AJK High Court Dismisses Corporate Disputes Between Brothers; Refers Case to Commission for Investigation

In a recent judgment, the Company Bench of the Azad Jammu and Kashmir High Court dismissed three interconnected petitions involving allegations of fraud, mismanagement, and financial embezzlement between two brothers, Mansoor Ahmed Khan and Zulfiqar Abbasi. The cases revolved around disputes in two companies, Mangla Metals (Pvt.) Ltd. and Kohsar Hydropower (Pvt.) Ltd., both co-owned by the parties.

The petitions accused Mr. Abbasi, the CEO, of fraudulent activities, breach of fiduciary duties, and misuse of company funds. Mr. Khan alleged oppressive conduct, fraudulent audits, and illegal transfer of shares. Conversely, Mr. Abbasi denied the allegations and countered with claims of embezzlement and misconduct by Mr. Khan.

Justice Syed Shahid Bahar consolidated the petitions due to overlapping facts and issues. The court ruled that the matters required detailed investigation beyond its jurisdiction, referring them to the statutory Commission established under the Companies Act, 2017. It highlighted the need for alternative dispute resolution mechanisms like arbitration and mediation to avoid prolonged litigation.

The judgment emphasized that allegations of fraud and financial mismanagement require substantial evidence and proper investigation. It directed the petitioners to seek redress through the Commission, equipped with investigative powers under the Companies Act, urging swift resolution to safeguard corporate integrity.

This decision underscores the judiciary’s preference for specialized forums to handle complex corporate disputes efficiently while promoting alternative dispute resolution.