Law: Companies Ordinance, 1984

Section: 305

(a) Companies Ordinance (XLVII of 1984)---Ss. 305(e) & 306(a)---Failure of company to pay undisputed debts within 30 days of service of statutory notice of demand by creditor---Condition precedent for passing order of winding up of company. 1990 CLC 1030; PLD 1973 Lah. 60; PLD 1985 Kar. 193; 1989 MLD 374; 1970 SCMR 184; 1997 CLC 230; PLD 1992 Kar. 249; 1989 CLC 1167 and PLD 1971 Kar. 597 ref. PLD 1990 SC 768; 1992 SCMR 1006; re: Imperial Hydropathic Hotel Co. 49 IT 147 and re: European Life Assurance Society (1869) TX IR (Equity Cases) 122 rel. (b) Companies Ordinance (XLVII of 1984)--- ----Ss. 305(e) & 306(a)---Notice by creditor demanding payment of debt from company---Essential contents---Service of notice on company---Burden of proof---Lack of service of notice or any defect in notice would render winding up proceedings non-maintainable---Principles. In case of denial of debt by company, it is incumbent upon the creditor to prove the service of notice. Notice under section 306(a) of Companies Ordinance, 1984 is a highly formal and important document, which must be clear and unambiguous and should unequivocally state that the person sending the notice is a creditor of the company demanding as specific amount of money from the company. Any defect in the notice or lack of service of notice will render the winding up proceedings on this ground ab initio defective for a logical reason that it imposes a penal obligation upon the company and, therefore, has to be strictly construed. Where no demand notice is served upon company by its creditor, then petition for winding up would be rendered untenable. (c) Companies Ordinance (XLVII of 1984)---S. 309---Civil Procedure Code (V of 1908), O.XXIX, R.1--­Petition for winding up of company by its creditor (a Banking Company)---Nothing on record was available to show that Board of Director of petitioner's Bank had taken any decision to initiate such proceedings and that signatories of petition claiming to be officers of bank had been duly authorized by Bank to sign and verify pleadings and institute such petition on behalf of Bank--­High Court dismissed such petition being not maintainable. PLD 1971 SC 550; PLD…

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