Law: Companies Act, 2017

Section: 257,256

(a) Companies Act (XIX of 2017)--- ----Ss. 257, 256---Investigation of companys affairs in other cases---Intertwined, doctrine of---Scope---Petitioner sought direction to the SECP (Securities and Exchange Commission of Pakistan) to start investigation into the affairs of the respondents under S. 257(1)(a)(ii) of the Companies Act, 2017 (the Act)---Held, that petitioner, under the doctrine of intertwined, had to fulfill the requirements of S. 256 regarding locus standi of being member, qualification of member and company against whom the relief was being sought---Petitioner had no nexus with the respondents companies, not being member of any of the company---Petitioner had filed the petition solely under S. 257 of the Act without fulfilling its preconditions---In case parties/persons having no link or nexus to the affairs of a company (by way of either membership/shareholding/holding office) were allowed to invoke the provisions of both Ss. 256, 257 and other related provisions of the Companies Act, 2017 to have the affairs of a company investigated on account of matters that purely pertained to their commercial and business dealings with such a company, would in turn not only open flood-gates of litigation, but would also lead to; (i) a situation where the affairs of any company would be investigated in every such instance where there was an alleged breach of contract by the company in its business dealings with third party and; (ii) disputes in the normal course of business between a company and third party would end up requiring investigations into the affairs of a company, and; (iii) the laws and statutes dealing with and providing for legal remedies based on contract, sale of goods, specific performance etc. would more or less be rendered redundant---Petitioner had not approached the Commission to address any grievance and had directly knocked on the doors of the Court for issuance of direction without showing any proof of allegations or establishing himself to be member of such company---Petition was dismissed. Mohammad Raza v. Crescent Industrial Chemical Ltd. and 5 others 2018 CLD 898; Mian Javed Amir and others v. United Foam Industries (Pvt.) Ltd.…

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