Law: Companies Act, 2017

Section: 6(1), 387

1. Companies Act (XIX of 2017)---

----Ss. 6(1) & 387, proviso---Constitution of Pakistan, Art. 10A---Company ordered to be wound up by the Court---Appointment of liquidator to manage the affairs of the company---Winding-up order challenge to---Maintainability---Directors, powers of---Company that has been ordered to be wound up can challenge the winding-up order in its name, provided the institution of appeal and the person acting on behalf of the company are authorized by a resolution of its board of directors---Section 6(1) of the Companies Act, 2017 provides that "[a]ny person aggrieved by any judgment or final order of the Court passed in its original jurisdiction under this Act may, within sixty days, file a petition for leave to appeal in the Supreme Court of Pakistan."---It uses the general expression "any person aggrieved" and does not mention the specific persons competent to file a petition for leave to appeal---Company against which a winding-up order has been passed falls within the scope of the expression "any person aggrieved" and thus can file a petition for leave to appeal in the Supreme Court under Section 6(1) of the 2017 Act---Company can exercise such right of appeal through its directors---Upon the commencement of the winding-up proceedings, despite the appointment of the liquidator, certain powers still remain with the directors of the company who, before the winding-up order, had the ultimate responsibility for managing the company and acting in its best interests in their fiduciary capacity---Such powers are usually referred to as 'residuary powers', and are not affected by the provisions of company law like the proviso to Section 387 of the Companies Act, 2017--Therefore, a company against which the winding up order has been passed is to exercise its right of appeal through the board of directors---Board of directors can, by its resolution, authorise any person, including the former chief executive of the company, to act on behalf of the company in filing an appeal or a petition for leave to appeal against the winding-up order---When the directors can defend the original winding-up proceeding, they surely can also file and pursue an appeal arising from that original proceeding, as it is an integral part of defending the company from being wound up until it stands wound up or dissolved---This continuity ensures that the company retains its right of defense throughout the legal process---It is a necessary corollary of the company's right to appeal that its directors control the conduct of the appeal, just as they had control over the defence to the winding-up petition in the first instance---Denying the directors the capacity to exercise the company's right to appeal would effectively deprive the company of its locus standi to challenge the winding-up order, which would be contrary to the fundamental right of every person, including a juristic person like a company, to a fair trial and due process in the determination of civil rights and obligations, guaranteed by Article 10A of the Constitution---Regarding the expenses/costs for filing the appeal or petition for leave to appeal, the liquidator upon his appointment takes over the charge of all the assets and funds of the company, and the directors no longer have any control or authority to make or authorize any expenditure therefrom---Given this position, the directors inevitably have to arrange the funds for payment of fees to the counsel, etc., from their personal sources other than the funds and assets of the company and also bear the costs of appeal or petition for leave to appeal, if any, in case of dismissal---However, if the company's appeal succeeds and the windingup order is set aside, they may get reimbursement of those expenses from the company's funds under a resolution of the board of directors made after the success of the appeal.

Re Diamond Fuel Company (1879) 13 Ch. D. 400; Ripon Press and Sugar Mill Company v. Gopal Chetti (1931) 58 Ind App 416; U.K. Jurisdiction: Re Union Accident Insurance Co. Ltd. (1972) 1 All ER 1105; Closegate Hotel Development (Durham) Ltd. v. McLean (2013) EWHC 3237 (Ch). Indian Jurisdiction; Anil Kumar Sachdeva v. Four 'A' Asbestos [1980] 50 Comp Cas 122 (Del); Sinha Watches v. Gujarat S.F.C. (1985) 58 Com Cas 489 (Guj); Tata Finance Ltd. v. Chemox Chemical Industries, [2000] 100 Com Cas 338 (Bom); Rishabh Agro Industries v. P.N.B. Capital Services AIR 2000 SC 1583; Modi Rubber Ltd. v. Madura Coats Ltd. MANU/UP/1521/2004=2004 SCC Online All 1400 Australian Jurisdiction: Re Laverton Nickel (1979) 3 ACLR 945; Re Rick Wilson (1982) 7 ACLR 354. South African Jurisdiction: O'Connell Manthe and Partners v. Vryheid Minerale 1979 (1) SA 553 (T); Storti v. Nugent (2001) 3 SA 783 (W); Praetor v. Aqua Earth Consulting CC (162/2016) [2017] ZAWCHC 8 Malaysian Jurisdiction; Sri Hartamas Development v. MBF Finance (1991) LRC (Comm) 595; KTL v. Azrahi Hotels (2003) 3 CLJ 49. Singapore Jurisdiction; Sun Electric Power v. RCMA Asia (2021) 2 SLR 478; Hin Leong Trading v. Rajah and Tann, (2022) SGCA 28; Closegate Hotel Development (Durham) Ltd. v. McLean (2013) EWHC 3237 (Ch) and Re Rick Wilson (1982) 7 ACLR 354 ref.