Ms Alliance Sugar Mills Limited & Ms RYK Mills Limited through Umer Farooq & Shaharyar Khan Vs The Registrar of Companies SECP

Stereo. H C J D A 38.

JUDGMENT SHEET

THE LAHORE HIGH COURT, LAHORE

JUDICIAL DEPARTMENT

Case No. C.O. No.74937 of 2025 M/s Alliance Sugar Mills Ltd. Vs. The Registrar of etc. Companies, SECP

JUDGMENT

Date of Hearing 20.05.2026 For applicants: M/s Shehryar Kasuri, Jawad Ashraf Rana and Muhammad Abdullah Arif, Advocates for the applicants.

For respondent: Mr. Ruman Bilal, Advocate for the respondent-SECP. Mr. Muhammad Waseem, Assistant Attorney General, along with Yasir Abbas, SI/FIA, Lahore.

Ch. Muhammad Jawad Yaqoob, Additional A.G.

Ms. Fatima Shahid, Special Prosecutor, NAB.

Mr. Adil Aftab Kashmiri, Advocate for respondent-NBP. Mr. Khalid Mahmood Naz, Legal Advisor of Meezan Bank Ltd.

Hassan Nawaz Makhdoom, J.- The instant joint Application has been instituted under Sections 279 to 284 read with Section 285 of the Companies Act, 2017 (the “Act”) read with SRO No. 840(I)/2017 dated 24.08.2017 issued by the Finance Division, Government of Pakistan seeking sanction of the proposed Scheme of Arrangement/ Reconstruction formulated inter se the applicant companies, namely M/s Alliance Sugar Mills Limited and M/s RYK Mills Limited. The proposed Scheme primarily contemplates restructuring, reorganization, realignment of shareholding, redistribution and vesting of certain assets and liabilities inter se the applicant companies, together with consequential corporate and financial adjustments, with the stated object of streamlining the corporate structure, enhancing operational and managerial efficiency, improving financial sustainability, and optimizing utilization of resources within the group structure.

2.This Court, vide order dated 16.12.2025, initiated the statutory process for consideration of the proposed Scheme of Arrangement and directed convening of the Extra-Ordinary General Meetings of the

shareholders/members of the applicant companies in order to ascertain their wishes and approval with regard to the proposed Scheme. Learned Chairpersons were appointed to preside over the meetings, supervise the voting process and submit their respective reports to this Court regarding the conduct and outcome thereof. A direction was also made for issuance and publication of notices in widely circulated newspapers, besides issuance of notices to the SECP, Competition Commission of Pakistan, and other concerned stakeholders in accordance with the Companies (Court) Rules, 1997, so as to ensure procedural transparency, regulatory oversight, and compliance with all statutory formalities prior to consideration of the proposed Scheme at the sanction stage.

3.The respondent-SECP has filed detailed comments/reply followed by a subsequent sur-rejoinder raising various observations, reservations, and regulatory concerns in relation to the proposed Scheme of Arrangement/Reconstruction. The objections primarily revolve around the accounting treatment, disclosure requirements, financial restructuring mechanism and legal characterization of certain inter-company transactions contemplated under the Scheme vis-à-vis Section 199 of the Act. The respondent-SECP has, inter alia, questioned the treatment and disclosure of certain amounts, including the proposed handling of inter-corporate loans and capital contributions, the absence of an independent valuation or fairness opinion, and the proposed accounting adjustments and financial entries envisaged under the restructuring framework. The respondent- SECP has further expressed reservations regarding the proposed shareholding re-alignment, restructuring methodology, and consequential financial implications arising under the Scheme, with the stated object of ensuring transparency, legality, proper regulatory compliance, and protection of the interests of shareholders, creditors, and other stakeholders. Clarifications have also been sought with regard to the continuing applicability of statutory, accounting, disclosure, and regulatory obligations notwithstanding sanction of the Scheme by this Court. In addition thereto, reference has been made to

alleged pending proceedings before certain law enforcement agencies as well as the possible financial exposure of the applicant companies, arising therefrom. The respondent-SECP has accordingly contended that the matters relating to valuation methodology, financial structuring, inter-company transactions, and consequential accounting treatment warrant closer regulatory scrutiny so as to ensure consistency with the governing corporate and regulatory framework prescribed under the Act, and applicable laws.

4.Learned counsel for the applicants while referring to C.Ms. No.1 and 2 of 2026 submits that No Objection Certificates of all the applicants’ creditors have already been placed on record, thereby reflecting their conscious acceptance of the arrangement after due consideration of its financial and commercial implications. It is additionally submitted that despite publication of citations/notices in widely circulated Urdu and English newspapers in compliance with the statutory requirements and the directions issued by this Court, no objection has been received from any shareholder, creditor, stakeholder, or member of the general public, which, according to the learned counsel, further demonstrates the fairness, transparency and commercial suitability of the proposed Scheme.

5.Conversely, learned counsel for the respondent-SECP, while reiterating and relying upon the objections earlier raised in the reply as well as the sur-rejoinder, submits that in view of the mandate and implications of Section 199 of the Act, coupled with the nature and character of the financial facilities involved in the proposed restructuring, the Scheme does not warrant sanction by this Court at this stage. It is contended that upon sanction of the proposed Scheme, the financial facilities and inter-corporate arrangements secured by one company may not continue to subsist in the same legal and financial manner, thereby potentially affecting the underlying regulatory and statutory framework governing such transactions. Learned counsel further submits that the proposed restructuring, therefore, requires closer judicial and regulatory scrutiny to ensure that the Scheme does not result in circumvention of statutory safeguards, regulatory

requirements, or obligations attached to the financial arrangements contemplated therein.

6.Heard. Record perused.

7.In the present case, the record manifestly reflects that meetings of the shareholders/members of the applicant companies were convened pursuant to the orders passed by this Court under the supervision of learned Chairpersons duly appointed for the said purpose. The reports submitted by the learned Chairpersons affirm that the meetings were lawfully convened and conducted strictly in accordance with the requirements of law. The said reports further reveal that the proposed Scheme received unanimous approval from the shareholders/members of the applicant companies, thereby reflecting their conscious and informed consent to the proposed restructuring. It has further come on record that the secured creditors of the applicant companies have furnished their respective No Objection Certificates and have unequivocally consented to the proposed Scheme. The consent extended by the secured creditors assumes considerable significance, as their financial and commercial interests stand directly connected with the restructuring contemplated under the Scheme. Furthermore, notices regarding the proposed Scheme were published in widely circulated Urdu and English newspapers in compliance with the statutory requirements. No objection has been received from any creditor, shareholder, stakeholder, or member of the general public notwithstanding publication of notices in widely circulated Urdu and English newspapers and affording due opportunity to all concerned to contest or oppose the proposed Scheme. The absence of opposition from any affected quarter further reinforces the fairness, transparency, and commercial acceptability of the proposed Scheme.

8.The objections advanced by the respondent-SECP primarily pertain to matters concerning accounting treatment, regulatory compliance, and the legal implications of certain inter-company transactions vis-à-vis Section 199 of the Act. The applicants, however, have furnished a detailed and comprehensive explanation through the

rejoinder, supplementary documents, and other material placed on record, which adequately addresses and explains the concerns so raised by the respondent-SECP. In any event, sanction of the proposed Scheme by this Court shall neither curtail, restrict, nor oust the jurisdiction vested in the SECP or any other competent statutory or regulatory authority to independently examine, regulate, investigate, or proceed in respect of any accounting, taxation, corporate, regulatory, or statutory matter strictly in accordance with law, if and when so required. The sanction sought to be accorded is confined to the Scheme under consideration and shall not be construed as conferring immunity from lawful regulatory oversight, statutory compliance of obligations, or any action otherwise permissible under the governing legal framework.

9.In view of the objections raised by the respondent-SECP and reiterated by its learned counsel, regarding the alleged pendency of proceedings before certain law enforcement agencies, this Court, through specific directions, sought clarification from the concerned authorities. Consequently, the learned Assistant Attorney General, accompanied by Yasir Abbas, SI/FIA, appeared before this Court and furnished a report on behalf of the Federal Investigation Agency stating that although FIR No.23/2022 had earlier been registered at FIA CCC, Lahore pursuant to proceedings emanating from the Sugar Inquiry Commission, the said FIR subsequently stood quashed by this Court vide judgment dated 03.10.2022. It has further been categorically stated in the said report that presently no case, inquiry, or investigation is pending against the applicant companies before FIA Lahore. Learned Special Prosecutor for NAB, under instructions, has also made a statement before this Court that, as of now, no reference or inquiry is pending against the applicant companies before the National Accountability Bureau. No subsequent proceedings have been shown to be pending thereafter. Furthermore, nothing has been brought on record demonstrating the existence of any adverse finding, restraint order, prohibitory direction, or legal embargo operating against the applicant companies which may impede, frustrate, or otherwise disentitle them

from seeking sanction of the proposed Scheme. In the absence of any subsisting legal restraint or adverse adjudication, the aforesaid objection/s of SECP does not constitute a lawful impediment to the exercise of jurisdiction by this Court under the Act.

10.It assumes considerable significance that the secured creditors, including United Bank Limited, have expressly, consciously, and unequivocally conveyed their consent and no objection to the proposed Scheme. The stakeholders whose financial, commercial, and proprietary interests stand directly affected by the contemplated restructuring have, after due deliberation and careful evaluation of the attendant implications, commercial feasibility, financial viability, and future business prospects, consciously approved and endorsed the proposed arrangement. In matters relating to corporate restructuring, reconstruction, and schemes of arrangement, the informed collective commercial wisdom of the shareholders and creditors carries substantial sanctity and weight, particularly where the statutory procedure prescribed under the Act, has duly been observed and complied with in letter and spirit. It is further significant that no shareholder, creditor, stakeholder, or affected person has come forward to allege any prejudice, discrimination, unfair treatment, mala fide, or adverse consequence arising out of the proposed Scheme, thereby further reinforcing its fairness, transparency, and commercial acceptability.

11.The supervisory jurisdiction exercised by the Company Court is not intended to displace, substitute, or override the informed collective commercial wisdom of the shareholders, creditors, directors, and other stakeholders through judicial discretion, save and except where the proposed arrangement, on the face of the record, appears ex facie unlawful, fraudulent, mala fide, oppressive, unconscionable, or demonstrably contrary to public policy, national interest, or the governing legal framework. In DEWAN SALMAN FIBRE LTD., ISLAMABAD v. DHAN FIBRES LTD., RAWALPINDI (PLD 2001 Lahore 230), it was recognized that the Company Court acts as an umpire and not as an appellate forum over the informed commercial

decisions of stakeholders. Similarly, in GADOON TEXTILE MILLS LIMITED and others (2015 CLD 2010), it was held that matters relating to valuation, consideration, restructuring, merger, de-merger, and swap ratios substantially fall within the domain of businessmen and shareholders, whose commercial decisions ordinarily ought not to be supplanted by judicial opinion. The same principle was reiterated in ROOMI FOODS (PVT.) LTD. and others v. JOINT REGISTRAR OF COMPANIES and others (2020 CLD 900), wherein it was observed that once the stakeholders directly affected by the arrangement have consciously approved the Scheme and the requisite No Objection Certificates stand furnished, the arrangement is ordinarily presumed to be fair, reasonable, and commercially acceptable. Likewise, in PRESSON-DESCON INTERNATIONAL (PRIVATE) LIMITED and others v. JOINT REGISTRAR OF COMPANIES (PLD 2020 Lahore 869), it was held that the jurisdiction of the Company Court remains supervisory and regulatory rather than appellate forum, confined to ensuring compliance with statutory safeguards, procedural regularity, and fairness of process. Moreover, in SPI Insurance Company Limited and another (2023 CLD 1088), the same judicial approach was reaffirmed by emphasizing that once the statutory requirements have been satisfied and the Scheme has been approved by the requisite stakeholders acting bona fide and in good faith, the Court ordinarily ought not to interfere with the commercial merits of the arrangement. Also see Fauji Fertilizer Company Limited and Fauji Fertilizer Bin Qasim, Limited v. Securities and Exchange Commission of Pakistan and another (2025 CLD 343). The cumulative effect of the above noted precedents is that a Company Court must exercise judicial restraint and confine its scrutiny to legality, procedural compliance, transparency, fairness, and protection against manifest prejudice, while refraining from reassessing the commercial wisdom, financial structuring, valuation methodology, or business expediency underlying the arrangement merely because an alternative commercial model may also be conceivable. No illegality, infirmity, prejudice, or circumstance

warranting refusal of sanction has been brought to the notice of this Court in the present matter.

12.The SECP, being the principal statutory regulator of the corporate sector and financial services framework in the jurisdiction, performs a pivotal supervisory and regulatory function in ensuring transparency, accountability, sound corporate governance, investor confidence, and compliance with the applicable legal and regulatory regime. Its statutory mandate encompasses regulation of company affairs, oversight of capital markets, non-banking financial institutions, and allied financial services, enforcement of corporate governance standards, monitoring of financial and regulatory compliance, and preservation of the integrity, stability, and orderly functioning of the corporate and financial system. The Company Court while exercising jurisdiction under Sections 279 to 284 read with Section 285 of the Act, is primarily required to examine whether the statutory prerequisites governing the proposed Scheme have duly been fulfilled. The Court is further obligated to satisfy itself that the arrangement appears fair, reasonable, bona fide, lawful, and not opposed to public policy or national interest. The existence of concurrent regulatory jurisdiction vested in the SECP does not, in itself, constitute a legal impediment to the exercise of jurisdiction by this Court for the purposes of sanctioning a Scheme of Arrangement. The jurisdiction of the Company Court continues to operate independently once the statutory framework and procedural requirements prescribed under the Act have duly been satisfied. At the same time, the SECP shall continue to remain fully competent and authorized to independently exercise any regulatory, supervisory, investigative, corrective, or enforcement jurisdiction vested in it under the Act, and other applicable laws in respect of any matter requiring subsequent scrutiny, compliance, regulation, or action in accordance with law.

13.The record further reveals that the proposed Scheme does not contemplate the amalgamation, merger, dissolution, absorption, or winding up of either of the applicant companies. A careful examination of the Scheme demonstrates that it is, in essence, a corporate

reorganization and restructuring arrangement intended to achieve a realignment of shareholding and certain inter-company financial arrangements within the RYK Group. Upon implementation of the Scheme, both applicant companies shall continue to exist as separate and independent juristic entities, retaining their respective corporate identities, assets, liabilities, rights, obligations, and business operations. The proposed arrangement principally envisages a restructuring of the existing ownership framework whereby M/s Alliance Sugar Mills Limited shall cease to remain a wholly-owned subsidiary of M/s RYK Mills Limited, while certain inter-company financial accommodations, capital contributions, and related adjustments shall stand reorganized in the manner contemplated by the Scheme. The Scheme does not operate to extinguish the separate corporate identity of either of the applicant company, nor does it envisage a transfer of the entire undertaking, business, assets, rights, and obligations of one company to the other. Each entity shall continue to retain its independent juristic existence in accordance with the framework contemplated by the Scheme. The underlying commercial rationale of the Scheme is to establish a more streamlined and efficient corporate structure capable of promoting independent operational decision-making, effective managerial control, optimized financial deployment, and sustainable long-term growth of the applicant companies while preserving their separate legal existence and business operations. The Scheme, in its true substance and legal effect, represents a bona fide corporate reorganization designed to rationalize the corporate structure of the applicant companies, enhance managerial and operational efficiency, and optimize the deployment of financial and business resources. The proposed arrangement is directed towards achieving a more streamlined and effective organizational framework while promoting the long-term commercial objectives of the applicant companies. A significant feature of the proposed Scheme is that it neither affects nor diminishes the separate juristic existence of the applicant companies. Their respective business undertakings, rights, obligations, and commercial operations shall continue uninterrupted,

and both entities shall remain independent going concerns operating in accordance with law.

14.This Court is, therefore, satisfied that the applicant companies have duly fulfilled and complied with all mandatory, procedural, and statutory requirements envisaged under the Act; that the proposed Scheme has received unanimous approval from the shareholders/members concerned in meetings validly convened and conducted pursuant to the orders of this Court; that the secured creditors have expressly furnished their consent and respective No Objection Certificates to the proposed restructuring; and that the Scheme, on face of the record, appears fair, reasonable, bona fide, commercially prudent, legally sustainable, and consistent with the recognized objectives of corporate restructuring. It is further evident from the record that no legal, factual, regulatory, or public policy impediment has been pointed out or brought to the notice of this Court, which may lawfully hinder sanction of the proposed Scheme. Moreover, nothing adverse has been shown on record to justify withholding, declining, or refusing sanction of the Scheme by this Court in exercise of its jurisdiction under the Act.

15.Consequently, the instant Application is allowed and the proposed Scheme of Arrangement/Reconstruction (Mark-A), already placed on record at pages 249 to 255, is hereby sanctioned under Sections 279 to 282 read with Section 285 of the Act, and shall form an integral part of this order. All transfers, vesting arrangements, adjustments, allotments, issuances, cancellations, restructurings, and all other ancillary or consequential acts and transactions contemplated under the Scheme shall take effect, operate, and be implemented strictly in accordance with the terms and conditions embodied therein and shall be valid, binding, and enforceable upon the applicant companies, their shareholders, creditors, and all other persons concerned.

16.The applicants shall, however, remain under a continuing obligation to ensure strict compliance with all applicable statutory, corporate, accounting, taxation, disclosure, and regulatory requirements as may be attracted under the prevailing legal framework. The

applicants shall further remain bound to comply with and give due effect to any lawful directions, conditions, observations, or regulatory requirements issued by the SECP or any other competent authority in accordance with law. In consequence thereof, it is further ordered that in terms of Section 282 of the Act, the Applicant/s shall cause the delivery of the certified copy of this order to the Registrar of Companies for compliance.

17.This application along with allied C.Ms is disposed of accordingly.

(Hassan Nawaz Makhdoom) Judge

Approved for Reporting

Judge Announced/dictated on 20.05.2026 and signed on 09.06.2026.

Tahir Noor