TAHIR MAHMOOD, EXECUTIVE DIRECTOR (ENFORCEMENT).---This Order shall dispose of the proceedings initiated against the directors of Kashmir Polytex Limited (hereinafter referred to as the "Company") for default made in complying with the provisions of subsection (1) of section 245 of the Companies Ordinance, 1984 (the "Ordinance").
2. The facts leading to this case, briefly stated, are that in terms of the provisions of section 245 of the Ordinance, the Company was required to prepare and transmit to the members and simultaneously file with the Commission, its quarterly accounts for the 1st quarter ended September 30, 2006 and 2nd quarter ended December 31, 2006 required to be filed by October 31, 2006 and February 28, 2007 respectively. The Company, however, failed to file the requisite accounts with the Commission within the prescribed time period. Failure of the directors to comply with the aforesaid requirement necessitated action against them as provided under the law. A notice dated March 30, 2007 was, therefore, served on the Chief Executive and directors of the.
Company calling upon them to explain as to why penalties as provided under subsection (3) of section 245 read with section 476 of the Ordinance may not be imposed on them for the aforesaid contravention. No response was received to the aforesaid notice.
3. In order to provide an opportunity of personal hearing, the matter was fixed for May 7, 2007. On the date of hearing, Mr. Tanveer Ahmed, Financial Advisor/the authorized representative, appeared before, me to argue the case on behalf of all the directors of the Company. During the course of hearing, Mr. Tanveer contended that the Company is registered in Azad Jammu and Kashmir, therefore, the Commission does not have jurisdiction over the Company. He further submitted that during the period under review, the Company faced financial constraints, however, now they are in the revival process and have paid all liabilities to PICIC. He informed that the Company has also started exports. Request was also made to allow one month time for preparation and filing of quarterly accounts. Mr. Tanveer prayed for a lenient view in the matter and assured to be compliant in future.
4. I have given due consideration to the arguments advanced by the representative of the directors at the time .Of hearing but none of them justify the default in filing of quarterly 'accounts.
The plea of the Company that being registered in Azad Jammu and Kashmir, it is not required to file accounts with the Commission is not correct. As per requirement of section 245 of the Ordinance, every Company listed on Stock Exchanges, is required to transmit quarterly accounts to its members and the stock exchanges at which the shares of the Company are listed and simultaneously file the same with the Registrar and the Commission. Since Kashmir Polytex Limited is listed on the Karachi and Lahore Stock Exchanges, therefore, section 245 of the Ordinance is applicable to the Company and its directors. Accordingly, the directors of the Company are responsible for submission of quarterly accounts to the Commission. The Company has, however, failed to file requisite accounts with the Commission within prescribed time and the same have not been filed till date even after issuance of show-cause notice dated March 30, 2007. Moreover, the track record of the Company with regard to filing of annual, half yearly and quarterly accounts is also not satisfactory.
The Company has defaulted in submission of annual and quarterly accounts in the past for which the directors were penalized earlier also. The repetition of default shows that the management of the Company does not take the provisions of Law seriously. Accordingly, the default under section 245 of the Ordinance is established, which attracts the penal provisions of subsection (3) of section 245 of the Ordinance.
5. In view of the above, it appears that the directors of the Company do not assign due importance in complying with the requirements of the law. However, instead of imposing the maximum fine of Rs.100,000 on every director and a further fine of Rs.1,000 per day for the continuous default, I, in exercise of powers conferred upon me under section 245 read with section 476 of the Ordinance, impose a fine of Rs.30,000 (Rupees thirty thousand only) on the Chief Executive find each of the directors of the Company responsible for the defaults for the quarters ended September 30, 2006 and December 31, 2006, in the following manner: - S. # Name Penalty (Rupees)
1. Mr. Muhammad Ashraf Khan, Chief Executive30,000
2. Mr. Mushtaq Ahmed, Director30,000
3. Dr. Mrs. Yasmin Ashraf; Director30,000
4. Mr. Muhammad Younus Khan, Director30,000
5. Mrs. Hareem Ara Hashmi, Director30,000
6. Mr.Muhammad Akram Director30,000 180,000
6. However, no penalty is imposed on Mr. Shahid Mahmood, director (Nominee ICP). The Chief Executive and directors of Kashmir Polytex Limited are hereby directed to deposit within thirty days of the date of receipt of this Order the aforesaid fine aggregating to Rs.180,000 (Rupees one hundred and eighty thousand only) in the Commission's designated bank account No.10464-6, Habib Bank Limited, Central Branch, 2-Habib Bank Plaza, I.I Chundrigar Road, Karachi and send a copy of the receipted vouchers to the Commission for information and record, failing which proceedings under the Land Revenue Act, 1967 will be initiated which may result in the attachment and sale of their movable and immovable property. It should also be noted that the said penalty is imposed on the Chief Executive and the directors in their personal capacity; therefore, they are required to pay the said amounts from their personal resources.