IN THE SUPREME COURT OF PAKISTAN 
( Appellate Jurisdiction ) 
 
 
Present. 
Mr. Justice Nasir-ul-Mulk, HCJ. 
Mr. Justice Amir Hani Muslim 
Mr. Justice Ejaz Afzal Khan 
 
 
CIVIL APPEALS NO.616 AND 617 OF 2006 
(On appeal against the judgment dated 16.2.2006 
passed by the Lahore High Court, Lahore in ICA 
No.12/2005 and the order dated 27.2.2006 passed in 
CM No.69/2006 in ICA No.12/2005) 
 
Mian Javed Amir and others (in both cases) 
… 
Appellants 
Versus 
United Foam Industries (Pvt) Ltd, Lahore (CA.616/06) 
Sh. Combined Industries (Pvt) Ltd and others (CA.617/06) 
 
 
 
 
 
 
 
 
 
… 
Respondent(s) 
 
 
 
For the Appellants : 
Mr. Aitzaz Ahsan, Sr. ASC 
(in both cases) 
 
Mr. Uzair Karamat Bhandari, ASC 
 
 
 
 
Mr. M. S. Khattak, AOR 
 
For Respondents (1-10): 
Mr. Raza Karim, Sr. ASC 
(in CA.616/06) and   
Mr. Omar Alvi, ASC 
Respdt.2-11 in CA.617/06)  
 
For Respondent No.12: 
Mr. Hamid Khan, Sr.ASC. 
(in CA.616/06 and  
Respondent No.1 in CA.617/06) 
 
Date of hearings 
: 
10, 15-16 & 18-6-2015. 
 
JUDGMENT 
 
 
 
AMIR HANI MUSLIM, J. These Appeals by leave of the 
Court are directed against the common judgment dated 16.2.2006, passed 
by the Lahore High Court, Lahore, whereby ICAs No.11-L & 12-L/2005 
filed by the Respondents were allowed and judgments of the learned Single 
Judge/Company Judge dated 7.6.2005, in C.O.No.3/2005, were set aside. 
The Appellant filed CMs.No.68 & 69 of 2006 for recalling the order dated 
16.2.2006 which was dismissed vide impugned order dated 27.2.2006. 
C.As.No.616 & 617/06. 
2 
2. 
 
Brief facts of the case are that Respondent No.1 United Foam 
Industries (Pvt) (herein after referred to as ‘the Company)] was 
incorporated on 12.3.1976 under the Companies Act 1913 and presently 
operating under the Companies Ordinance 1984. The Company was a joint 
venture of Appellant No.1 and Respondent No.2 and the Appellants were 
shareholders to the extent of 38%. The dispute arose between the parties 
with regard to the alleged transfer of shares by the Respondents. The 
Appellants challenged the said transfer of shares before the Company Judge 
under Section 305 and 152 of the Companies Ordinance, 1984 praying for 
winding up of the Company and also for the rectification of register of 
shareholders on the ground that the Respondents had manipulated the 
record and made bogus entries in the register to show that Appellants had 
sold out to them their shares. By filing written statements the Respondents 
denied the allegations leveled against them by the Appellants and also 
leveled counter allegations. On 7.6.2005 the learned Company Judge 
referred the matter to the SECP for appointment of a reputable Inspector 
within 14 days to investigate into the allegations levelled by the parties 
against each other, with direction to file report within two months.  
3. 
 
The Respondents M/s Sheikh Combined Industries (Pvt) Ltd 
and United Foam Industries (Pvt)  Ltd, challenged the order dated 7.6.2006 
by filing separate ICAs which were allowed, holding that the Civil Court 
would be the appropriate forum for adjudication of the controversy between 
the parties. Being aggrieved of the said order, the Appellants filed CMs 
No.68 & 69 of 2006, which, too, were dismissed vide order dated 
27.2.2006. The said orders were challenged by the Appellants in Civil 
C.As.No.616 & 617/06. 
3 
Petitions No.475-L & 480-L of 2006, wherein leave to Appeal was granted 
to consider the following questions : - 
i. 
Whether the learned Division Bench having concurred with 
the finding of the learned Company Judge with regard to 
the existence of serious disputes qua the management and 
running of the company was justified in law to interfere 
with the direction for appointment of an Inspector to 
investigate in terms of the observations made by the learned 
Company Judge in para-9 and 10 of the order passed by 
him? 
ii. 
Whether the order passed by the learned Company Judge 
for appointment of Inspector to investigate into the affairs 
of the Company was beyond the parameters of Section 265 
of the Companies Ordinance? 
iii. 
Whether the transfer of shares recorded by Company in its 
register of share holders in the absence of share certificate 
pertaining to those shares is not unlawful? 
iv. 
Whether the order of the learned Company Judge could be 
interfered with on the sole ground that the civil suits 
between the parties were pending decision? 
v. 
Whether a civil court is a proper remedy to investigate the 
allegations/counter allegations or the circumstances and 
the mandate of law warrant a more pro-active remedy 
under the special law i.e. Inspector having the requisite 
expertise to investigate in terms of Section 265 of the 
Companies Ordinance? 
vi. 
Whether the learned Company Judge instead of referring 
the matter for investigation by an Inspector to be appointed 
by the Security Exchange Commission of Pakistan could 
decide the same himself in terms of Section 152 read with 
Section 305 of the Companies Ordinance? 
4. 
 
The learned Counsel for the Appellants had contended that 
Civil Suit is not the appropriate remedy in the present case as the remedy 
has been provided in the special statute i.e. Companies Ordinance 1984. He 
C.As.No.616 & 617/06. 
4 
referred to sections 263 and 265 of the Companies Ordinance 1984, which 
provide for appointment of an Inspector and confer powers on him to 
investigate into the affairs of the Company. The learned Counsel, in support 
of his contention, has relied upon the case reported in the case of Light 
Metal and Rubber Industries (Pvt) Ltd.  Vs. Serfraz Quadri (2011 CLD 
1485). 
5. 
 
He next contended that the Appellant is in possession of the 
original share certificates, without which shares cannot be transferred under 
Section 76 of the Ordinance. In support of his contention he has relied upon 
the case reported as Mst. Maqsooda Begum Vs. Maulvi Abdul Had (PLD 
1968 Lahore 903). 
6. 
 
He further contended that the scope of Section 265 of the 
Ordinance is very wide, as has been held in the case of Mian Miraj Din  vs.  
Brothers Steel Mills (1996 CLC 516). He submitted that the matters which 
fall within the domain of the Companies Ordinance, a special procedure has 
been provided which debars the jurisdiction of the Civil Court. 
7. 
 
The learned Counsel for the Appellants, Mr. Aitzaz Ahsan Sr. 
ASC submits that there exists a serious dispute between major shareholders 
of the Company. According to him, under Section 265 of the Companies 
Ordinance, 1984, the Court can itself appoint an Inspector for investigation. 
The Appellant alleges that he is owner of 38% shares in the Respondent-
Company, out of which 23% shares have purportedly been transferred. The 
learned Counsel contended that these questions are required to be 
investigated by the Inspector. 
C.As.No.616 & 617/06. 
5 
8. 
 
He has further contended that three separate Civil Suits have 
been filed; one prior to the petition for winding up of the Company and for 
determination of shareholding whereas two were filed subsequent to the 
Petition, claiming damages. He referred to the case of Khaqan Industries vs. 
Islamic Republic of Pakistan  (1979 SCMR 62) wherein it was held that 
pendency of civil litigation is no bar to initiate proceedings before the 
Company Judge under the Companies Ordinance. He also referred to 
Section 314 of the Ordinance, which authorizes the Company Judge to pass 
any order it deems just. He further referred to Section 281, which provides 
that an inquiry or investigation shall not affect the winding up proceedings. 
He, therefore, contends that the power to hold inquiry or investigation 
exists independent of any proceedings provided for winding up.  
9. 
 
The learned Counsel further contended that in the case of 
Mian Miraj Din (1996 CLC 516), the Court investigated into the internal 
disputes in Ittefaq Group regarding breach of trust and misappropriation of 
funds and the findings of the High Court were upheld by this Court in 
Brothers Steel Ltd. and others vs. Mian Miraj Din (PLD 1995 SC 320). He 
also relied upon the case of Attock Refinery Ltd. Vs. Executive Director 
Enforcement and Monitoring Division, SECP (PLD 2010 SC 946). He also 
referred to Section 152 of the Ordinance, which permits a party to file an 
application for rectification of register of shareholders.       
10. 
 
He contended that in the case of Lahore Race Club through 
Secretary vs. Raja Khushbakhat-ur-Rehman (PLD 2008 SC 707), it was 
held that no Civil Suit between the parties shall affect the jurisdiction of the 
Company Court. He contended that the Civil Suits pending between the 
parties have no nexus with the present Appeal. The learned Counsel 
C.As.No.616 & 617/06. 
6 
referred to Section 76 of the Ordinance, which provides that shares shall 
not be transferred unless the Transfer Deed is properly executed and the 
scripts are transferred. Therefore, the transfer of shares recorded in the 
register in absence of share script was not lawful. 
11. 
 
On the other hand, the learned Counsel Mr. Hamid Khan has 
contended that the findings in regard to ownership of shareholding can only 
be recorded by a Civil Court of competent jurisdiction. He relied upon the 
case reported as Lahore Race Club through Secretary (PLD 2008 SC 707). 
The learned Counsel submitted that out of 38% disputed shareholding,  
15% shareholding was initially sold and the remaining 23% was sold to his 
client in 2001. The Appellants, therefore, filed Civil Appeal No. 616 of 
2006) under Sections 152 and 305. In the prayer, it has been stated that 
transfer of shares, increase in share capital and allotment of shares shall be 
declared illegal. It was further prayed that register of shareholders shall be 
rectified and the Company should be wounded up. He submitted that the 
Inspector appointed under Section 265 does not have the authority to rectify 
the register of shareholders or order winding up. Therefore, the reliefs 
claimed under the prayer do not fall within the powers of Inspector under 
Section 265. He contended that the Inspector does not have the powers to 
decide the disputes between shareholders regarding the ownership/title of 
shares. He submitted that the Company Judge has passed an order which 
does not fall within the ambit of Section 265. 
12. 
 
He next contended that the dispute of the nature cannot be 
resolved in summary manner and requires adjudication by the Civil Court, 
after recording of comprehensive evidence. He submitted that the Civil 
Court is the appropriate forum to decide the dispute of ownership of 
C.As.No.616 & 617/06. 
7 
shareholdings between two major shareholders, after proper investigation 
and recording of evidence. He has relied upon the cases reported as 
Muhammad Aslam Javed vs. Malik Ijaz Ahmed and another  (2003 YLR 
2150), Muhammad Ahmed vs. Associate Engineering Concern (Pvt) Ltd  
(1998 CLC 426), Lahore Race Club through Secretary  (PLD 2008 SC 
707), Messrs Ammonia Supplies Corporation Ltd vs. Messrs Modern 
Plastic Containers Pvt Ltd.  (AIR 1998 S.C. 3153) and Messrs Ammonia 
Supplies Corporation Ltd. Vs. Messrs Modern Plastic Containers Pvt. Ltd 
(AIR 1994 Dehli 51). 
13. 
 
Mr. Raza Kazim, the learned Counsel for the Respondent 
No.1 has submitted that the main issue before the court is the allegation by 
the Appellant that the Respondent has committed fraud/forgery. He 
contended that if it is held that these shares were legally sold, then the 
Appellants have no locus standi as they were ceased to be the members of 
the Respondent Company. And in case it is determined that fraud/forgery 
has been committed by the Respondents, the register of shareholders shall 
be rectified. He has submitted that in order to settle this issue, some 
evidence is required to be recorded. To determine the allegation of fraud, 
the most important material is the examination of signatures by the 
handwriting expert, and this cannot be undertaken by an Inspector. He 
submitted that the recording of statements and cross-examination should be 
done in the High Court under the Companies Ordinance, as it does not 
involve an enormous record to be looked into. He submitted that the point 
in issue is very limited and can be undertaken by the Company Judge.  
14. 
 
He next contended that there is no restriction on the Company 
Judge to try this matter and record evidence under Section 9 of Companies 
C.As.No.616 & 617/06. 
8 
Ordinance. He contended that the concept of summary procedure relates to 
time that the case should be decided expeditiously, within 90 days. In 
support of his contention, he relied upon the case reported in Messrs 
Platinum Insurance Company Ltd. Karachi Vs. Daewoo Corporation 
Sheikhupura through Director Admn and Finance (PLD 1999 SC 1), 
wherein it was held that summary procedure adopted must be fair and just 
and it does not debar a Court from recording evidence.   
 
15. 
 
We have heard the learned Counsel for the parties at length 
and have perused the record. The Appellant filed proceedings before the 
learned Company Judge under the provisions of Sections 152 read with 
Section 305 of the Ordinance for winding up of the Company and for 
rectification of register of shareholders. The learned Company Judge 
referred the matter to the Security and Exchange Commission for 
appointing an Inspector to investigate into the affairs of the company and 
report within two months. The Respondents challenged the order of the 
learned Company Judge in I.C.A before a Division Bench, which set aside 
the orders of the Company Judge and directed the parties to approach the 
Civil Court for resolution of their dispute.  
 
16. 
 
The question which arises from these proceedings is whether 
a Court having jurisdiction under the Ordinance can undertake the exercise 
of recording oral/documentary evidence and decide disputed questions of 
fact in an Application under Section 152 of the Ordinance, in view of the 
restriction contained under Section 9(3) of the Ordinance. Section 9(3) of 
the Ordinance provides that “in the exercise of its jurisdiction as aforesaid, 
the Court shall, in all matters before it, follow the summary procedure.” In 
C.As.No.616 & 617/06. 
9 
our opinion, this Section does not abridge or curtail the power of the Court 
to record oral evidence or receive documentary evidence in the proceedings 
before it to determine the issues relating to a “Company” or its members 
covered under the Companies Ordinance, 1984.   
 
17. 
 
Section 9 of the Code of Civil Procedure provides:- 
“9. 
Courts to try all civil suits unless barred. The 
Courts shall (subject to the provisions herein contained) 
have jurisdiction to try all suits of a civil nature 
excepting suits of which their cognizance is either 
expressly or impliedly barred.” 
 
Since the Ordinance was promulgated with an intent to amend the 
law relating to companies and certain other associations for the purpose of 
healthy growth of the corporate enterprises, protection of investors and 
creditors, promotion of investment and development of economy and 
matters arising out of or connected therewith, therefore, all matters relating 
to companies irrespective of the fact whether factual controversy is 
involved or not are required to be tried by a Court having jurisdiction under 
the Ordinance of 1984. Mere insertion of the term “summary procedure” 
does not debar the Company Judge from receiving evidence in cases where 
factual controversy is involved. The Court having jurisdiction under this 
Ordinance can receive evidence in cases it thinks appropriate in the 
circumstances of the case.  
18. 
 
In order to gather the true intent of the legislature and the 
purpose of the Ordinance, it would be advantageous to reproduce Section 
152 of the Ordinance:- 
“Power to Court to rectify register (1) If— 
(a) the name of any person is fraudulently or without 
sufficient cause entered in or omitted from the register 
C.As.No.616 & 617/06. 
10
of members or register of debenture-holders of a 
company; or 
(b) default is made  or unnecessary delay takes place in 
entering on the register of members or register of 
debenture-holders the fact of the person having become 
or ceased to be a member or debenture-holder; 
the person aggrieved, or any member of debenture-holder of the 
company, or the company, may apply to the Court for 
rectification of the register. 
(2) 
The Court may either refuse the application or may 
order rectification of the register on payment by the company of 
any damages sustained by any party aggrieved, and may make 
such order as to costs as it in its discretion thinks fit.     
(3) 
On any application under sub-section (1) the Court may 
decide any question relating to the title of any person who is a 
party to the application to have his name entered in or omitted 
from the register, whether the question arises between members 
or debenture-holders or alleged members or debenture-holders, 
or between members or alleged members, or debenture-holders 
or alleged debenture-holders, on the one hand and the company 
on the other hand; and generally may decide any question which 
it is necessary or expedient to decide for rectification of the 
register.  
(4) 
An appeal from a decision on an application under sub-
section (1), or on an issue raised in any such application and 
tried separately, shall lie on the grounds mentioned in section 
100 of the Code of Civil Procedure, 1908 (Act V of 1908): 
(a) 
if the decision is that of a civil court subordinate 
to a High Court, to the High Court; and 
(b) 
if the decision is that of a Company Bench 
consisting of a single Judge, to a Bench consisting of 
two or more Judges of the High Court” 
 
19. 
 
In order to carryout the purposes of the above Section and the 
Ordinance itself and to determine the factual controversy between the 
parties, a Court having jurisdiction under the Ordinance has ample power to 
record evidence in cases it deems fit. The object of Section 152 of the 
Ordinance, which relates to factual controversy, cannot be achieved without 
entering into in-depth investigation and recording of evidence. Therefore, 
we hold that there is no legal bar for a Company Court to enter into factual 
inquiry, framing of issues for determination and recording of oral as well as 
documentary evidence in coming to the just conclusion of the case.  
C.As.No.616 & 617/06. 
11
20. 
 
The learned Company Judge has also erred in law while 
directing the S.E.C.P to appoint an Inspector who shall submit a report as to 
whether a case under Section 305 is made out or not. Suffice it to observe 
that the power to appoint an Inspector under Sections 263 and 265, vests 
with the Commission on an application by a member of the company or the 
Registrar of the Commission.  The areas in which the Inspector was 
directed to investigate falls within the jurisdiction of the Company Court 
and can be investigated and looked into by a Company Judge itself.    
 
21. 
 
The dictionary meaning of the term “Summary Proceedings” 
referred to in Section 9 of the Ordinance of 1984, is “to be disposed of 
promptly in simple manner out of regular course of the common law”. This 
term by itself does not impose any restriction on the forum from recording 
evidence to reach a final conclusion. Section 9 of the Ordinance of 1984 
does not exclude the jurisdiction of the Court to decide the controversial 
facts.  
22. 
 
We, for the aforesaid reasons, are of the considered view that 
a Court having jurisdiction under the Ordinance of 1984 can record oral as 
well as documentary evidence in any dispute brought before it for 
adjudication and the learned Division Bench of the High Court fell in error 
in holding that the Civil Court would be the appropriate forum for resolving 
the controversy between the parties.  
 
23. 
 
The above are the reasons of our short order of even date, 
which is reproduced hereunder:- 
“For reasons to be recorded later, the appeals 
are partly allowed in the terms that while 
C.As.No.616 & 617/06. 
12
setting aside the impugned judgment of the 
Division Bench of the Lahore High Court, the 
order of the Company Judge is modified to the 
extent that the exercise of rectification of 
register of shareholders as well as the issue of 
winding up shall be examined and decided by 
the Judge himself instead of referring the same 
to the Inspector” 
 
CJ 
 
J 
 
J 
Islamabad the, 
16th June, 2015. 
APPROVED FOR REPORTING. 
Sohail/**