Asim Textile Mills Limited Vs Additional District Judge etc

Stereo. H C J D A-38.

JUDGMENT SHEET

IN THE LAHORE HIGH COURT AT LAHORE

JUDICIAL DEPARTMENT

W.P. No.235776 of 2018 Asim Textile Mills Limited Versus Additional District Judge, Jaranwala, etc.

JUDGMENT

Date of hearing: 13.10.2026.

Petitioner by: M/s. Aakif Majeed Butt, Malik Ali & Aneeq Saqib, Advocates Respondent No.3 by: M/s. Pevaiz Akhtar Tahir & Adil Zaman, Advocates.

HASSAN NAWAZ MAKHDOOM, J.- Through this petition under Article 199 of the Constitution of the Islamic Republic of Pakistan, the petitioner has called in question the legality and propriety of the order dated 26.01.2015 passed by the learned Civil Judge, Jaranwala, whereby two preliminary issues concerning the valid institution of a suit and the authority of the person instituting it were decided in favour of respondent No.3 (Masood Textile Mills Limited) as well as the order dated 30.06.2018 passed by the learned Additional District Judge, Jaranwala, dismissing Civil Revision No.504 of 2015 and maintaining the findings recorded by the learned trial Court.

2.Briefly stated, the facts necessary for adjudication of the instant petition are that respondent No.3 instituted a suit for possession, declaration, cancellation of documents and permanent injunction against the petitioner on 18.08.2006. The suit arose out of a business arrangement allegedly entered into between the parties in the year 1990, pursuant to which certain business interests and property were transferred in the petitioner’s name, subject to settlement of accounts and payment of outstanding liabilities. Alleging non-fulfilment of the agreed obligations, respondent No.3 sought cancellation of the relevant transfer documents concerning land measuring 12Kanals 14Marlas 5Sarsahis, along with recovery of

Rs.8,45,92,587/- and consequential relief. The petitioner contested the suit through a written statement, raising, inter alia, an objection that the plaint had not been instituted by a person duly authorized to represent respondent No.3. During the pendency of proceedings, the suit was dismissed for non-prosecution on 03.07.2009, whereas the application for its restoration was dismissed on 25.01.2012. The matter was thereafter brought before this Court through F.A.O. No.177 of 2012, which was allowed vide order dated 21.04.2014, subject to payment of costs of Rs.35,000/-, with a direction to the learned trial Court to frame and decide the objections regarding maintainability of the suit in the first instance.

3.In compliance with the aforesaid directions, the learned trial Court framed the following preliminary issues on 03.06.2014:

“(i) Whether the suit has been validly instituted? OPP (ii) Whether Muhammad Akhtar, being an employee of the company, has legal authority to file the suit? OPP” Respondent No.3 examined Naseer Ahmad Shah as PW-1 and Muhammad Akhtar Khan as PW-2 and produced a resolution of the Board of Directors dated 02.08.2006 (Exh.P-1) and an authority letter dated 16.08.2006 (Exh.P-2). Conversely, the petitioner relied upon the annual returns of respondent No.3 for the years 2005 and 2006 (Exh.D-1 to Exh.D-3), disputing the competence of the persons allegedly responsible for passing the resolution and authorizing institution of the suit. Upon appraisal of the evidence, the learned trial Court decided both preliminary issues in favour of respondent No.3 through order dated 26.01.2015. The petitioner challenged the said determination through Civil Revision No.504 of 2015, which was dismissed by the learned Additional District Judge, Jaranwala, on 30.06.2018. Hence, the instant constitutional petition.

4.Learned counsel for the petitioner submits that the Courts below failed to appreciate the mandatory requirements governing authorization

of legal proceedings by a company. It is contended that the purported resolution dated 02.08.2006 (Exh.P-1) was neither proved to have been passed at a duly convened meeting of the Board of Directors nor was supported by the requisite corporate record, including the minutes book. Learned counsel maintains that Sections 172 and 173 of the Companies Ordinance, 1984, corresponding, according to him, to Sections 150 and 151 of the Companies Act, 2017, were overlooked while determining the validity of the alleged authorization. It is further argued that Muhammad Akhtar Khan, being a Mechanical Engineer employed by respondent No.3, was neither its director nor principal officer and, therefore, lacked competence to institute and verify the plaint under Order XXIX Rule 1, C.P.C. Learned counsel also questions the evidentiary worth of Exh.P-1 and Exh.P-2, particularly in view of the alleged contradictions in the testimony of PW-1 and the annual returns produced by the petitioner. According to him, the Courts below misread and failed to properly appreciate the material evidence and erroneously treated the disputed authorization as sufficient to establish valid institution of the suit. He consequently seeks setting aside of both the impugned orders.

5.Conversely, learned counsel for respondent No.3 controverts the submissions advanced on behalf of the petitioner and supports the impugned orders. He submits that the suit was competently instituted by Muhammad Akhtar Khan pursuant to the resolution of the Board of Directors dated 02.08.2006 (Exh.P-1), followed by the authority letter dated 16.08.2006 (Exh.P-2), whereby he was duly empowered to initiate legal proceedings on behalf of the company. It is contended that the aforesaid documents, duly supported by the testimony of PW-1 and PW- 2, were properly appreciated by both Courts below, which concurrently found the institution of the suit to be lawful. Learned counsel further submits that the petitioner’s objections concerning non-production of the minutes book, alleged irregularities in the Board proceedings and the official designation of Muhammad Akhtar Khan are misconceived. It is

maintained that the petitioner, being a third party to the internal affairs of respondent No.3, cannot insist upon proof of every procedural formality relating to its corporate management. Learned counsel concludes that the concurrent findings of the Courts below neither suffer from misreading or non-reading of evidence nor from any jurisdictional defect warranting interference under Article 199 of the Constitution and, therefore, prays for dismissal of the petition.

6.Arguments heard. Record perused.

7.The controversy involved herein and requiring adjudication is whether the suit instituted on behalf of respondent No.3 through Muhammad Akhtar Khan was competently instituted on the strength of the Board resolution dated 02.08.2006 (Exh.P-1) and the subsequent authority letter dated 16.08.2006 (Exh.P-2), particularly in the light of the statutory provisions governing corporate authorization and the principles laid down by the Hon’ble Supreme Court of Pakistan regarding the doctrine of indoor management. It further requires examination whether the Courts below properly appreciated the documentary and oral evidence while determining the competence of the person instituting the suit, and whether their concurrent findings suffer from any patent illegality, material misreading or non-reading of evidence, or jurisdictional infirmity warranting interference by this Court in exercise of its constitutional jurisdiction under Article 199 of the Constitution.

8.It is well settled that a company, being a juristic entity, can institute legal proceedings only through a natural person competent to act on its behalf. Order XXIX Rule 1, C.P.C., permits the secretary, director or other principal officer of a corporation, who is conversant with the facts of the case, to sign and verify pleadings. The said provision, read with Order VI Rule 14, C.P.C., does not, however, preclude a company from authorizing another person to institute proceedings through a lawful delegation of authority in accordance with its Articles of Association. Thus, the competence to institute a suit is not determined solely by the official

designation of the person concerned, but also by the existence and validity of the authority conferred upon him. In the circumstances, the mere designation of Muhammad Akhtar Khan as a Mechanical Engineer cannot be construed as a legal impediment to the institution of the suit, so long as his authority to represent respondent No.3 and initiate proceedings on its behalf is duly established.

9.The question of competence and authorization to institute legal proceedings on behalf of a company has comprehensively been examined by the Hon’ble Supreme Court of Pakistan in Rahat and Company through Syed Naveed Hussain Shah v. Trading Corporation of Pakistan (PLD 2020 SC 366). While examining the earlier pronouncements in M/s.Muhammad Siddiq Muhammad Umar and another v. Australasia Bank Ltd. (PLD 1966 SC 685), Iftikhar Hussain Khan of Mamdot v. Ghulam Nabi Corporation Ltd. (PLD 1971 SC 550) and Central Bank of India Ltd. v. Taj-ud-Din Abdur Rauf and others (1992 SCMR 846), the Hon’ble Court authoritatively clarified the principles governing corporate authorization, particularly the scope and application of the doctrine of indoor management. It was held that where a company institutes proceedings against an independent third party, the general rule enunciated in M/s Muhammad Siddiq Muhammad Umar/Australasia Bank’s case (supra) governs the controversy. Under the said rule, the relevant inquiry is whether the Articles of Association confer upon the competent corporate authority the power to institute legal proceedings or delegate such authority to another person, and whether the authorization relied upon conforms to those Articles. Once these requirements are satisfied, it is not invariably necessary to independently establish the actual passing of the Board resolution or the regularity of the internal proceedings through which such authorization was granted. The doctrine of indoor management proceeds on the principle that persons dealing with a company are entitled to presume that its internal formalities have been duly observed, provided the transaction is consistent with its public

constitutional documents. The Hon’ble Supreme Court, however, distinguished cases involving a person occupying the position of an insider, particularly a director of the company, who may possess an independent legal entitlement to question the validity of the Board proceedings. In such circumstances, the actual convening of the meeting, issuance of notices to directors and validity of the resolution may require closer judicial scrutiny, depending upon the facts of the case. The Hon’ble Supreme Court of Pakistan, thus, recognized the principles laid down in M/s. Muhammad Siddiq Muhammad Umar/Australasia Bank’s case (supra) as the general rule applicable to third-party transactions and those enunciated in Iftikhar Hussain Khan of Mamdot’s case (supra) as a special rule applicable to disputes involving insiders. Both judgments were expressly approved, whereas the contrary interpretation adopted in Abdul Rahim and others v. United Bank Ltd. (PLD 1997 Karachi 62) was disapproved and declared not to represent the correct legal position. The distinction is material in assessing whether the objection to the institution of a suit relates to the absence of lawful corporate authorization or is confined to alleged procedural irregularities in the internal affairs of the company.

10.The Hon’ble Supreme Court of Pakistan further emphasized in the aforesaid judgment that objections relating to corporate authorization should not ordinarily be allowed to delay or impede adjudication of disputes on merits through unnecessary preliminary proceedings. It was held that, where the competence of a person instituting proceedings on behalf of a company is questioned, the Court should, if considered necessary, examine the relevant Articles of Association and determine the objection in the light of the doctrine of indoor management. Only where such examination fails to resolve the controversy should the Court, for reasons to be recorded, proceed to frame an issue, call for additional evidence or undertake further inquiry. The Hon’ble Supreme Court also expressed a tentative view that any defect arising from want of proper

authorization may be cured through subsequent ratification by the company, while leaving the question open for authoritative determination in an appropriate case. The governing principle, therefore, requires a distinction between the absence of lawful authority to institute proceedings and alleged irregularities in the internal corporate process through which such authority was conferred, as the latter do not necessarily render the proceedings incompetent.

11.Adverting to the facts of the present case in the light of the foregoing legal principles, it is evident that respondent No.3 instituted the suit against the petitioner, an independent corporate entity, arising out of their business dealings. There is nothing on record to suggest that the petitioner was a director or otherwise occupied the position of an insider of respondent No.3 so as to claim an independent right to question the regularity of its internal Board proceedings. The controversy, therefore, attracts the general principle of indoor management enunciated in M/s.Muhammad Siddiq Muhammad Umar/Australasia Bank’s case (supra) and reaffirmed in Rahat and Company’s case (supra). Consequently, the petitioner’s insistence upon strict and independent proof of every procedural formality relating to the convening of the Board meeting and adoption of the resolution dated 02.08.2006 cannot be regarded as an indispensable requirement for establishing the competence of the suit. The determining factor, therefore, is the existence of lawful authorization for the institution of the suit in accordance with the Articles of Association of respondent No.3, and not the independent proof of every procedural formality observed in the course of its internal corporate proceedings.

12.An examination of the evidence reveals that the learned trial Court considered the Board resolution dated 02.08.2006 (Exh.P-1), the authority letter dated 16.08.2006 (Exh.P-2), and the testimony of PW-1 and PW-2. The resolution was produced to establish that Amir Hameed Khan, Director (HR), had been empowered to nominate an officer for instituting

legal proceedings on behalf of respondent No.3, whereas the subsequent authority letter evidenced the nomination of Muhammad Akhtar Khan for that purpose. The learned trial Court also examined the objections raised by the petitioner regarding the authenticity and legal effect of these documents, the alleged inconsistencies in the witnesses’ testimony, and the annual returns produced in rebuttal. Upon appraisal of the evidence, the learned trial Court concluded that the requisite authorization for institution of the suit stood sufficiently established. The learned revisional Court, after independently examining the material available on record and the objections advanced by the petitioner, concurred with the findings of the trial Court. The concurrent findings, therefore, rest upon an appreciation of the documentary and oral evidence rather than upon the mere official designation of Muhammad Akhtar Khan.

13.The petitioner’s principal objection concerning non-production of the original minutes book and alleged non-compliance with Sections 172 and 173 of the Companies Ordinance, 1984, also requires consideration in its proper legal perspective. The aforesaid provisions regulate distinct aspects of corporate proceedings and record-keeping. Section 172 concerns the registration of special resolutions, whereas Section 173 relates to the maintenance of minutes of meetings and proceedings. The petitioner has not demonstrated that the resolution authorizing institution of the suit necessarily constituted a special resolution requiring registration under Section 172, or that the alleged omission to produce the minutes book, rendered the authorization legally ineffective. The absence of such record may be relevant to the evidentiary assessment in an appropriate case, but it does not automatically invalidate every act undertaken pursuant to an otherwise lawful corporate delegation. More importantly, the binding principles laid down in Rahat and Company’s case (supra) do not make production of the Board resolution or the entire record of internal proceedings an invariable prerequisite where the doctrine of indoor management applies. The petitioner’s reliance upon the

said statutory provisions, therefore, does not establish any patent illegality in the concurrent findings of the Courts below.

14.The objection that Exh.P-1 was not produced along with the plaint or included in the original list of documents is likewise insufficient to invalidate the proceedings. The document was subsequently produced during the evidence recorded on the preliminary issues and was subjected to judicial consideration. The petitioner had the opportunity to contest its authenticity, admissibility and evidentiary worth, and did, in fact, raise objections concerning the same. The alleged omission to produce the document at the initial stage cannot, in isolation, justify dismissal of the suit when the question of authorization has been examined upon evidence. The law does not contemplate that every procedural omission relating to the production of corporate documents must necessarily defeat substantive proceedings, particularly where the underlying authority is otherwise capable of being established.

15.The petitioner’s further contention that Muhammad Akhtar Khan was not a principal officer within the meaning of Order XXIX Rule 1, C.P.C., proceeds upon an unduly restrictive interpretation of the provision. The distinction between authority derived from the office held by an individual and authority conferred through a competent corporate delegation cannot be overlooked. The former may arise by virtue of the person’s position within the company, whereas the latter depends upon the authority lawfully conferred upon him. In the present case, respondent No.3 did not rest its claim of competence exclusively upon Muhammad Akhtar Khan’s designation; rather, it relied upon Exh.P-1 and Exh.P-2 to establish the source and extent of his authority. The Courts below accepted that evidence after considering the objections raised by the petitioner. The mere fact that Muhammad Akhtar Khan was employed as a Mechanical Engineer, therefore, does not negate the authorization found to have been conferred upon him.

16.The alleged inconsistencies in the testimony of PW-1, particularly regarding the circumstances surrounding the adoption of the Board resolution dated 02.08.2006, were duly considered by the learned trial Court in conjunction with the documentary evidence. Likewise, the annual returns (Exh.D-1 to Exh.D-3), relied upon by the petitioner to question the validity of the authorization, were examined, but found insufficient to dislodge the evidence produced by respondent No.3. The petitioner has failed to demonstrate that the alleged discrepancies were so material as to undermine the very foundation of the authorization or render the findings contrary to the record. The learned revisional Court, upon independent scrutiny of the resolution (Exh.P-1), the subsequent authority letter (Exh.P-2), the witnesses’ testimony and the objections raised by the petitioner, concurred with the conclusions reached by the trial Court. The concurrent findings, when examined in light of the principles elucidated by the Hon’ble Supreme Court of Pakistan in Rahat and Company’s case (supra), disclose no apparent inconsistency with the governing law, particularly the distinction between the absence of a substantive corporate authority and alleged irregularities in internal corporate proceedings. In these circumstances, a fresh appraisal of the same evidence merely to arrive at a different conclusion would be unwarranted in the absence of any demonstrated illegality, material misreading or non-reading of evidence, or jurisdictional infirmity.

17.It is well settled that the constitutional jurisdiction of this Court under Article 199 of the Constitution does not extend to a routine reappraisal of evidence or substitution of its own findings for those concurrently recorded by the competent Courts. The Hon’ble Supreme Court of Pakistan, in Muhammad Ayub, Shop Manager Bata Pak. Ltd. and another v. Muhammad Rahman and others (2026 SCMR 31) and Mohammad Ziafat v. Tariq Nawaz Khan Tareen and others (2026 SCMR 1132), held that interference with concurrent findings is permissible only where such findings suffer from patent illegality, gross misreading or non-

reading of material evidence, perversity or reliance upon extraneous considerations. In the present case, both the Courts below duly examined the documentary authorization (Exh.P-1 and Exh.P-2), considered the supporting oral evidence and addressed the objections raised by the petitioner. No legal or jurisdictional infirmity has been demonstrated by the petitioner in the orders impugned herein. Mere disagreement with the concurrent appreciation of evidence does not furnish sufficient justification for interference in exercise of constitutional jurisdiction. Accordingly, the impugned findings warrant no interference and are, thus, maintained.

18.For the foregoing reasons, the instant constitutional petition, being devoid of merit, is hereby, dismissed. However, the learned trial Court shall proceed with the suit and adjudicate the remaining controversy independently on its own merits, strictly in accordance with law, without being influenced by any observation made hereinabove, which shall remain confined to the question of valid institution of the suit.

(Hassan Nawaz Makhdoom) Judge Approved for reporting.

Judge Announced/dictated on 13.10.2026 and signed on 02.11.2026.

Tahir Noor