LAHORE, Dec 23: A division bench of the Lahore High Court has stayed the sale of four steel mills of the Ittefaq Group with a direction that tenders for the disposal of the units should not be opened and all future steps in this regard shall be subject to the court approval.

The bench also served notice on all eight banks, against whose loans the units were to be put to public auction, and the Ittefaq Foundries to explain their view on Jan 15.

A single bench has fixed Jan 26 for a report on how many tenders had been received by a committee, appointed by the high court, for the sale of the Ittefaq Foundries, the Ittefaq Brothers, the Brother Steel Mills and the Ilyas Enterprises through auction.

The court issued the restraining order in an intra-court appeal moved through Advocate Syed Mansoor Ali Shah by the family of Mian Meraj Din, one of the seven families which owned the Ittefaq Group. It brought into question the scheme of the sale of the units on the grounds that it did not meet the conditions required under Section 284(2) of the Companies Ordinance, 1984.

The ICA assailed the order of LHC's single bench which ordered on Oct 22 that the steel units be sold afresh through auction after proper advertisement. The appeal said the winding up of the steel units was being adjudicated by the high court without the court passing a winding up order and in the absence of a decree against the appellant Meraj Din family.

The appeal, against the dismissal of the family petition against maintainability of the petition for sale of the units to the Al-Rehmat Group of Companies, contended that Section 284 of the ordinance envisaged to bail out companies out of financial crisis, short of their winding up. But the court misconceived the section of the law to go for the winding up of the companies.

The ICA also contended that the arrangements under the law became meaningless when the steel units were still under the management of the Sharif family, and no permission for this arrangement had been obtained from the share-holding families.

The appeal also questioned the credibility of the banks which first filed petitions in the Banking Tribunal for the recovery of their loan and now agreed on the arrangement for the units sale in a situation that had no administrative control over the steel units.

It also assailed the appointment of a committee by the high court on the grounds that it had failed in its duty, and that it had no authority to proceed for the sale of the units. The appeal proposed convening of an annual general meeting of all seven Ittefaq families to take a decision in regard to the units through a special resolution.