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Judicial Miscellaneous Application No.35 of 1973, decided on 20th May, 1987.

‑‑‑Ss. 162, 104 & 105‑C‑‑Scope and application of Ss. 104 & 105‑C‑ Petition for winding up of company on ground that allocation of 39200 shares of the Company made was illegally annulled in the general body meeting and as such reallocation of these shares of the company in a subsequent general body meeting of company purportedly held was wholly illegal‑‑Allotment of further shares‑‑Notice to existing shareholders‑‑Failure of existing shareholders to communicate their acceptance‑‑Effect‑‑Extension of time of notice by Registrar‑‑When possible‑‑Where meeting of the company allocating shares was held in accordance with provisions contained in Articles of Association of the Company and procedure prescribed under S. 105‑C was duly adopted; return showing allocation of shares was submitted to the Registrar in accordance with the provisions of S. 104 (1); petitioner's shares allocation in the company was same both under allocation as well as the distribution of shares made in the meeting, allocation of further shares of company in the meeting being valid, winding up of the company was declined‑‑Petitioners, however, were entitled to an offer for purchase of proportionate shares of the transferred shares.

Section 104(1)(a) of the Companies Act, 1913 provides that upon issue of every allotment of its share, the company shall file within one month of the date of such allotment with the Registrar a return of allotment showing the number and nominal amount of shares, the names, addresses and description of allottee, the amount (if any) paid or due and payable on each share. Section 105‑C of the Act provides that where directors of the Company decide to increase the capital of the Company by the issue of further shares, such shares, shall be offered to members in proportion to the existing shares held by each member. This offer is to be in the form of a notice which will specify the number of shares to which the member is entitled, and the time within which he is to communicate his acceptance to the offer. If after expiry of the time mentioned in the notice, the member concerned failed to notify his acceptance of the offer, it will be deemed to be declined and thereafter the directors may dispose of the same in such manner as they think fit. If the above return is not filed within the prescribed period of one month the Registrar may extend the time under section 104(2‑A) of the Act after being satisfied that the period of one month was inadequate in the circumstances of the case.

In the present case it was alleged that there was nothing on record to show that the procedure prescribed for issuance of further shares was followed at the time of allocation of shares of the Company. Even the return about the allocation of shares was not filed within one month as required under section 104(1) of the Act and there was nothing on record to show that the Registrar validly extended that period under section 104(2‑A) of the Act after being satisfied that in the circumstances of the case the period of one month was inadequate. As against this, record showed overwhelming documentary evidence in the form of agenda of meeting, copies of notices of meeting, registration receipts showing despatch of such notices acknowledgment cards showing receipt of notices of the resolution and copies of returns submitted to Registrar, to prove holding of meetings. The convening of these meetings were not disputed by any other shareholders except petitioner. The above evidence on record showed that the meeting held was in accordance with the provisions contained in the Articles of Association of the Company and the procedure prescribed for issuance of further shares under section 105‑C of the Companies Act was duly adopted. The return showing allocation of shares was also submitted to registrar in accordance with the provisions of section 104(1), of the Act. The allocation of shares of Company made in the meeting therefore, was valid, petitioner's share allocation in the company being the same both under the allocation as well as the distribution of shares made in the meeting.

The petitioner, was also entitled to an offer for purchase of proportionate shares out of the transferred shares. The company was accordingly directed to comply with the provision in the Articles of Association with regard to these shares which were sold during the pendency of the petition.

Muhammad Ali Sayeed for Petitioner.

S.A. Waheed for Respondents.

Dates of hearing: 19th and 24th February, 1987.

This petition under section 162 of the Companies Act, 1913 was presented on 30‑11‑1973 by late Mst. Fatima Begum widow of H. Munawaruddin for winding up of the Company incorporated under the name and style of Kamran Industries Ltd., as one of its shareholders (I will hereinafter refer the original petitioner in the case, Mst. Fatima Begum, as "the deceased petitioner" for the sake of convenience). In the petition besides the Company, all the 12 shareholders of the Company were impleaded as respondents. It may be mentioned here that the deceased petitioner and respondents Nos. 2 to 13 are members of the same family. The deceased petitioner was the mother of respondents 2, 4, 6, 8, 10, 11 and 13 while respondents 3, 5, 7, 9 and 12 are the wives of respondents 2, 4, 6, 8 and 11 respectively. Initially all the respondents except respondents 6 and 7 supported the petitioner but during the period of 14 years when this petition was pending in Court many developments took place in the case with the result that when the petition came up for final hearing except respondents 2 and 3 no one else supported the petition. In these circumstances, it is necessary to mention here some of the developments which took place during the pendency of above petition as the same have important bearing on the fate of this petition. The deceased petitioner in her petition sought winding up of the company under the just and equitable clause on the sole ground that the allocation of 39200 shares of the Company made on 11‑8‑1969 was illegally annulled in the purported general body meeting of the Company held on 12‑9‑1969 and as such re‑allocation of these 39,200 shares of the company in the subsequent general body meeting of company purportedly held on 4‑12‑1972 was wholly illegal. On 15‑9‑1975 when the petition came up for hearing the learned counsel for the deceased petitioner sought adjournment on the ground that the petitioner in the meantime had discovered several other grounds which she desired to add in the petition in support of her prayer for winding up of the company. Accordingly C.M.A. No.176/1975 was filed on 25‑9‑1975 seeking amendment of petition. While the above application for amendment of petition was still pending, the deceased petitioner died somewhere in 1978 and as such when the petition was called in Court on 30‑9‑1978 the learned counsel for the deceased petitioner made a statement that as a result of the death of the deceased petitioner, he would like to assert from her L. Rs. if they still wanted to proceed with the case. Thereafter, on 19‑4‑1979 C . M. A . No. 250 of 1979 was filed on behalf of some of the L.Rs. of deceased in the petition with the prayer that respondents 2, 4, 10, 11 and 13 and Mst. Safia Begum and Rafia Begum the two daughters of the deceased may be permitted to pursue the winding up .petition. This application was contested by respondents 5 and 6 but finally by order dated 28‑4‑1981 the Court allowed transposition of respondents Nos. 2, 10, 11 and 13 in the petition as the petitioners in place of deceased petitioner. However, with regard to C.M.A. No. 176 of 1975 filed by the deceased petitioner for amendment of petition, the Court while allowing substitution as aforesaid observed that it will be open to respondents 2, 10, 11 and 13 either to pursue that application or to make a fresh application for such amendments as may have become necessary in the circumstances of the case. As a result of the above order original respondents Nos. 2, 10, 11 and 13 alongwith two daughters of the deceased petitioner Mrs. Safia Begum and Mrs. Rafia Begum became petitioners No.1 to 6 while respondents No.3 to 9 and 12 were renumbered as respondents No. 2 to 9 respectively. The petitioners 1 to 6 however, filed the amended petition on 24‑8‑1981 without seeking any amendment of the original grounds pleaded by the deceased petitioner in her petition. It may be mentioned here that C.M. A. No.176 of 1975 filed by the deceased petitioner was ultimately dismissed for non‑prosecution on 14‑11‑1983 and, thereafter, no further application was made for amendment in the petition by petitioners No.1 to 6. 1 will, therefore, hereinafter, where ever necessary will refer to the contents of the original petition instead of referring to the amended petition filed by petitioners No.1 to 6. After filing of the amended petition, one of the petitioner, namely, Mst. Rafia Begum widow of late Muhammad Atique petitioner No.6 filed C.M.A. No.528 of 1982 for permission to withdraw from the petition on the ground that the right which devolved on her as the legal heir of deceased petitioner has been surrendered by her in favour of the son of respondent No.5 namely Abdul Tahir. The court by order dated 9‑8‑1982 allowed petitioner No.6 to withdraw from the case without determining the effect of the surrender of her right in favour of Abdul Tahir. Again on 27‑9‑1982 another application C.M.A. No.669 of 1982 was presented in the case by petitioners No.2 to 5 seeking permission to withdraw from the case on the ground that these petitioners had also entered into a compromise with respondents 1, 5 and 6. This application was also granted by the Court on 27‑9‑1982 and the, names of these petitioners were struck off from the array of petitioners. Yet another application (C.M.A. No.571 of 1983) was filed in the case on 28‑9‑1983 on behalf of respondents No.7 and 8 stating that they had also settled their disputes with respondents 5 and 6 and as such they also desired to withdraw from the case. This settlement mentioned in the above application was also recorded by the Court on 2‑10‑1985 and it was mentioned in the order that respondents No.7 and 8 may remain absent in the case. The effect of the above‑noted developments in the case was that out of six shareholders of the company who got themselves substituted as petitioners after the death of the deceased petitioner, five withdrew from the petition before final hearing of the case on the ground that they have no dispute with the Company or with respondents 5 and 6, leaving behind only one shareholder of the company namely petitioner No.1 who alone is now seeking winding up of the company and from among the respondents he is supported in the above prayer only by his wife respondent No.2, while all the other respondents are opposing the petitioner. I now revert back to the grounds of winding up as mentioned in the original petition. The deceased petitioner as well as the present petitioner No.1 alleged in the petition that respondents 2 to 7 and 11 of the original petition subscribed to the Memorandum and Articles of Association of the respondent company by acquiring shares of Rs.10 each and thereafter, on or about 29‑6‑1965 10,000 shares of the company were allotted to them and their respective shareholdings as it stood on 29‑6‑1965 was shown as follows in paragraph 5 (iii) of the petition:‑

(a) Mian Ahsan Ellahi. 1600 shares

(b) Mrs. Safia Nasreen 1100

(c) Mian Inam Ellahi 1600

(d) Mrs. Shamim Akhtar 1100

(e) Mian S.A. Rauf 1600

M Mrs. Rafia Sultana 1100

(g) Mian Nasiruddin 1600

(h) Mst. Fatima Begum

(the petitioner) 1100

‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑

10800

Further in paragraph 5(iv) of the original petition the shareholdings of the original 12 respondents and the deceased petitioner after allocation of further 39200 shares of the company on 11‑8‑1969 is shown as under:‑

115(iv) Thereafter, on or about 11‑8‑1969, the following further shares were issued to the petitioner and the following Respondents;

(a) Mian Ahsan Ellahi 900 shares

(b) Safia Nasreen 1400

(c) Inam Ellah 900

(d) Shamim Akhtar 3900

(e) S. A. Rauf 900

(f) Rafta Sultana 3900

(g) Mohd. Aslam 2500

(h) Mumtaz Begum 5000

(i) Nasiruddin 900

(j) Gulshad Begum 7500

(k) Mohd. Akbar Jehangir 2500'

(1) Salma Begum d/o H. Munawaruddin 2500

(m) Fatima Begum

(the petitioner) 6400

Thus, on 11‑8‑1969 the shareholdings of the sons their wives, the petitioner and her daughter was as under:

(a) Mian Ahsan Ellahi & his wife 5000 Shares

(b) Mian Inam Ellahi & his wife 7500

(c) S.A. Rauf and his wife 7500

(d) Mohd. Aslam & his wife 7500

(e) Mian Nasiruddin & his Wife 1000

(f) Mohd. Akbar 2500

(g) Fatima Begum 7500

(the petitioner)

(h) Salma Begum. 2500

It will be seen that both the deceased petitioner and the present petitioner No.1 claimed that the share allocation of 39200 shares of the company on 11‑8‑1969 was valid and legal and that the shareholding of each shareholder as shown in paragraph 5(iv) of the petition was correct while the allocation of 39200 shares done in the alleged meeting of the company held on 4‑12‑1972 was illegal and void. This position is clearly borne out from the following assertion made in the original petition: ‑

5(x). That on or about 4th December, 1972 the shares of Rs.3,92,000 were allotted as under. No notice of this meeting was ever sent to the petitioner:

(a) Mian Ahsan Ellahi 900 shares

(b) Safia Nasreen 1400

(c) Mian Inam Ellahi 900

(d) Mian Abdul Rauf Shaikh 900

(e) Mian Nasiruddin 900

(f) Mian Mohd. Asiam. 2500

(g) Mian Mohd. Akbur 2500

(h) Mrs. Shamim Akhtar 10100

0) Mrs. Rafia Sultana 10200

(j) Mrs. Mumtaz Begum 3900

(k) Mrs. Gulshad Begum 5000

39200 shares

It is, submitted that the allotment of l1th August, 1969 is still in existence and the decision taken in the meeting on 4th December, 1972 is illegal and of no consequence whatsoever. The shares could be allotted only to the existing members. The Petitioner and Respondent No.13 have been ignored in this allotment. Shares of some respondents have been reduced.

The respondents Nos.4 to 6 have illegally and with mala fide intentions allotted large number of shares to their respective wives just to have majority and control of the respondent No. 1.

It is quite clear from the above‑stated facts that the total shareholdings of the present petitioner No.1 and respondent No.2 as well as their individual shareholdings as it stood after the allocation of shares made on 11‑8‑1969 remained unchanged even after the reallocation of shares made in the disputed meeting of the company held on 4‑12‑1972. Therefore, their girevance that the meeting held on 4‑12‑1972 was illegal and that the distribution of shares made on 11‑8‑1969 was valid and binding is only of an academic nature in so far they are concerned as their shareholding both jointly as well as individually remains the same whether the allotment of shares made on 11‑8‑1969 is maintained or the allocation in the alleged meeting of company dated 4‑12‑1972 is upheld. However, the shareholdings of the following shareholders of the company was changed after the allocation of shares made in the meeting of company held on 4‑12‑1972 as against the allocation of 11‑8‑1969.

Name of shareholder Share allotted Share allotted

on 11‑8‑1969 on 4‑12‑1972.

Mrs. Shamim Akhtar 3900 10100 (6200)

Mrs. Rafia Sultana 3900 10200 (6300)

Mrs. Mumtaz Begum 5000 3900 (1100)

Mrs. GuIshad Begum 7500 5000 (2500)

Fatima Begum 6400 Nil.

(deceased petitioner).

It will appear from he above chart that present respondents 4 and 6 got extra 6200 and 6300 shares respectively while shares of respondents 8 and 9 and of the deceased petitioner were reduced by 100, 2500 and 6400 shares respectively as a result of reallocation of shares made on 4‑12‑1972 as compared to their shareholdings as shown on 11‑8‑1969.

After hearing the above petition at some length on 22‑10‑1986 I found that the main dispute between the parties centred round the legal character of the meetings of the company held on 11‑8‑1969, 12‑9‑1969, 9‑10‑1972 and 4‑12‑1972. The petitioner No.1 and respondent No.2 contended that the meeting of the Board of Directors of the company held on 11‑8‑1969 was legal and valid and the allocation of shares made in that meeting was valid and subsisting and the meetings subsequently held on 12‑9‑1969, 9‑10‑1972 and 4‑12‑1972 were illegal. The respondents No.5 and 6 on the other hand urged that firstly, there was no meeting of the board of directors held on 11‑8‑1969 and if any such meeting was held it was not in accordance with the law and as such the distribution of shares made in the meeting held on 11‑8‑1969 was illegal and as such reallocation of these shares in the meeting held on 4‑12‑1972 was valid and legal. It was in these circumstances that on 22‑10‑1986 when I partly heard the above petition I passed the following order‑.‑

"22‑10‑1986. Mr Muhammad Ali Sayeed, Adv. for the Petitioner. Mr. S.A. Wadood, Adv. for the Respondent.

I have partly heard this petition at some length and after hearing the learned counsel for the parties I feel that in order to resolve the controversy with regard. to the disputed meetings of the company held on 11‑8‑1969, 12‑9‑1972, 9th October, 1972 and 4th December, , 1972 the parties may be directed to file certified copies of the relevant documents submitted by them in connection with the above meetings in the office of the Registrar, Joint Stock Companies. The parties may also place any other document which would be helpful in resolving above controversy, filed by them in the year 1969 before the Registrar. The certified copies should be placed at least two days before the next date of hearing. Mr. Muhammad Ali Sayeed, learned counsel for the petitioner made a grievance in Court that Income‑tax authorities are not granting certified copies of the balance sheets submitted by the companies. I do not see any difficulty in the way of the petitioner who is admittedly a shareholder of the company, in obtaining certified copies of the account filed by the company before the Income‑tax Authorities. The petitioner is at liberty to approach the authorities concerned for grant of such certified copies which may be granted to him in accordance with law. For further arguments the case is adjourned to 24‑11‑1986.

Both the petitioner No.1 and respondents No.5 and 6 in pursuance of the above order submitted number of documents in support of their respective contentions. The only document produced by petitioner No.1 in support of his contention that a valid meeting of board of directors was held on 11‑8‑1969 in which 39200 shares of the company 'were validly allotted is a return of these shares filed by one Riaz Hassan with the Registrar of Joint Stock Companies on 16‑9‑1972. The respondents No. 5 and 6 on the other hand challenged the validity of the meeting allegedly held on 11‑8‑1969 on the following grounds:‑

(i) That no notice or agenda of the meeting held on 11‑8‑1969 was issued;

(ii) Neither the original nor a copy of the resolution or the minutes of the meeting held on 11‑8‑1969 is produced by the petitioner;

(iii) That no offer of the shares was made to the existing shareholders of the company as required by section 105‑C of the Companies Act;

(iv) That Riaz Mahmood who allegedly filed the return of shares allotted by the company on 11‑8‑1969 had no authority to file the same; and

(v) That the return of shares was filed by the said Riaz Mahmood on 16‑9‑1972 while the allocation of shares had taken, place on 11‑8‑1969 which was already disapproved in the meeting of board of directors of the company held on 12‑9‑1972 and reallocation of these shares was decided.

The above objections raised by respondents No.5 and 6 to the validity of allocation of shares on 11‑8‑1969 is not without substance. It is significant that in paragraph 5(iv) of the petition it was only alleged that on or about 11‑8‑1969 further allocation of 39200 shares of the company took place. The respondents 5 and 6 in reply to paragraph 5(iv) of the petition raised the following objections to the validity of allocation of shares on 11‑8‑1969 in paragraph 11(a) to (g) of their counter‑affidavit:‑

11. (a) The impugned allotment was made in contravention of the Articles of Association of the company and had no sanctity under the law.

(b) No notice of Agenda was ever issued by the then Board of Directors nor any resolution was passed by the Board of Directors of the Respondent No.1 nor any meeting of shareholders was held.

(c) In any case no notice of the Agenda, or the intended allotment was issued to or received by respondents No.4 to 7, who were then iii Last Pakistan and which fact and their addresses were known to all concerned. The mandatory provisions of Articles and Companies Act were not complied with and even no offer was ever made to respondents No.4 to 7 about their entitlement of shares.

(d) The shares were not allotted to the existing shareholders in accordance with the proportion of their holdings in the share capital of the company which was obligatory under the Articles 79 & 81 of the Articles of Association of the company.

(e) That alleged return of the allotment filed with the Registrar of Joint Stock Company was signed by one Riaz Mahmood, who had no authority to sign such return. It may be mentioned that Riaz Mahmood was not a manager of the company and in fact there was no manager thereof.

(f) The alleged allottees of 39,200 shares did not become shareholders. Their names were not entered in the Register of members of the company and no share certificates were issued to them. The alleged allotment was mala fide, illegal, inchoate, incomplete and inoperative.

(g) The impugned allotment dated 11‑8‑1969 was ultra vires and therefore, the same was not approved by the general body of the shareholders of respondent No.1 in its meeting held on 12‑9‑1972. The copies of the resolution of the said meeting were despatched to all the shareholders including the petitioner by registered post vide Post Office Receipt No.R‑60 dated 14‑9‑1972. None of the shareholders made any objection to this effect. A copy of the said resolution dated 12‑9‑1972 is annexed hereto and marked "C".

In reply to above objections of respondents 5 and 6 raised in their counter‑affidavit, Muhammad Akbar Jehangir (who is not supporting the petitioner now) made the following reply in paragraphs 7 to 9 of his rejoinder which he filed as attorney of the deceased petitioner:‑

"7. That the contents of para. 11 of the counter‑affidavit are denied. It was Respondent No.6 who wanted to have the control of the company to his benefit that he started creating disputes in respect of the allotment of the shares of 11‑8‑1969 which allotment was perfectly valid under law and otherwise also.

8. That she also denies the contents of para 11 and sub‑para. thereof, of the counter‑affidavit and submits that Mr. Riaz Mahmood had already filed a case in the Labour Court for recovery of his dues against the Respondent No.1 which case on behalf of the Respondent No.1 was being attended to by Respondent No.6. In that case Riaz Mahmood stated himself to be the Manager of the respondent No.1.

9. That she denies the contents of para. 11 (g) of the counter‑affidavit and submits that no notice of the meeting of 12‑9‑1972 was received by her. All alleged decisions are denied and are null and void.11

From the contents of the petition, counter‑affidavit and the rejoinder reproduced above it is abundantly clear that none of the objections raised by respondents 5 and 6 to the validity of allocation of 39200 shares made on 11‑8‑1969 were controverted either by the deceased petitioner or by other respondent who was supporting the deceased petitioner at that time by producing the relevant record of the company. Muhammad Akbar Jehangir who had filed rejoinder affidavit in reply to the counter‑affidavit of respondents 5 and 6 on behalf of the deceased petitioner, had also filed another rejoinder to the same counter‑affidavit in his capacity as respondent No.10. In that he alleged in para 7 that in 1971 shares scripts were issued to all the shareholders which were registered with the Registrar of Joint Stock Company. I had permitted the parties on 22‑10‑1986 to produce any relevant document from the office of Registrar, Joint Stock Companies in support of their respective contentions but petitioner No.1 could not produce any such document which could prove issuance of share certificate to shareholders and registration therof in the office of Registrar, Joint Stock Companies as a result of allocation of 11‑8‑1969. It is significant that both the deceased petitioner and the present petitioner No. 1 contended that allocation of 39200 shares of the Company had taken place validly on 11‑8‑1968 which is subsisting till today but in para. 5(v) of the petition it is stated as follows:‑

"In February, 1972 a meeting took place between Respondents Nos.2, 4, 10 and 11 wherein by an agreement it was admitted that the issued capital of the Respondent No.1 company is of Rs.5 Lakhs.

True copy of the Agreement is attached herewith and marked

A reading of the document Annexure B referred to above will show that it purportedly settled several outstanding disputes between the parties including the dispute relating to their shareholdings in the respondent company but it was not signed by respondents 5 and 6. Again the above document was executed by petitioners No.1, 2, 3 and respondent No.3 on 6‑2‑1969 but this document made no reference to the allocation of shares made on 11‑8‑1969. On the contrary, in paragraph 19 of the document (Annexure B ) the allocation of shares of the Company as on that date is stated to be as follows:

"Mian Ahsan Illahi and his family members

(Petitioner No.1 and Respondent No.2) Rs.85,000

Mian Inam Illahi and his family members

(Respondent 3 and 4) Rs.85,000

Mian A. Rauf and his family members

(Respondents 5 and 6) Rs.85,000

Mian Nasiruddin and his family members

(Petitioner No.3 and Respondent No.9) Rs. 85, 000

Mian Muhammad Akbdr (petitioner 2) Rs.85,000

Fatima Begum (deceased petitioner) Rs. 75, 000

The shareholdings of the parties as on 6‑2‑1972 as shown in the document Annexure "B" to the petition is different from what is stated in para. 5(iv) of the petition which according to the deceased petitioner as well as petitioner No.1 was the final position of shareholdings of different shareholders of the company after allocation of 39,200 shares made on 11‑8‑1969. Articles 11 to 20 of the Articles of Association of the Company deals with the procedure for issuance of share capital of the Company. Articles 11 and 12 ibid makes it obligatory on the Directors of Company to comply with the provisions of sections 104 and 105‑C of the Act while issuing share capital of the company. Section 104(l)(a) of the Act provides that upon issue of every allotment of its share, the company shall file within one month of the date of such allotment with the Registrar a return of allotment showing the number and nominal amount of shares, the names, addresses and description of allottee, the amount (if any) paid or due and payable on each share. Section 105‑C of the Act provides that where directors of the Company decide to increase the capital of the Company by the issue of further shares, such shares shall be offered to members in proportion to the existing shares held by each member. This offer is to be in the form of a notice which will specify the number of shares to which the member is entitled, and the time within which he is to communicate his acceptance to the offer. If after expiry of the time mentioned in the notice, the member concerned failed to notify his acceptance of the offer, it will be deemed to be declined and, thereafter the directors may dispose of the same in such manner as they think fit. If the above return is not filed within the prescribed period of one month the Registrar may extend the time under section 104(2‑A) of the Act after being satisfied that the period of one month was inadequate in the circumstances of the case. There is nothing on record to show that the procedure prescribed for issuance of further shares was followed at the time of allocation of 39,200 shares of the Company on 11‑8‑1979. Even the return about the alleged allocation of shares was not filed within one month as required under section 104(l) of the Act and there is nothing on record to show that the Registrar validly extended that period under section 104(2‑A) of the Act after being satisfied that in the circumstances of the case the period of one month was inadequate. As against this the respondents No.5 and 6 have produced on record overwhelming documentary evidence in the form of agenda of meeting, copies of notices of meeting, registration receipts showing despatch of such notices, acknowledgment cards showing receipt of notices by the deceased petitioner and petitioner No.1 and Respondent No.2, copies of the resolution and copies of returns submitted to Registrar, to prove holding of meetings on 12‑9‑1972, 9‑10‑1972 and 4‑12‑1972. The convening. of these meetings are not disputed by any other shareholders except petitioner No.1 and Respondent No.2. The above evidence on record do show that the meeting held on 4‑12‑1972 was in accordance with the provisions contained in the Article of Association of the Company and the procedure prescribed for issue of further shares under section 105‑C of the Companies Act was duly adopted. The return showing allocation of shares on 4‑12‑1972 was also submitted to Registrar in accordance with the provisions of section 104‑(l) of the Act. I, therefore, hold that the allocation of 39200 shares of Company made in the meeting held on 4‑12‑1972 was valid. I have already pointed out earlier that in so far petitioner No.1 and respondent No.2 were concerned, their share allocation in the company was the same both under the allocation of 11‑8‑1969 as well as the distribution of shares made in the meeting held on 4‑12‑1972. Mr. Muhammad Ali Sayeed, learned counsel for the petitioner No.1 very vehemently argued that the meeting held on 4‑12‑1972 was not valid as no notice of this meeting was ever served on the deceased petitioner or on the petitioner No.1. The respondent No.5 and 6 have produced on record the registration receipt of the notices issued for the meeting of the company held on 4‑12‑1972 as well as the acknowledgment cards which show that these notices were duly received both by the deceased petitioner as well as by petitioner No.1 and his wife respondent No.2. 1, therefore, do not find any ground for ordering winding up of the respondent Company. However, keeping in view the peculiar circumstances of the case, I am of the view that some consequential orders are necessary for transferring some of the shares to petitioner No.1 and respondent No.2 which they are entitled to get as shareholders of the Company. On 22‑12‑1983 the following consent order was passed by me in the case while disposing of an interim application of petitioner:‑‑

22‑12‑1983.

After I heard the learned counsel for the petitioner and the respondents at some length they agreed to the disposal of the present interim application by following consent order:‑

'That the proposed action of the company to issue 50,000 ordinary shares pursuant to the Resolution of Board of Directors dated 30th November, 1983, shall be entirely at the risk of present management and will not affect, prejudice or alter the status of the present petitioner in any manner vis‑a‑vis the present winding up petition is concerned. it is also agreed that the shares offered to the petitioner under letter dated 7‑12‑1983 shall be kept available to‑them until disposal of the main petition and the petitioner will have the option to purchase the same in the end if the main petition is disposed of in favour of the company. However, if at that stage the petitioner declined to accept the same the company will be free to dispose of the same in accordance with the Articles of Association of Company.'

The application is accordingly disposed of in terms of above consent order."

The petitioner No.1 and respondent No.2 will therefore, be entitled to purchase the shares offered to them vide letter dated 7‑12‑1983 provided they exercise their option and pay for the same within 14 days of this order. It is an admitted position that respondents No.5 and 6 and others during the pendency of this petition through negotiation/settlement purchased the shareholdings of other shareholders in the Company. Article 56 of the Memorandum and Articles of Association of the Company makes the following provisions with regard to the transfer of such shares:‑

"56. The shares specified in any transfer notice as aforesaid shall be offered by the Company in the first place to the members in proportion to the existing shares held by them respectively and the offer shall in each case limit the time within which the same if not accepted will be deemed to be declined and may notify to the members that any member who desires an allotment of shares in excess. of his proportion should in his reply state how many excess shares he desires to have and if all the members do not claim their proportions the unclaimed share shall be used for satisfying the claims in excess. if any shares shall not be capable, without fractions, of being offered the members in proportion of their existing holdings the same shall be offered in such propritions and in such manner as may be determined by lot to be drawn under the direction of the Directors.. If and so far as any share is not taken by the members as aforesaid it may be offered by the Company to be sold to any person selected by the Directions as to whom it is desirable in the interest of the Company to admit to membership subject to Article 58 hereof."

The petitioner No.1 and respondent No.2 are, therefore, also entitled to an offer for purchase of proportionate shares out of the transferred shares. The respondent Company is accordingly directed to comply with the above provision in the Articles of Association with regard to these shares which were sold during the pendency of this petition. Subject to above observations the petition is dismissed but there will be no order as to costs.

M. B.A. /F‑18/ K Order accordingly‑

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