ISLAMABAD: The Lahore High Court (LHC) Rawalpindi bench on Tuesday redefined certain ingredients of partnership in the family business while disposing of the petition filed by two brothers against the control and ownership of a business outlet managed by their three siblings.

The petitioners Shaukat Ali Noon and Arshad Ali Noon petitioned before the LHC seeking to liquidate the family business or a court decree to give them an equal share in it.

Brief facts of the case, as per the petition, are that in the year 1947 the deceased father of the petitioners and the respondents Khalil Ahmed Noon, Liaqat Ali Noon and Rashid Ali Noon, started business of a bakery on Railway Road, Saddar in Rawalpindi.

After his demise and selling out inherited land and the Simla Bakery, the petitioners and the respondents jointly started a business with the name of Rahat Bakers.

The above-mentioned name was thereafter changed to the present nomenclature as Tehzeeb Bakers due to the filing of multiple suits between the parties.

Saqib Shafique, advocate for the petitioners, argued before the court that his clients are partners in the business based on three partnership deeds dated Oct 29, 1994, Oct 28, 2002 and Dec 2, 2011 and are holders of 20pc shares and the respondents changed the name of the business and got it registered with the Securities and Exchange Commission of Pakistan (SECP) frequently.

He argued that the business is generating sales revenue of over Rs40 million daily but the petitioners were not being given the due share.

Advocate Kashif Ali Malik, counsel for Khalil, argued that the petitioners were never members or shareholders in the business.

He alleged that the petitioners prepared forged, bogus and fabricated documents just to claim an interest in the family business.

The court observed that “the basic requirement for seeking intervention of this court by a member or creditor of a company under Section 286 of the Companies Act is to be a member having not less than 10pc of issued share capital of a company.

Moreover, the next requirement is that such a member or creditor has to satisfy the court by making an application that the affairs of the company are being conducted unlawfully.

The court pointed out that the law defines the modes of becoming a member of a company, firstly by subscribing to a memorandum; secondly by allotment of shares and thirdly by entering their name in the register of members of a company in terms of Section 119 of the Companies Act.

The court observed that the documents annexed with this petition do not show that the affairs of the company are being conducted unlawfully and fraudulently and ruled that the petitioners cannot be declared partners in the business since they lack the requirements as prescribed in the law.

Published in Dawn, December 20th, 2023