2025 C L D 1428
[Balochistan]
Before Gul Hassan Tareen, J
Mrs. RAZIA AMIR SULTANA and others ---Applicants
Versus
AL AMIR PAPER MILLS (PVT.) LIMITED and others ---Respondents
Company Petition No.01 of 2021, decided on 29th May, 2025.
(a) Companies Act (XIX of 2017) ---
----Ss.5(1), 5(2), 126, 127, 287- A & 497 ---Limitation Act (IX of 1908), First Sched.,
Art.112--- Petition for rectification of shareholding register ---Limitation ---Jurisdiction of the
Company Bench---The petitioners invoked the jurisdiction of the High Court under its
companies jurisdiction for correction of the members' register of the company--- The
company was incorporated in 1993 and the petitioners and respondent No. 2, were legal heirs of the member, who originally held a collective shareholding of 491,000 shares ---However,
after the petitioners migrated abroad between 1999 -2000, respondent No. 2 fraudulently
removed their names from the register, assumed full ownership, and later unlawfully transferred shares to respondent No. 4, including those of the deceased---Applicants filed
present petition in 2021 seeking rectification of shareholding register ---Main questions for
determination before the High Court was as to "Whether the petitioner, who had been the shareholders of the company, were entitled to rectification of the company's register on account of alleged fraudulent removal of their names and unauthorized transfer of shares by respondent No. 2, and whether such petition was maintainable and within limitation period" --
-Held: ---Respondent No.2 was the beneficiary of the shares, therefore, the burden to proof
was on him to plead and prove the particulars of such purchase ---Respondent No.2 did not
plead description and particulars of purchase, such as price, sale, agreement, mode of payment of the price ---While transferring shareholding of the applicants the respondent No.2
had not observed and complied with the Articles of Association--- Respondent No.2, at the
relevant time, in compliance with the erstwhile S. 76 of the Companies Ordinance, 1984 did not bring on record instrument of transfer duly stamped and executed by the applicants and their late father ---Respondent No.2 could not place on record any instrument showing that he
had paid price of the shares to the applicant ---Respondent No.2 was the beneficiary of the
shareholding, thus, burden to proof was on him to substantiate that he had purchased the shareholding of the applicants but he failed to do so--- Section 126(3) of the Companies Act,
2017 (and S. 152 of the erstwhile Companies Ordinance, 1984) conferred exclusive jurisdiction upon the High Court to try an application made under S. 126 for rectification of the register ---Thus, the High Court had exclusive territorial and subject matter jurisdiction to
try the application at hand under S. 5 subsection (1) and S. 126 of the Companies Act, 2017---Subsection (2) of S. 5, ousted the jurisdiction of any other court to entertain any proceedings
in respect of any matter which the High Court was empowered to determine by or under the Companies Act, 2017 ---With regards to the question of limitation for filing application for
rectification of register, the High Court while relying on the case reported as "2022 SCMR 1171" observed that no limitation was provided for filing application for rectification of register and held the petition to be within time ---Moreover, applicants and respondent No.2
were legal heirs of the late member and there was no limitation for a co -sharer and against
other co -sharer for claiming shares in the joint immovable, or movable, property including
shares in a company ---High Court ordered for rectification of the shareholding register of
members ---Petition was allowed, in circumstances.
Naila Naeem Younus v. Indus Services Limited 2022 SCMR 1171 rel.
(b) Companies Act (XIX of 2017) ---
----S.126---Limitation Act (IX of 1908), First Sched., Art.112--- Petition for rectification of
shareholding register ---Limitation ---Scope ---Section 126 of the Companies Act, 2017 or any
other provision thereof and the Limitation Act, 1908 do not prescribe any particular time
limitation for making an application for rectification in the register of members ---Term
'Company' has been mentioned in the explanation to S. 3 of the Limitation Act, 1908 which means 'a company which is being wound up by the Court'---The only article mentioning term 'Company' in Schedule -I of the Limitation Act 1908 is Art. 112, which states 'For a call by a
company registered under any Statute or Act.' ---Hence, both Acts i.e. Companies Act, 2017
and Limitation Act, 1908 do not place impediment of limitation on an application made for the rectification of entries in the register of members ---High Court while relying upon the
case reported as '2022 SCMR 1171' observed that there was no limitation period prescribed for an application for rectification of register.
Naila Naeem Younus v. Indus Services Limited 2022 SCMR 1171 rel.
Sultan Khalid for Petitioners.
Ex-parte vide order dated 23rd May, 2025 for Respondents Nos.1 to 4, 5 and 7.
Murtaza Butt for Respondent No.6.
Date of hearing: 23rd May, 2025.
JUDGMENT
GUL HASSAN TAREEN, J. ----The applicants have invoked the company
jurisdiction of this Court under sections 126, 127, 287- A and 497, the Companies Act, 2017
('Act') for correction of the register of members of Al -Amir Paper Mills (Pvt.) Limited,
bearing Registration Number Q -00122 1993- 94.
2. They contended that Al Amir Paper Mills (Pvt.) Ltd. ('the Company') was
incorporated in 1993 under the Companies Ordinance, 1984 ('the Ordinance') (since repealed and substituted by the Act). Applicant 1 (Razia Amir Sultana) held 81834 shares, applicant 2 (Rais Khan) held 81834 shares, applicant 3 (Naeem Akhtar) held 81834 shares, applicant 4 (Ghazala Majid) held 40916 shares, applicant 5 (Lubna Rais) held 40196 share and respondent 2 (Saleem Akhtar) held 81833 shares in the Company. Applicants and respondent 2 are the legal heirs of late Amir Muhammad who held 81833 shares in the Company. Their total shares were 491,000. The shareholding of the applicants, respondent 2 and the late Amir Muhammad was reflected in the record and, in the Annual Returns of the Company, Form 3 till dated 07 August 1994 which were presented to the Securities and Exchange Commission of Pakistan ('respondent 5'). However, in the Annual Returns (Form -A), subsequently
presented to the respondent 5, applicants, and the name of their father were removed from the register of members, and it was shown that they resigned from the positions of the directorship of the Company and the respondent 2 had transferred their shareholding and the shareholding of the late Amir Muhammad into his name on 31 December 2000. Applicants 1 to 3 had migrated to the Canada in 1999- 2000. Applicant 4 was residing in the USA and the
Company was being run and administered by the respondent 2. In their absence, respondent 2 had fraudulently removed their names from the register of the Company and became single share holder of the Company. Later, respondent 2 had transferred the shareholding to the respondent 4 in contravention of the Articles and Memorandum of Association of the Company. The respondent 2 altered Articles of Association without Company's resolution duly signed by the share holders. Applicants further contended that respondents 2 and 3 had presented forged documents before the respondent 5 and transferred the shareholding to the respondent 4. Applicants prayed as follows:
a) That the applicants be declared as shareholders as per shareholding dated 07.08.1994 in the respondent No.1 Company, and thereafter, the respondent No.1 be directed to correct/rectify the share register and the shareholding of the applicants be restored in the respondent No. 1 Company.
b) That after correction/rectification, the respondent No.1 Company be directed to bring in [sic] the necessary changes in Form 29 by deleting the names of respondents Nos. 3 and 4, and any other name entered without the consent of the shareholders of the Company.
c) That the applicants are the rightful shareholders of the company and their names have
been omitted fraudulently and without sufficient cause.
d) That the shares of late Amir Muhammad as liable to be distributed among the legal heirs in accordance with law.
e) That respondents Nos.2, 3 and 4 be restrained to further sell the shares of the Company or create a third party interest in the respondent No. 1 Company.
f) That to terminate, set- aside or modify any purported sale agreement of shares between
the Company, director, Chief Executive to which the applicants are not party.
g) That the respondents Nos.4 and 5 be declared as usurpers of the share holdings of respondent No.1 Company which they have obtained through fraud.
h) That to direct the respondent No.6 to hold the disbursement of the insurance award in
respect of Al Amir Paper Mills (Pvt.) Limited, till the application regarding the
shareholdings is decided.
i) Any other relief as may be deem [sic] fit and appropriate in the circumstances of the case be also awarded, along with the cost of the application.
3. On 27 April 2021, the application was registered. Notices were issued and the
respondents 1 to 4 were prevented from making any further change/creating any third party interest in the shareholdings of the Company.
4. Respondents 1 to 4 submitted their common written statement/reply on 24 September
2021. Respondents 5 and 6 also submitted their separate written statements.
5. On 23 May 2025, none appeared on behalf of the respondents 1 to 4, 5 and 7,
therefore, ex -parte order was passed against them.
6. Mr. Sultan Khalid, learned counsel for the applicants submitted that applicants had
not sold out their shareholding in the Company to the respondent 2 and the respondent 2 had made alterations in the register of members and transferred the shareholdings of the applicants and their late father to his name in contravention of the Memorandum and Articles of Association of the Company and the provisions of Ordinance.
7. Mr. Murtaza Butt, learned counsel for the respondent 6 submitted that respondent 6 is
not necessary party in the application, however, the respondent, he represents, would comply with the order of this Court.
8. Heard and have gone through the record. Following points fall for determination in
this application: -
a. Whether this Court as a Company Bench has jurisdiction to try the application at hand?
b. Whether application at hand is barred by limitation?
c. Whether applicants, respondent 2 and their late father had 491000 shares in the Company?
d. Whether applicants had sold out their shareholding to the respondent 2 in the Company?
e. Whether the applicants are entitled to the reliefs they have claimed?
Point for determination (a), decision thereon and the reasons for the decision:
Whether this Court as a Company Bench has jurisdiction to try the application at hand?
9. In their common written reply, respondents 1 to 4 have raised objection of
jurisdiction. Part II of the Act prescribes jurisdiction of the Court. Term 'Court' is defined in section 2 (23), the Act which means, 'a Company Bench of a High Court having jurisdiction
under this Act.' Part II of the Act consists of two sections, that is, 5 and 6. Section 5
subsections (1) and (2) pertain to jurisdiction which read as: -
'(1) The Court having jurisdiction under this Act shall be the High Court having jurisdiction in the place at which the registered office of the company is situate.
(2) Notwithstanding anything contained in any other law no civil court as provided in the Code of Civil Procedure, 1908 (Act V of 1908) or any other court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Court is empowered to determine by or under this Act.'
At para 1 of the application, the applicants have pleaded that registered office of the
Company is situated at Hub Industrial Estate, Hub, Lasbela, Balochistan. In their common reply, respondents 1 to 4 have admitted para 1 of the application. The Article II of the
Memorandum of Association of the Company reads as: -
'II. The Registered Office of the Company will be situated in the Province of
Balochistan.'
The registered office of the Company is situated in the Hub City, within the local
limits of the territorial jurisdiction of this Court, therefore, this Court has exclusive territorial
jurisdiction to try the application. Besides, territorial jurisdiction, this Court has subject
matter jurisdiction. Applicants have sought rectification in the register of members. Section
126 subsection (3), the Act (and section 152, the late Ordinance) confers exclusive jurisdiction in this Court to try an application made under section 126, for rectification of the register. Thus, this Court has exclusive territorial and subject matter jurisdiction to try the
application at hand under section 5 subsection (1) and section 126, the Act. Subsection (2) of
section 5, outs jurisdiction of any other court to entertain any proceedings in respect of any
matter which this Court is empowered to determine by or under the Act.
For the aforesaid reasons, point of determination (a) is answered in affirmative.
Point for determination (b), decision thereon and the reasons for the decision:
"Whether application at hand is barred by limitation?"
10. Respondents 1 to 4 have raised preliminary legal objection (I) in their common reply
that, 'this application is hopelessly barred by time.' Applicants, by making the application, have sought rectification in the register of members which is governed by section 126, the Act. The section 126 or any other provision of the Act and the Limitation Act, 1908 ('Act, 1908') do not prescribe any particular time limitation for making an application for rectification in the register of members. Term 'Company' is mentioned in the explanation to section 3 of the Act, 1908 which means 'a company which is being wound up by the Court'. The only article which mentions term 'Company' in the Schedule -I, the Act 1908 is Article
112, 'For a call by a company registered under any Statute or Act.' Both Acts do not place impediment of limitation on an application made for the rectification of entries in the register of members. Applicants and respondent 2 are legal heirs of late Amir Muhammad and there is no limitation for a co -sharer and against other co -sharer for claiming shares in the joint
immovable, or movable, property including shares in a company. The Supreme Court of Pakistan, in Naila Naeem Younus v. Indus Services Limited published in 2022 SCMR 1171 has held as: -
"Neither the Limitation Act nor the Ordinance mentions an application for the rectification of the company's register of members or denture -holders nor prescribes a
particular period within which such an application is to be filed. Article 181 of the First Schedule to the Limitation is in respect of, 'Applications for which no period of limitation is provided elsewhere in this schedule or by section 48 of the Code of Civil Procedure, 1908 (V of 1908)', and for such applications prescribes a three years period. Therefore, the question to be considered is whether Article 181 also applies to an application for the rectification of the register of a company.
12. The Ordinance (substituted by the Companies Act, 2017) is a self -contained law
and attends to all matters pertaining to companies, including the maintenance of the register of members and debenture - holders and provides the mechanism to rectify if a
fraud is committed or omission made therein. The Ordinance does not prescribe any
period within which an application for rectification may be submitted. Therefore, it
would not be appropriate to do so on account of a tenuous connection with Article 181 of the Limitation Act. Section 152
15 of the Ordinance does not distinguish
between rectification necessitated on account of a fraud having been committed and rectification required to correct an omission in the register of members. Fraudulent
changes made to the register and omissions therefrom are both categorized as
offences.
16 There is no limitation period in Pakistan to prosecute and punish a crime;
unlike some countries where there are statutes of criminal limitations. A fraudster,
who had illegally transferred shares of another into his own name commits a crime and could be convicted for this offence. However, if the impugned order is upheld, the one defrauded could not get back his/her shares, if the application to rectify the company's register was filed after a period of three years. But this irreconcilable
contradiction does not arise if Article 181 is held not to apply to an application to
rectify the company's register. SECP is quite correct to state that when section 152 of
the Ordinance is read with the section following it (section 153) it removes all doubts,
if there were any, that the legislative intent was not to prescribe a period of limitation
in filing a rectification application, or to make it subject to Article 181, or to any
other provision of the Limitation Act."
The application is not barred by the law of limitation.
For the aforesaid reasons, point for determination (b) is answered in negative.
Points for determination (c) and (d), decision thereon and the reasons for the decision:
Whether applicants, respondent 2 and their late father had 491000 shares in the
Company?
Whether applicants had sold out their shareholding to the respondent 2 in the
Company?
11. Parties are not at issue that applicants, respondent 2 and their late father had 491000
shares in the Company vide Form 3 dated 07 August 1994. On merits, in reply of para 4,
respondents 1 to 4 have pleaded as under: -
'It is important to mention here that after death of Amir Muhammad all the shares of
the applicants was [sic] purchased by the respondent 2 and transferred the same
through process by the competent authority as such the applicants are not the
shareholder in the company.'
Respondent 2 was beneficiary of the shares, therefore, the burden to proof was on him
to plead and prove the particulars of such purchase. Respondent 2 has not pleaded
description and particulars of purchase, such as, price, sale agreement, payment, mode of
payment of the price et cetera.
Articles 3(a) and 11(a), the Articles of Association of the Company relate to transfer
of shares which reads as: -
'3(a) the right of transfer shares of the company is restricted in the manner hereunder provided.'
11. The right of members to transfer their shares shall be restricted as follows: -
(a) Shares may be transferred by a member or other person entitled to transfer to any
member selected by the transferor and save as provided by Article 3 no share shall be
transferred to a person who is not a member so long as any member (or person selected by the Directors as one whom it is desirable in the interest of the Company to admit into membership) is willing to purchase the same at a fair value, to be
ascertained by the auditors of the Company for the time being, and in as certifying the
auditors shall considered to be acting as experts and not Arbitrators; and accordingly
the Arbitration Act, 1940, shall not apply.
12. Articles 3(a) and 11(a) prescribe mode of transfer of shares by one member to the
other member. Respondent 2 had not purchased the shares of the applicants per, referred to
articles of Association nor even pleaded so in his written reply. The memorandum and
articles of the Company were registered under section 26, the Ordinance. The memorandum and articles shall, when registered, bind the company and the members thereof to the same extent as it they respectively had been signed by each member and contained a covenant on the part of each member, his heirs, and legal representatives, to observe and be bound by all
the provisions of the memorandum and of the articles, subject to the provisions of the
Ordinance (section 31, the Ordinance). While transferring shareholding of the applicants,
respondent 2 had not observed and complied with the Articles of Association and, thus, contravented section 31, the Ordinance. Under section 76, the Ordinance. 'An application for registration of the transfer of shares and debentures in a company may be made either by the transferor or the transferee, and subject to the provisions of this section, the company shall enter in its register of members the name of the transferee in the same manner and subject to the same conditions as if the application was made by the transferee:
Provided that the company shall not register a transfer of shares or debentures unless
proper instrument of transfer duly stamped and executed by the transferor and the transferee has been delivered to the company along with the scrip.
Respondent 2 has not brought on record instrument of transfer duly stamped and
executed by the applicants and their late father. Respondent 2 could not place on record any instrument showing that he had paid price of the shares to the applicants. Respondent 2 was beneficiary of the shareholding, thus, burden to proof was on him to substantiate that he had purchased the shareholding of the applicants but he failed.
Vide letter dated 3 March 2000, the respondent 5 had required the respondents 1 and
2 to furnish copies of agreement with regard to allotment of shares into his name and attested copies of registration of the outgoing directors, however, respondent 2 did not file the documents despite a reminder dated 9 September 2002. In its reply, respondent 5 has pleaded
that the respondent 2 was reported to be appointed as Chief Executive on 16 October 1999
and Form 29 dated 29 October 1999 is lying objected with the respondent 5 due to material
discrepancies and lack of supporting documents. It has been pleaded that Form 29 dated 20 February 1998 was filed notifying the resignation of five out of the seven directors w.e.f. 18 February 1998 which too is lying in objection with it. Thus, applicants are entitled to have their shareholding restored as reflected in Form 3 dated 07 August 1994. In Naila Naeem Younus's case, the Apex Court has held as: -
"20. In the present case the contesting respondents admit the shareholding of the petitioners but seek to deprive them of their said shares on completely untenable grounds. The contesting respondents also have not produced instruments of transfer or transfer deeds, executed by the petitioners, whereby the said shares could have been transferred to respondent 3, and on the contrary acknowledge that this was not done. It was also illegal to forfeit the said shares, as alternatively contended by the contesting respondents. The petitioners had held the said shares for decades and could not be deprived of them nor could their rights therein be arbitrarily extinguished. The act of the contesting respondents in transferring/forfeiting the said shares is completely unsustainable. Consequently, the petitioners are entitled to have their said shareholding restored to their original position, as reflected in Form -A dated 31
October 1985. And, all acts whereby the petitioners said shares, were purportedly transferred to respondent 3, and/or to anyone else, are held to be of no legal effect, and must be immediately undone."
For the aforesaid reasons, points for determination (c) and (d) are answered in
affirmative and negative, respectively.
13. Respondent 2 had lodged claim on behalf of the Company against the respondent 6
under Insurance Policy No.02/P/039/003955/ -/07/98 which was arbitrated by the learned
Umpire, vide Arbitration Award dated 30 April 2001. Applicants are also entitled to have their respective shares, as consequential relief in the sum as determined by the learned arbitrator.
14. I allow this application, praying that the Company's register of members be rectified
to show the applicants are members of the respondent 1/the Company and the said shares belong to them, is allowed, and all Form A, Form 29 presented to the respondent 5 which
show otherwise be rectified by the respondents 1 to 5, as under: -
Applicant 1, Razia Amir Sultan as owner of 81834 shares,
Applicant 2, Rais Khan as owner of 81834 shares,
Applicant 3, Naeem Akhtar as owner of 81833 shares,
Applicant 4, Ghazala Majid as owner of 40916 shares,
Applicant 5, Lubna Rais as owner of 40916 shares,
Respondent 2, Saleem Akhtar as owner of 81833 shares,
Applicants and respondent 2 are entitled to have their respective shares in the 81834 shares
of their late father. Respondent 2 had omitted the names of applicants from the register of members fraudulently; therefore, office is directed to send a reference for adjudication of offence under section 153, the Ordinance per section 126 subsection (4) the Act to the Court as provided in section 482, the Act. (At then, the Ordinance was enforced). Office is further directed to cause a copy of this judgment to be forwarded to the Company to file notice of the rectification with the registrar, respondent 5 within fifteen days from the receipt of this judgment.
As far as payer clause (h) is concerned, matter relating the validity of arbitration
award dated 30 April 2001 is pending before the Sindh High Court at Karachi in Arbitration
Application 625 of 2021; consequently, no order is being passed to such extent.UN/67/Bal.
Petition allowedThis judgment is reproduced from a publicly available source for informational purposes and does not constitute legal advice. If you believe this listing contains an error,
let us know.