court in Multiline Associate v. Ardeshir Cowasjee 1995 SCMR 362 a Full Bench was constituted. The Honourable Full Bench of this Court heard the matter and examined the divergent views of the appellant and the respondent in respect of interpretation of section 10 of "the Ordinance" in respect of the maintainability of the appeal in case of interlocutory orders passed after a company has been ordered to be wound up. In ultimate analysis the Honourable Full Bench of this Court held that in case of interlocutory orders passed after winding 'up order, the appeal would lie to the Division Bench. It would be advantageous to reproduce the Dicta laid down by the Honourable Full Bench of this Court:- 8. "Having carefully considered the respective contentions advanced before us it appears that language used in section 10(1) of the Companies Ordinance, does present some ambiguity. Prima facie the contention of Mr. Asim Mansoor Khan duly supported by precedents to the effect that the words any order, decision or judgment appear to be of very wide import is not altogether unfounded. Nevertheless, at the same time it cannot be overlooked, as argued by Mr. Rashid Akhtar Qureshi, that these words are qualified by the expression where the company ordered to be wound up has a paid up capital of Rs,1 million restricts the operation of the provision to specific types of orders i,e, orders of the Company Judge directing that a Company be wound up. In the circumstances, it appears necessary to discover the true legislative intent by reading the Ordinance as an organic whole." 9. "In the first instance it needs to be kept in view that once a winding up order is passed under section 314 of the Ordinance and an Official Liquidator is appointed, the liquidator performs his duties subject to the directions of the Court and the Court retains the power to pass interlocutory orders of several kinds till the process is completed and the company is finally dissolved. Moreover section 396 to 401 stipulate that even in cases where voluntary winding up is commenced the Court either on its own motion or in the application of any person entitled to apply for winding up can order that such process shall continue subject to the supervision of the Court. Therefore, even in such cases the Court acquires the jurisdiction to pass orders of various nature during the winding up process. The question which has agitated us is as to whether the legislature intended that all such interlocutory orders some of which may be quite innocuous should be made directly appealable before the Honourable Supreme Court and particularly when the paid-up share capital of the Company exceeded Rs,1 million the appellant may not even be required to obtain leave to appeal but prefer such appeal as of right. I have found that the same question came up for consideration before the Honourable Supreme Court in Muhammad Bux v. Pakistan Industrial Credit Investment Corporation Limited 1999 SCMR 25 and persuaded their Lordships to grant leave to examine it. However, I have been informed by the Registrar Supreme Court that no final judgment has been pronounced so far. It may be pertinent to quote the following observations from the leave granting order:-- ' The question which, however, arises for determination is whether the words "where the Company ordered to be wound up" occurring in subsection (1) of section 10 of the Companies Ordinance have reference only to the order relating to winding up of the Company or they would refer to any order that is passed by the Court after the Company has been ordered to be wound up. If such wide connotation is given to the said words, then any interlocutory order passed by the High Court after a Company has been ordered to be wound up would become appealable to this Court by virtue of section 10(1). The judgment of the High Court has also been assailed on merits." 10. "We agree with the Official Liquidator to the extent that the Scheme of 1984 Ordinance stipulated early disposal of proceedings under the Ordinance and certain provision which did not exist in its
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predecessor statute i,e, the Companies Act, 1913 clearly point in this direction. Section 9 provides that petitions and applications under the Ordinance should be disposed of expeditiously but no later than 90 days from the presentation thereof. It also provides that except for an unusual circumstances cases should be on a day to day basis. Section 10(3) requires that appeals filed under section 10(2) should be disposed of within 90 days. These provisions may indeed be directory but their significance as to the manifestation of the legislative will cannot be undermined." 11. "Nevertheless the assertions that interlocutory orders passed during the winding up process were made appealable only to the Honourable Supreme Court in view of the above context appears misconceived. It needs to be emphasized that whereas appeals under section 10(2) are required to be decided within 90 days there is no such binding in respect of appeals under section 10(1). Moreover, it appears highly incongruous to assume that on one hand the legislature sought to provide a mechanism for early disposal of cases under the Ordinance and at the same time conferred an unfettered right upon a litigating party aggrieved even by a slightly harmful interlocutory order of the Company Judge to insist that his appeal be heard by the Honourable Supreme Court after notice to all parties and after fulfilment of all prerequisites for hearing of a regular appeal. It does not stand to reason that where appeal to the Supreme Court as of right has been provided by the Constitution against final orders of a High Court in a very limited number of cases, such right should be made available against interlocutory order in a category of cases which the legislature intended to be disposed of expeditiously. We constrained, to observe that such interpretation of section 10(1) would defeat the very intent of the legislation." 12. "Indeed there is justification for granting a right to appeal to the Supreme Court against an order of winding up of a Company because of the importance of such matter in the economic life of the country and in view of the well settled principle that the Court should make all possible efforts to save a Company rather than allowing it to die. The same principle however, could not be extended to interlocutory orders. We would therefore, respectfully endorse the observations of Ajmal Mian, J. (as his Lordship then was) in the case of Mahboob Industries 1998 CLC 866 and disagree with the view taken in the cases of Muhammad Farooq v. T.J. Ibrahim and Company PLD 1999 Karachi 246 and by the Lahore High Court in the cases of Ch. Jameel Ahmad PLD 1991 Lah.467 and Muhammad Suleman 1997 CLC 867. The objection as to the maintainability of the appeal is, therefore, rejected and it may be placed before a Division Bench for appropriate orders." 11. Learned Amicus Curiae has placed before us very recent judgment of the Honourable Supreme Court of Pakistan in Civil Appeal Nos.1045 and 1221 of 1999, 378 of 2003, 320 of 2004 and Civil Petition No,2450 of 2001 given in Kamaluddin Qureshi v. Ali International Co. And others, which are similar and identical cases. The Honourable Supreme Court of Pakistan in substance has approved the dictum laid down by the Full Bench of this Court referred supra and it would be also advantageous to reproduce the dictum laid down by the Honourable Supreme Court of Pakistan in extenso for the sake of clarity. 8. "At this juncture before proceeding further, it may be appropriate to consider the scope consequences and effect of an order of winding up of a Company. An order of winding up of a Company encompasses activities in different spheres of economic activity and effects interests of divergent nature. The investment of shareholders and investors are at stake. The various contracts with those supplying or providing services to the Company and their economic activities are effected. In case, the Company is engaged in providing goods or services of essential or of daily requirements of the community, such order may cause abrupt withdrawal of all such products or services being provided by the Company under liquidation. The various works undertaken by the Company or under different contracts are brought to a stand still. The recovery of taxes, duties and levies resulting from the activities is discontinued, last but not the least. The entire range of
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creditors, suppliers, bankers, financers and employees entitled to their respective dues are also exposed to difficulties and uncertainties. No order passed under the Company law has consequences of such diversity and magnitude. Thus the order of winding up being entirely distinguishable stands out on a different pedestal than any other order relating to any specific subject matter or dispute. No order passed either before the order of winding up or afterwards can, therefore, be equated with an order of winding up with respect to its consequence. It has been repeatedly held the right to appeal is a substantial right. The remedy of an appeal is available only where expressly provided and in the manner it is provided.' Subsection (1) of section 10 of the said Ordinance starts with the non-obstante clause and this has an overriding effect over any other law it confers a right to appeal against an order of winding up. The intent of the legislature to provide the remedy of an appeal against an order of winding up of a company, directly to the Supreme Court is reflected in unambiguous terms irrespective of the fact and nature of the proceedings that may lead to an order of winding up of a company. The scope of an appeal has, therefore, been widened to provide remedy irrespective of the source or basis of such order by use of the words "any order, decision or judgment of the Court", which if not challenged in appeal would otherwise attain finality as an order of winding up as is apparent by the use of the words "where the Company ordered to be wound up." "The remedy provided is subject to further conditions; that in case the Company ordered to be wound up has a paid-up capital of not less than one million rupees an appeal would lie to this Court but where the Company ordered to be wound up has a paid-up capital of less, than one million rupees the remedy is subject to an additional condition of grant of leave to appeal. The subsection thus creates a distinction between cases involving the order of winding up of the Company and the remedy of a direct "appeal" or "after grant of leave to appeal" before the Supreme Court on the basis of the paid-up share capital of the Company. It may not be out of place here to examine the consequences of interpretation of section 10(1) of the Ordinance differently so as to apply to appeals against any order, decision or judgment of the Court other than that the order of winding up of a Company. The right of appeal conferred under the said Ordinance which is a special enactment; adopting any other interpretation, would lead to an anomalous situation. An example of which may be case where an appeal invoking a claim of a creditor for over a million rupees brought before the Court against order of a Company Judge in a case where the paid-up capital of the limited Company is less then one million; a petition for leave to appeal would lie in spite of the fact that the amount over one million against a company under liquidation merely because of the paid-up capital being less than one million rupees. A different remedy of a direct appeal to Supreme Court is provided to a creditor having a claim for a few thousand rupees against a company with a paid-up capital of over one million would have a right to file a direct appeal against a finding of a Company Judge pertaining to his claim involving a Company under liquidation although their claims may otherwise be similar except for the difference in amount of respective claims. This prima facie is obvious discrimination amongst the creditors. Secondly for the aforesaid reasons such interpretation would also be in direct conflict with the provisions of Article 185(d)(e) of the Constitution of Islamic Republic of Pakistan pertaining to appeals before the Supreme Court. There is no distinction regarding appeals prior to passing of an order of winding up of a company. Such restriction can only be inferred by addition of words to this effect but in view of the plain meanings of the word no addition is required because the language of .The statute is clear and unambiguous they are to be given their ordinary meaning as held in Pakistan through Secretary Finance and others v. Messrs Lucy Cement and another 2007 SCMR 1367. It appears that the learned Bench of this Court; for the legal acumen and learning of the Honourable members of which, we have the highest regard and hold in high esteem; was not properly assisted in this case, while considering the case of Ibrahim Shamsi (supra), as a result of
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which this aspect, escaped notice and the anomaly resulting in practical terms in case a different interpretation is adopted escaped consideration. Both subsections (1) and (2) of section (10) of the said Ordinance deal with the remedy of appeal provided by the law. Subsection (2) provides that an appeal from any order made or decision shall lie in the same manner and subject to the same conditions under which appeals lie from any order or decision of the Court. This subsection appearing after subsection (1) makes no distinction between orders prior to or subsequent to an order of winding up. It appears after subsection (1) and pertains to the same subject-matter, therefore, subsection (2) is attracted to and further regulates all the cases of appeals including appeals against orders passed after…
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