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Judicial Miscellaneous Nos.5, 6 and 7 of 1984, decided on 5th October, 1986.

‑‑‑Ss.162 & 166‑‑Winding‑up of Company by Court‑‑Suits for recovery of loans previously instituted by petitioners/secured creditors against companies were withdrawn on ground of some amicable settlement arrived at between them outside Court‑‑Cause of action on which instant winding up petitions were filed by petitioners, being same as agitated in previously instituted suits and there being no allegation in present petitions that subsequent arrangement arrived at between parties had been flouted which could give further cause of action to petitioners for present proceedings‑‑Petitioners, held, had failed to make out case to justify order of winding‑up against companies, particularly when credit of petitioners was fully secured by executing power of attorney by respondents in favour of petitioners fully authorising them to dispose of or sell assets of such companies, mortgaged with petitioner in satisfaction of loans.

Iqbal Ahmad for Petitioner.

A. A. Zari for Respondent.

Date of hearing: 5th October, 1986.

This order will govern the disposal of J. M. Nos.5 and 7 of 1984. Both these petitions are filed under section 162 read with section 166 of the Companies Act for an order of winding‑up against the two companies incorporated under the name and style of Punjab Lamps Works Ltd. and Electric Lamp Manufacturers of Pakistan Ltd. The grounds agitated for an order of winding‑up in both the petitions are common, namely, their inability to pay the debts and that the companies have ceased to function and therefore, their substratum is gone. In so far the second ground, namely, that the companies have ceased to function and as such their substratum is gone, the petitioner has not been able to establish the same on record. However, to prove alleged inability of respondents to pay their debts, the petitioner has relied on the outstanding foreign currency loans against Punjab Lamps Works Ltd. to the tune of Rs.1,10,19,911.84 and against Electric Lamp Manufacturers of Pakistan Ltd. to the credit of Rs,2,80,62,109.93. The petitioner is a secured creditor and it is admitted that the above liability of loan is secured by creation of equitable mortgages which are duly registered, under the provisions of the Companies Act. The plea of the petitioner in both the cases is that in spite of, several promises made by the respondent companies to repay the above loans, they failed to honour their commitment, which established their inability to pay the debts. It is also contended that the present financial conditions of these companies are such that they are no more commercially viable. After hearing the learned counsel for the parties at length I am of the view that the petitioner has failed to make out a case to justify an order of winding up against these companies. It is not disputed before me that the petitioner in the above cases had instituted suits against the above companies for recovery of these very loans in the year 1980 before the Special Court Banking. It is also not disputed that the respondent companies were granted leave to defend in both the suits but before the said suits could proceed, the parties jointly applied for withdrawal of the suits under Order XXIII rule 1, C . P. C . on the ground of some amicable settlement arrived at between them outside the Court. It is significant that neither in the application before the Banking Court nor in the present petitions the terms of the above compromise are mentioned. In fact, the petitioner made no reference to the above suits instituted by them against the respondent companies and the compromise arrived at before the Banking Court in this regard. It is only when the respondent companies in their counter‑affidavit filed the copies of the plaint and the order of Banking Court allowing the petitioner to withdraw the above suits instituted against the respondents that in the rejoinder some averments have been made in reply to the counter affidavit admitting the fact and complaining that the compromise entered into before the Banking Court by the respondent was not honoured. Be that as it may, the fact remains that the cause of action on which the present winding up petitions are filed is the same as was agitated in the above‑referred two suits. There is no allegation in the present petitions that the subsequent arrangement arrived at between the parties has been flouted which could give further cause of action to the petitioner for the present proceedings. Apart from it the petitioners are admittedly a secured creditor and in addition to it the respondents have executed powers of attorneys in favour of petitioners which fully authorised them to dispose of or sell any of the assets of the companies mortgaged with the petitioners in satisfaction of the above loans. Mr. A.A. Zari, learned counsel for the respondents companies unequivocally repeated this stand before me and stated that the companies have neither obstructed nor have any intention to obstruct the sale or disposal of any of the assets of the companies by the petitioner in satisfaction of their claim in accordance with the law. Not only this, after the withdrawal of suits before the Banking Court, the respondents appear to have provided additional securities for these loans in the shape of 55 lacs shares of Hyesons Sugar Mills Ltd. which are in the custody of petitioner. The learned counsel for the respondents stated before me that the respondents never objected to the sale of these shares by the petitioner for satisfaction of their claim. In these circumstances, the present petitions filed by the petitioners only seem to be a device to coerce the respondents to pay the loan which is not permissible. No case for passing order of winding up is made out. These petitions are accordingly dismissed but in the circumstances of the case there will be no order as to costs.

H.B.T. Petitions dismissed.

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