Law: Companies Ordinance, 1984

Section: 305

(a) Companies Ordinance (XLVII of 1984)----Ss. 305 & 306---Winding up of a company---Scope and object stated. Object of winding up of a company is to release the assets of the company and pay its debts in accordance with law. In winding up cases, utmost endeavor should be made for survival of the corporate sector rather than to dismantle it. A company may be wound up on any of the grounds mentioned in section 305 of the Companies Ordnance, 1984. The conjoint effect of sections 305 and 306 of the Companies Ordinance, 1984 made it clear that the court had discretion to order or not to order the winding up of a company after taking into consideration relevant facts. Winding up proceedings cannot be used as a lever for pressurizing a company to pay its disputed debts. For winding up a company, the court has to consider whether the substratum of the company is gone, the object for which it was incorporated to carry on the business except at loss and no reasonable hope that the object of trading at profit can be attained and the existing or probable assets are insufficient to meet liabilities. (b) Companies Ordinance (XLVII of 1984)---Ss. 305, 306 314, 152 & 79---Winding up of company---Grounds on which a company may be wound up---Scope---Petitioners who were legal heirs of deceased shareholder and director of respondent company, sought winding up of company on various grounds including that the shares of the deceased had not been transferred to the petitioners; that the respondents were siphoning funds from the company illegally and that assets of the company were being sold illegally---Validity---Petitioners admittedly claimed shareholding of 16.72% which had still not been transferred in their names and the petitioners had neither pleaded the case of winding up on allegation that the company was conducting its business in a manner oppressive to its members nor on this ground had the petitioners filed the winding up petition---Non-transfer of shares to the petitioners was not a ground available for winding up a company under S.305 of the Companies Ordinance, 1984; and said grievance of the petitioners was to be dealt with by Ss.79 & 152 of the Companies…

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