Limitation Period for Petition under Section 152 of Companies Ordinance 1984

Limitation Period for Petition under Section 152 of Companies Ordinance 1984 Case Laws Corporate Law Knowledge – Corporate Law Lahore High Court Limitation Litigation & Arbitration Order 7 Rule 11 Solutions - Corporate Law Mr. Justice Shahid Karim in his judgment has decided the issue regarding limitation period for petition under Section 152 of Companies Ordinance 1984 in Companies Original No. 52 of 2010.

1. This is an application under Order VII, Rule 11 of Code of Civil Procedure (CPC) (the Application) for the rejection of the petition C.O No.52 of 2010 (the Petition), which has been filed for seeking the following prayer:

i. To issue 62.5% of the total shares of Messrs. Joy Foam Pvt. Ltd. to Petitioner No.1/company or its nominee against their initial investment of Rs.12,500,000/- therein;

ii. To issue share certificates of requisite value in the name of Petitioner No.1 or its nominee;

iii. To constitute the Board of Directors of Respondent No.1/company and include its nominees therein in accordance with the ratio of the above mentioned shares of the petitioners (62.5 %) in M/s: Joy Foam (Pvt) Ltd;

iv. To amend the statutory record of Respondent No.1/company including its Memorandum and Articles of Association so as to describe the petitioner No.1 as subscriber of 62.5% of its total share holding;

v. To file the above amended statutory record and documents with the appropriate authority;

vi. In the alternative to refund the amount of Petitioners investment in M/s: Joy Foam (Pvt) Ltd; amounting to Rs.12,500,000/- together with mark-up there upon at 2% above the bank rate calculated from 01.01.2004 till the date of decision of this civil original petition together with damages amounting to Rs.288 Million for loss of business.”

2. A synoptical resumption of the facts are that on 07.04.2004 the petitioners filed a suit for declaration and mandatory injunction. The declaration was sought with regard to the purported omission of the names of the petitioners from the Register of Members of Joy Foam (Pvt.) Limited, (“Joy”) as also for a declaration that the petitioners were Directors of Joy and were entitled to the allotment of 12,50,000 shares in lieu of their contribution to the paid up share capital of Joy. This suit was filed before the Senior Civil Judge, Lahore. The basis of the claim was that the petitioners had invested an amount of Rs.12.5 million in the capital of Joy. On 28.9.2010 by relying on a judgment of Supreme Court of Pakistan reported as Lahore Race Club v. Raja Khushbakht ur Rehman (PLD 2008 SC 707) the civil court returned the plaint with the direction to the petitioners to file the same before a competent forum. On 8.12.2010 the petitioners filed the present petition C.O 52 of 2010. It is the case of the respondents that the titled petition is substantially and materially different from the plaint which was returned to the petitioners to be filed at the competent forum.

3. The instant application was filed by the respondents for the rejection of the petition on the threshold. A reply was filed to this application by the petitioners. In a nub, the applicants assert that:

a. Since the plaint was returned to the petitioners, no amendments could be made to the plaint and, therefore, the petition was not maintainable as the plaint which was returned to the petitioners ought to have been filed without being altered or amended.

b. In case the petition is deemed to be a fresh petition, it was statute barred.

c. The petition and the documents appended to the petition disclose no cause of action.

4. The grounds raised in the application under consideration are dealt with in seriatim as follows.

No Amendments Could Be Made:

5. The learned counsel for the applicants has made a frontal attack on the petition, filed by the petitioners in its present form. According to the learned counsel, the instant petition is substantially different in material particulars from the plaint which was returned to the petitioners for being filed before a competent forum. The learned counsel for the applicants has relied upon Mst. Hawabai and 6 others v. Abdus Shakoor and 8 others (PLD 1970 Kar. 367), Kashif Rasheed and another v. Haji Muhammad Adrees through L.Rs. and 13 others (2007 CLC 1848) and Sardaraz Khan and 36 others v. Amirullah Khan and 34 others (PLD 1995 Pesh. 86) to invite this Court to hold that a plaint once returned has to be filed in the same form as it is returned and no amendments or changes can be brought about. It does not lie within the power of the party to whom the plaint is returned to effect any changes and on the strength of the precedents relied upon by the learned counsel, it is argued that any petition which incorporates substantial changes in the plaint which is so returned is incompetent and an action extra jus.

6. As a prefatory, the learned counsel for the petitioners submits that the present petition is a fresh petition and, therefore, the doctrine with regard to the return of plaint is not applicable to the facts and circumstances of the case.

7. It is clear from the stance taken by the learned counsel for the petitioners that the present petition has no relation with the suit which was filed before the civil court and the plaint in respect of which was returned to be filed before a competent forum. Thus, for all intents the proposition that we are now concerned with is not whether any amendments could be brought about in the plaint which was returned to the petitioners but whether the petitioners could file a fresh petition irrespective of the return of the plaint to the petitioners. This proposition was emphatically answered in the negative in the judgments which have been cited by the learned counsel for the applicants and the foundational judgment in this regard is the Mst. Hawabai case. However it turns out that Mst. Hawabai is no more good law on the subject. That judgment of the learned Single Bench of the Karachi High Court was appealed before a Division Bench of the Karachi High Court and while accepting the appeal the judgment cited by the learned counsel for the applicants was set aside in the following words:

“…There is nothing in rule 10 of Order VII, C.P.C which compels a plaintiff to necessarily present the same plaint to the Court having jurisdiction in the matter after it is returned to him by a Court on the ground that it had no jurisdiction in the matter, if he chooses, not to do so. In view of the above discussion we have reached the conclusion that after a plaint is returned to a plaintiff by a Court under Order VII, rule 10, C.P.C., he may adopt any of the following courses…”

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