Jurisdiction of Courts, in Corporate Matters, in Pakistan

1. Ameer Ahmad,Roll No.9 on Jurisdictiononcompanymatters
To be submittedto SirMubashar Tariq.
1
JURISDICTION OF COURTS IN
CORPORATE MATTERS
BYVIRUTE OF SECTION 7 OF COMPANIES ORDINANACE 1984:-
Companies Ordinance 1984 (the law for the time being in force) has
given the court jurisdiction on various occasions but most prominent and important factor to be noted that
under section 7 of the said law the statute declares it clearly that the jurisdiction over corporate matters
will be that of the HIGH COURT within territorial jurisdiction of respective High Court.
EXTENT AND SCOPE OF JURISDICTION U/S 7:-
SPECIAL JURISDICTION;
The legislature under section 7 has conferred special jurisdiction on the
High Courts. This specialty of jurisdiction was recognized by court in 2003 CLD 981 (DB) by saying
that, “Section 7 of the Companies Ordinance 1984 confers a special jurisdiction upon High Courts.
COMPLEMENTARYJURISDICTION:
This has been more elaborated by saying in 2003 CLD 293 that,“Section 7 confers jurisdiction upon
High Court in matters where no authority like Joint Registrar, Registrar and SECP has authority to
adjudicate the matter.”
TERRITORIALJURISDICTION;
The term “territorial jurisdiction” indicates that the High Court within
whose territorial jurisdiction the registered office of the company is situated will have the jurisdiction to
adjudicate the matter. This factor of territorial jurisdiction is so important that court in NLR 1982 Civ.
556 and also in 58 Cal. W.N. 641 has held that, “Jurisdiction to adjudicate conflicts of a corporate nature
is confined with territorial jurisdiction.”
EXCLUSIVE JURISDICTION;
This jurisdiction given u/s 7 is the exclusive jurisdiction of the High
Court and no other court’s jurisdiction can be invoked. Through the proviso of clause (1) of section 7
talks about conferring the jurisdiction in the civil court of original jurisdiction but this can only be done if
the federalgovernment in the official gazette order so, otherwise the jurisdiction u/s 7 is exclusively of
the High Court’s within their respective territorial jurisdiction. Recognizing this the court in AIR 1965

2. Ameer Ahmad,Roll No.9 on Jurisdictiononcompanymatters
To be submittedto SirMubashar Tariq.
2
Punj 24 held that, “For matters of a corporate nature which are the jurisdiction of High Court the
jurisdiction of ordinary civil court cannot be invoked.”
OUSTER CLAUSE OF CIVIL COURT;
A very clear recognition of this fact was given in EJAZ VS. KANEES BEGUM in 1992 where
the court clearly said that, “Section 7 is ouster clause for the civil courts in the matters which are related
to the Companies Ordinance 1984.
ORIGINAL CIVIL JURISDICTION;
Perhaps the most recent decision of the court in this regard is that of
Raja Khush Bakht-ur-Rehman v Lahore Race Club, PLD 20 SC 707 where Supreme court has clearly
said that, “Jurisdiction in a corporate matter is that of the High Court u/s 7 and this jurisdiction is
“original civil jurisdiction” of the High Court conferred upon it by the law.
This has been reaffirmed in 2009 CLJ 791 (SC) where the court again
said that,” Jurisdiction u/s 7 is Original Civil Jurisdiction.” The court also explained what “original civil
jurisdiction” is in the same case while observing that,” Original Jurisdiction is the authority of a court to
hear a case in the first instance, i.e. to function as a trial court.”
POWERS OF HIGH COURT IN EXERCISE OF ORIGINAL CIVIL JURISDICTION U/S 7;
1. To consider the controversial facts and decide their validity to reach a justifiable and just
conclusion in the pending matter:
2. To decide the controversies which may appear so as to enable it to solve the dispute
justifically;
3. To enter into and frame the points of determination of any pending matter;
4. Require evidence..
CRIMINALJURISDICTION OF HIGH COURT WITH RESPECT TO CORPORATE
DELINQUENCIES;
However there may be the case where the company law it self contains provisions which
specify that if an offence is committed the cognizance will be taken by the High Court, e.g.
section 282-M of the Ordinance which confers “original criminal jurisdiction” upon High Court if
any officer of Non-Banking Finance Corporation has contravened any of the provisions of
chapter of the ordinance. This all have been judicially recognized in 1990 DLR 381 (DB) where
it was held that, “u/s 7 High Court has no original criminal jurisdiction except where the offense
is committed under the company law directly being dealt with by the High Court.”

3. Ameer Ahmad,Roll No.9 on Jurisdictiononcompanymatters
To be submittedto SirMubashar Tariq.
3
Interesting is the fact that apart from “Contempt of Court “charges, section 282-M of the
Companies Ordinance 1984 is the only provision o flaw which confers upon the High Court “
ORIGINA CRIMINAL JURISDICTION” and no such provision is present in any other law.
TERRITORIALJURISDICTION IN CASE OF SUBSIDIARYCOMPANY:
An importantmattertobe discussedhere isthe determinationof territorial jurisdiction
incase of a subsidiarycompanywhere the registeredofficesof the holdingandsubsidiary
companyare withinterritorialjurisdictionof differentHighCourts.Forthiskindof proposition
the court in NLR 1993 Civ.338 has heldthat,“jurisdictionforsubsidiarycompanyistothe High
Court withinwhose territorialjurisdictionthe registeredofficeof the subsidiarycompanyis
situated.”
NATURE AND EXTENT OF POWERS OF HIGH COURT WITH REGARD TO EXERCISE OF
JURISDICTION;
The exercise of thisjurisdictionu/s7has ntobeensubjecttoany kindof limitation. The
HgihCourt isgivenimmense powerstoadjudicate mattersanddoall acts necessaryforthe
purpose. Thiswassaidin 2005 CLD 747 that, “there are no limitations on High Courtasregard
the mannerto exercise it’s powersand thepowersshould beexercise liberally. The only caution
is to avoid driving the partiesto agony beordering the litigation to be carried out beforesome
otherforum.”
EXECUTION OF ORDER PASSED BYTHE HIGH COURT;
Executionof orderpassedbythe High Courtwhile exercisingjurisdictionu/s7is alsothe
jurisdictionof the HighCourtandnot of anycivil court. Ascourt in AIR 1927 Pat. 182 said that,
“The HighCourt as itcan orderthe adjudicationbe made bya civil courtcan also orderthe
executionbe made bythe civil court.
DISCRETION OF THE HIGH COURT:-
Besidesthe enormouspowersthe HighCourtshasalsobeengivencompletepowersto
do justice andsimilarly,todecide the wayitdeemsfitforresolvingthe dispute. HighCourtis
neverunderanylegal obligationtograntrelief anditcan evenrefuse tograntrelief inEx-Parte
Proceedings. Asthe HighCourtperformsthe dutiesandfunctionsof the “courtof firstinstance”
so jurisdictiongiventoitisalsoverywiderandthe powerto do an responsibilityof doing
complete justice isonthe HighCourtas regardsthe corporate disputes.
PROCEDURAL ASPECTS OF JURSDICTIN:-
Section9of the CompaniesOrdinance 1984 is complete enactmentof the procedure
whichisto be followedbythe HighCourt.The maximumperiodforthe adjudication of the

4. Ameer Ahmad,Roll No.9 on Jurisdictiononcompanymatters
To be submittedto SirMubashar Tariq.
4
dispute is90 days. Anditis providedthatthe matteristo be hearddayto day withoutany
adjournment. If the adjournmentistobe givenitwill notexceed 14 daysat a time and 30 days
inall.
The maximumperiodisthoughfixedtobe 90 days,but, ithas bot beenaccordedthe
mandatorystatus. As Mr. SAeeduzzamanSiddiqui,J ina case gave veryimportantobservation
by sayingthat,“The keytointerpretationof sucha provision(section9of CompaniesOrdinance
1984) of lawliesindiscoveringthe real intentionof legislatureinthisregard.Where astatute
prescribedperformanceof apublicdutywithinaspecifiedtimesuchdirectioninthe statute is
generallyunderstoodasdirectoryinnature if the consequence of non-observance of the
prescriptionare notprovidedinthe statutes. Nodoubtsection9iscouchedin mandatory
language andit alsousednegative wordstoprescribe the maximumtime limitof 90 daysfor
disposal of a winding-uppetitionbutthese factorsalone are notdecisive toholdthe provisions
as mandatory.”
Thissectionalsosaysthat,” inthe exercise of itsjurisdiction,the courtshall,inall
mattersbefore it,follow the summaryprocedure.”
So,summaryprocedure justmeansto follow the procedure insuchaway as nochances
of delayare involved.But,followingsummaryprocedurenevermeanstodothingsinsuch a way
as the importantpointsforadjudicationare missing. Asina winding-uppetitionin 1993 CLC
1540, Mr. Iftikhar M. Chaudhry,J observed that;“Summary proceduredoesnotbarrecording
of evidence and the carefulconsideration of factswhileexercising jurisdiction underthe
CompaniesOrdinance.”
BENCHES OF HIGH COURT:-
Section 8 of Companies Ordinance provides for the constitution of company benches
which may be one or more. Every judge of High Court is not a judge for corporate matters, rather,
there is established a special forum for this purpose in every high Court in the form of
benches.These benches are commonly called as company benches.These benches consist of
Judges which are well acquainted with the knowledge of corporate structure and working and also
the law. These Judges are commonly called the company judges and practically speaking all the
powers and jurisdiction vested in the High Court is the jurisdiction and power given to these
judges or to the company benches.
CRIMINALJURISDICTION OF THE COURT:-
A very interesting aspect of the Companies Ordinance 1984 is that is confers upon the
High Court “Original Criminal Jurisdiction” as well. This jurisdiction is only in one case and that
is Section 282-M which gives the High Court “original jurisdiction” when an officer of the Non-
Banking Finance Corporation contravenes any of the provisions of Chapter of the Companies
Ordinance 1984.
SOME MATTERS NOT WITHINJURISIDCTION OF HIGH COURT:

5. Ameer Ahmad,Roll No.9 on Jurisdictiononcompanymatters
To be submittedto SirMubashar Tariq.
5
Under the Companies Ordinance 1984 some provision of law which give authority over
the matters not to the High Court but other authorities like Registrar and Commission. These
provisions relate majorly to the contravention of orders and circulars issued by the Registrar and
the Commission and the cognizance of such contravention is also the authority of these
authorities.
There are many provisions in the Ordinance which clearly declare that non-compliance
will be punished either with imprisonment or fine or with both and the authority for the purpose
will be the Registrar or the Commission or sometimes both have been given concurrent
jurisdiction.
An example of this is section 476 which gives the Registrar and Commission concurrent
jurisdiction in matter specified therein. It is also note worthy that u/s 476(4) the court of sessions
have been given jurisdiction to take cognizance of the offense where punishment includes
imprisonment. But, again this jurisdiction is for the court of Sessions and not the High and not the
High Court.
The clear illustration of this fact was given by the court in GULZAR AHMAED V
STATE where it was said that, “The court having jurisdiction u/sec. 476 of the Companies
ordinance 1984 is the Court of Sessions and not the High Court.”