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Election Petition, decided on 27th August, 1987.

---Ss.52, 62, 68(1)(b) & 69--Houses of Parliament and Provincial Assemblies (Elections) Order (5 of 1977), Art.10(2)(b)(8)--Companies Ordinance (XLVII of 1984),Ss.76(1), 160 & 173--Election petition- Election of respondent challenged on ground that he being, on nomination day, Managing Director of a contracting company dealing with Irrigation Department of Provincial Government in many subsisting contracts and holding major shares of the company, was disqualified to be a member of National Assembly--Respondent denying to suffer from alleged disqualification and pleading that he had transferred all his shares in the said company in favour of his wife and was replaced as Managing Director by another person in Annual General Meeting of shareholders and transfer of shares having been intimated to Registrar of Companies and the Bank in Forms XII and E well in time, he was left with no more interest in the Company on date of filing nomination papers--Contention of petitioner's counsel that by relying on (i) Transfer Deed (Form); (ii) minutes of meetings of Board of Directors and shareholders in which impugned transfer of shares was approved; (iii) Forms XII & E; (iv) Press advertisement and letter issued to Bank notifying transfer of shares, onus shifting on respondent had not been squarely discharged in that entries from Register of Share Transfers or Members of Company or scrips had not been produced--Entries made in Register of share transfers, Members of company and scrips being consequential in character, minutes of their meetings constituted original record which would suffice to establish that certain shares stood transferred in favour of a particular transferee--Respondent summoning original documents and also producing copies thereof which were presumed to compare with originals--New Managing Director, replacing respondent, categorically stating in his affidavit that transfer of shares by respondent in favour of his wife was approved in the meeting of Board of Directors- Affidavit of Managing Director constituted his examination-in-chief and he was not put any question in cross-examination to doubt authenticity or veracity of proceedings of meetings--Held, minutes, therefore, stood substantially proved in accordance with law of evidence prescribed in that behalf by Election Commission--Objection with regard to non-payment of filing fee for Form XII found to be without any substance--Registration of a transfer by the company implies that stamp duty was paid--Change effected by transfer being sufficiently denoted in-Forms XII & E and borne by minutes of meetings of the Board, non-production of scrips would not reduce - evidentiary value of documents already placed upon record--Board of Directors having taken transfer of shares by respondent in favour of his wife to be a genuine transaction, transfer was conclusive as per Articles of Association of the company--Petition dismissed.

Raja Muhammad Afzal v. Ch.Muhammad Altaf Hussain and others 1986 S C M R 1736; Mrs.Rohibi Chandrakant Vijayakar v. A.I. Fernandes A I R 1956 Bom. 421; State of Bihar v. M/s.Karam Chand Thapar & Brothers Ltd. A I R 1962 S C (Ind.) 110 (V 49 C 20) and Sh.Allauddin v. The Official Liquidator, The Cer'ral Exchange Bank Ltd. (1n Liquidation) P L D 1972 Lah. 552 and Karachi Electric Supply Corporation Ltd. v. Bank of India Ltd. P L D 1967 Kar.144 ref.

The petitioner Syed Kazim Ali Shah by this Election Petition impugns the election of the respondent Ch. Ejaz Ahmad declared vide notification dated. the 6th of March, 1985, from Constituency NA-103, Gujranwala. In fact, the contest was between them alone but the petitioner failed. Earlier, that is on the 11th of February, 1985, he made an application (Annexure 'A') to the Election Commission complaining of his disqualification but was informed vide letter (Annexure 'B') dated the 21st of February, 1985, that no action was possible against him at that stage. It was alleged that the respondent being on the nomination day, Managing Director of Messrs Ejaz Ahmad and Company (Contractors) Limited, Qila Didar Singh, Gujranwala, dealing with Irrigation Department, Government of the Punjab, in many subsisting contracts of remodelling canals and pitching stones etc. etc. was disqualified to be a member of the National Assembly. It was added that having held major shares of the Company directly or through relations, the respondent continued to be the main moving force behind it and thereby suffered the disqualification which he in a way camouflaged by submitting Form XII on the 24th of January, 1985 (Annexure 'C') suggesting that he ceased to be its shareholder/ director with effect from the 31st of May, 1984. This entry was assailed to be fake and false devised to cover up the disqualification which he still suffered. A prayer was made to set aside his election and correspondingly declare -the petitioner to be an elected member of the Assembly from the particular Constituency.

2. The petition was contested seriously for want of list of witnesses, their affidavits and omi6sion to supply copies thereof to the respondent. Further, a sort of recrimination was made to the effect that the petitioner being commonly known, on the date of filing nomination papers, as one who violated Islamic injunctions was disqualified to be a member of the National Assembly under Article 10 (d) and (f) of Houses of Parliament and Provincial Assemblies (Elections) Order,1977. He was said to be involved in many criminal cases F.I.Rs. whereof (Annexures 'R/1' to R/4') were appended. On merits, the respondent denied to suffer from the alleged disqualification. He pleaded that he transferred all his shares worth Rs. 5,000 in favour of his wife Mst. Firdaus Ijaz on the 5th of May, 1984 that he was replaced as Managing Director by Ch. Taj Muhammad in the Annual General Meeting of the shareholders held on the 31^st of May, 1984; and that the transfer of his shares was finally approved by the Board of Directors on the 6th of January, 1985. He observed that this transfer was intimated to the Registrar of Companies as also the Bank vide Forms XII and 'E' well in time and that after its completion in all respects he was left with no more interest in the Company on the date of filing nomination papers. He, however explained that though soon after the transfer of his shares taking place on the 5th of May, 1984, he was employed as General Manager of the Company in pursuance of a resolution of the Board of Directors, yet hp had resigned the job well before the crucial date, namely, the 20th of January, 1985; when the nomination papers were to be filed. In order to show that transfer of shares by him in favour of his wife was genuine, he pointed out that she being already a partner in a firm Messrs Chaudhry and Chaudhry Rice and Ice Factory, Qila Didar Singh, even before marrying was a lady of affluence and was financially quite comfortable to pay him a small amount of Rs. 5,000 for purchasing his shares in the Company. Moreover, she was shown to have already been paying income tax for many years.

3. Initially the following issues were framed on the 7th of May, 1985:--

(1) Whether the respondent was disqualified on the nomination day to be a Member of the National Assembly having an interest in a private Company known as M/s. Ejaz Ahmad and Co. (Contractors Limited) which has subsisting contract with the Government of Punjab ]n the Irrigation Department.

(2) What is the effect of non-filing affidavits and the list witnesses alongwith the petition.

Later, the following ones were added:

(3) If the election of the petitioner is declared void, is the respondent entitled to be declared as elected

(O. P.)

(4) Is the notice issued under section 66 of the Representation of the People Act, 1976 by the respondent within time.

(O.R.)

4. Issue No.4 relating to recrimination raised by serving a notice under Article 10 (d) and (f) of the Houses of Parliament and Provincia' Assemblies (Elections) Ordinance, 1977, was abandoned at the time of arguments and calls for no, determination.

5. The crucial point was if the respondent being a shareholder in the contracting Company on the nomination day was disqualified to be a member. The onus primarily lay on the petitioner, but it was contended on his behalf that once the respondent pleaded transfer of his shares in the company to his wife, it shifted on him to prove that the same was genuine. The respondent relied upon (i) Transfer Deed (Form) Exh.R/16 (11) minutes of meetings either of the Board of Directors or shareholders held on 5-5-1984, 31-5-1984, 6-6-1984 and 6-1-1985 Exhs. R/5 to R/8 wherein the impugned transfer was approved, (iii) Form XII Exh.P/2 (iv) Form 'E' Exh, R/11 (v) Press advertisement Exh. R/9 and (vi) the letter Exh.R/10 issued to the Bank on 6-1-1985 notifying the transfer of shares.

6. There was no rebuttal by the petitioner including his own affidavit or even personal statement, and yet Mr. Samdani for him severely criticised that the onus, shifting on the respondent in the peculiar circumstances, had not been squarely discharged. His main plank was that the best available evidence to prove the transfer of shares namely entries from the Register of share-transfers, or the Members of the company, or the scrips themselves containing an endorsement on their back in favour of the transferee was not produced. In the absence of such direct evidence, whatever was produced, was said to be peripheral, illusory, inconclusive and indeed inadmissible by virtue of the rule enunciated in Raja Muhammad Afzal v. Ch. Muhammad Altaf Hussain and others 1986 S C M R 1736 holding that the provisions of the Evidence Act could not be brushed aside altogether in trying election petitions.

7. It is true that copies of the Register of Share-Transfers or the Members of the company or the scrips were not produced, but one could say with impugnity that all those documents though conclusive in nature, were supposed to incorporate what may have been resolved or transacted by the Board of Directors through their meetings, In a way, therefore, all entries made therein were, consequential in character giving effect to the will of the plenary or the executive body of the company. The minutes of their meetings would constitute the original record and if the same is properly produced, it shall of its own force suffice to establish that' certain shares stood transferred in favour of a particular transferee. The sole reason why the Minutes Exho.R/5 to R/8 may not be believed, was that their scribe was not examined nor were copies certified to be true of the originals. Further, their authenticity was assailed because no notice of the meetings was sent to individual Members/ Directors, nor was any Agenda prepared. Since it was a private company consisting mainly of the members of the same family, Mr. Samdani submitted that there was comparatively greater need for them to observe all formalities including preparation of Agenda and service of notice on each individual participant. He emphasised that the minutes being private documents, should have been produced in original and proved by the Munshi recording them. In other words, he believed that copies thereof could have been allowed only if those were compared with the originals by placing the latter on the record.

8. I am afraid the contention has no force. It is on the record that the original minutes were also summoned and most probably produced before the Court. Taj Muhammad (R.W.7), the new Managing Director replacing the respondent, had in his affidavit categorically stated that vide the minutes the transfer of shares by the respondent in favour of his wife was approved in the meeting. He is one of the signatories of these minutes. If the original minutes were produced and if the signatory like him testified as to their contents, no more formality was needed to be observed in proving them. Copies placed upon the record were not challenged to be incompatible with the originals. For all purposes the Tribunal was satisfied to receive those copies in place of tile originals which may have been returned to the Company. Admittedly the originals were not in possession of the respondent as those constituted the record of the Company, which in law was a different entity. All that the respondent could do was either to have got summoned the originals or to produce copies. In fact he did both, and the, presumption was that the copies adduced compared with the originals. The objection was merely technical. The Evidence Act did not in extenso apply to these proceedings inasmuch as the provisions relating to examination-in-chief were excised. The affidavit of RW/7, the new Managing Director constituted his examination-in-chief, He elaborately referred to various meetings finally approving the transfer of shares made by the respondent. The petitioner failed to elicit any information from him in the cross-examination which, of course, was preserved by the rule of procedure laid down under section 62 of the Representation of People Act, 1976. The rule laid down in Raja Muhammad Afzal's case dealt with a little different situation of discussing evidence of bad reputation by merely producing F.I.Rs. against the returned member. It was held that F.I.Rs. themselves did not suffice to prove the profligate character of the respondent as these were no better than opinions of the persons making them. The situation in the present case is widely different, in that the witness purported to prove the minutes in his affidavit which partook the shape of his examination-in-chief. He was not put any question in the cross-examination to doubt the authenticity or veracity of these proceedings. The minutes, therefore, stood substantively proved in accordance with the Law of Evidence prescribed in this behalf by the Election Commission.

9. Absence of any Agenda of formal notice of the meeting also could not completely destroy the business transacted therein. No doubt under section 160 of the Companies Ordinance, 1984 read with Table 'A' of Regulation 51 of the same, there should have been a formal notice, but the fact remains that all members were present in those meetings the issuance of notice is in effect meant to enable the members to take part in the proceedings and if that object is fully achieved, there will be little need to insist for proving this formality. No doubt, being a private company, all the members may have belonged to the same family, but the law permits it and if they take part in a meeting, it cannot be seriously doubted. None of those members were examined by the petitioner to bear out his contention that any of those meetings was held without notice to him or his participation. Apparently the objection is available to a member alone for their domestic purposes and an outsider may not much insist upon it.

10. Form XII Exh.P/2 and Form' 'E' Exh.R/11 were said to be incomplete. In the former filing fee was missing while in the latter the date was not mentioned. As already observed, these forms were to communicate decisions made by the Board of Directors. If the minutes proved the same satisfactorily, any peripheral omission here or there in those forms would be of no consequence. It may be a clerical error. Mr. Zaki-ud-Din Pal relying upon section 87 of Companies Act; 1913 claimed that omission to mention filing this form did not have the effect of nullifying the new Managing Director. A perusal of the said section reveals that it provided a mechanism to inform the Registrar of changes taking about the Directors, Managing Director and Managing Agents of fee for filing the same with the Registrar cannot be undo the will of the Board of Directors. In fact Mr.Pal that such a fee was paid, or else the registrar would not have acknowledged the receipt of this form. likewise the objection that stamp duty wag not paid, is of no substance. No question was put to the witnesses in this behalf while counsel for the that the same too had actually been paid up. Reference Rohibi Chandrakant Vijayakar v. A.1. Fernandes (AIR 1956 Bombay 421) and State of Bihar v. M/s. Karam Chand Thapar Ltd. (AIR 1962 S.C. (Ind) 110 (V 49 C 20) on the of stamp duty cannot help advance the petitioner's case. 76 (1) of the Companies Ordinance, 1984, a company would transfer of shares unless proper instrument duly by the transferor has been delivered to it alongwith the will be appreciated that non-payment of stamp duty at the company to refuse to register transfer of shares. But in case the company as a fact registered the transfer and that is Form XII was submitted to the Registrar. It would evidently that the Company had no objection on that score. This was the only consequence which could ensure from the so-called non-payment of stamp duty. Conversely registration of a transfer by the Company may imply that the stamp duty was paid. For this 'reason the two cases referred to above, would have no application.

11. The Transfer Form Exh. R/16 was equally attacked particularly because Mst. Firdaus Begum herself was not examined. I seriously doubt if this objection could prevail. The transfer evidenced by this recognizance was ultimately approved by the Board of Directors and as a result they submitted Form XII as also Form 'E' to the Registrar. Under section 83 of the Companies Act, 1913 and section 173 of the Companies Ordinance, 1984, the approval accorded to this transfer by the Board of Directors in their minutes constituted an impeccable evidence until the contrary was established. Articles 19 and 20 of the Articles of Association of this Company gave a complete discretion to the Board of Directors to accord or refuse sanction to the transfer of shares and once the same was done, it-was conclusive proof thereof. In this case Minutes Exhs.R/5 to R/8 reveal that the transfer was sanctioned although post facto but there was no provision barring it from taking effect prospectively. The sanction, therefore, accorded on 6-1-1985 will take effect as from that date if not from previous dates of 5-5-1984 or 31-5-1985. As already pointed out, the petitioner did not file any affidavit nor did he appear as his own witness and thus there was nothing on the record to prove the contrary.

12. The advertisement in the Daily "Nawa-i-Waqt" Exh.P/3 was criticised as it did not show the concern to be a private limited company. R.W.7 Taj Muhammad was shown to be its Managing Partner rather than Managing Director. These misdescriptions cannot suffice to undo the purpose for which the advertisement was made. In law it was not much needed, yet appeared to have been made as a matter of abundant caution. The information primarily has to be laid before the Registrar of the Companies as also the Bank and both having already been informed separately, issuance of a press note like Exh.P/3 was not needed. Last but not the least the scrips should have been produced in original but' they were not in possession of the respondent. Again the change effected by the transfer was sufficiently denoted in Forms XII and 'E' besides, of course, borne by the minutes of the meetings of the Board. Production of scrips may have been at best an additional evidence, but its absence by no means will reduce the evidentiary value of the documents already placed upon the record. Sh.Allauddin v. The Official Liquidator, The Central Exchange Bank Ltd, (In Liquidation) (P L D 1972 Lah. 552) and Karachi Electric Supply Corporation Ltd. v. Bank of India Ltd. (P L D 1967 Kar. 144) no doubt supported the contention that endorsements made on the back of scrips were conclusive proof of transfers thereof, yet did not hold that other documents particularly minutes of Board approving the same would not be sufficient to prove the same.

13. Forms XII and 'E' were said to have been furnished late. The only penalty attracted for not keeping time in that behalf was payment of Rs.50 under section 87 of the Companies Act, 1913. It would mean that the changes in the company conveyed by them will remain intact. It was told at the Bar that the respondent defeated the petitioner by a huge margin of about thirty thousand votes. The entire petition was based upon technicalities rather than any substantial ground and the same were not proved to the hilt. If at all, those were attributable to the Company and not the respondent. He cannot be punished for the Company's faults.

14. The disqualification included having interest in a contract with the Government either directly or through someone else. Learned counsel urged that relinquishment of shares in favour of the respondent's own wife did not necessarly dispel the impression that she was not working for him. He observed that after all there could be no hard and fast line dividing the interest of spouses and that the wife in our society being more or less a tutelage ordinarily works for the husband. The assumption is quite sweeping. The shares transferred to her being worth Rs.5,000 was not too much an amount which the wife may not have been able to procure. The Board may have refused to accord sanction to it on the ground that it was a fake transfer, but this was not done. The corollary was that the Board took it to be a genuine transaction and once it was so taken, the transfer was conclusive as per Articles 19 and 20 of the Articles of Association of the Company. To hold otherwise would affect the conclusiveness of the transfer as per the Company's own Articles. We may not go that far to hold that what was conclusive by virtue of the Articles ibid, was in fact spurious otherwise. There was no point in the connection. The petition is dismissed with costs.

S.Q./18/E Petition dismissed.

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