Supreme Court Upholds Right of Companies to Appeal Winding-Up Orders

Islamabad 02-07-2024: In a significant ruling, the Supreme Court of Pakistan has affirmed that companies subjected to winding-up orders can appeal these orders through their board of directors or authorized representatives. This decision came in the cases of Cotton Mills, Spinning & Weaving Mills against Summit Bank Limited and MCB Bank Limited.

The court, comprising Mr. Justice Syed Mansoor Ali Shah, Mr. Justice Muhammad Ali Mazhar, and Mr. Justice Athar Minallah, rejected a preliminary objection raised by the respondent banks. The banks contended that once a company is ordered to be wound up and an official liquidator is appointed, the former chief executive or board of directors lose the authority to file appeals in the company’s name.

In its detailed judgment, the Supreme Court emphasized the right of companies, as separate legal entities, to challenge winding-up orders. The court cited legal precedents from various jurisdictions, supporting the position that companies retain the right to appeal through their board of directors even after a liquidator has been appointed. The judgment highlighted the principle that the directors' 'residuary powers' include the authority to contest such orders.

The decision ensures that companies can exercise their right to a fair trial and due process, as guaranteed by Article 10A of the Constitution. The case has been scheduled for further hearing on its merits after the summer vacation.

This ruling is seen as a pivotal moment in corporate law, reinforcing the rights of companies to defend their interests and maintain their legal standing throughout judicial proceedings. 

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