1. MRS. QAISER IQBAL, J.---This petition is directed challenging the vires of Circular No,EDM/D- II/31/2002 being void, illegal having no legal sanctity.
2. Succinctly petitioner is a Senior Chartered Accountant carrying on good reputation amongst the business circle governed by the Chartered Accountants Ordinance, 1961 and its bye-laws, regulated by respondent No, 2 to monitor the Government and Corporate Affairs in Pakistan. In pursuance thereof respondent No,1 established a Quality Assurance Program in 1987, under a Quality Control Committee constitute draw up the program of modus operandi and guideline for renewer terms as 'Peer Review'. The Quality Control Program initiated on the basis of drawn up report sent to Quality Control Review Committee with an object to upgrade the standard. It is alleged that the respondent No, 1 appointed the reviewer facilitated the petitioner's office examined the record in 20 minutes and a draft report was sent by the respondent No. 1 on 12 March, 2005.
3. Second review of the petitioner's audit file was carried out in April 2005. The respondent No, 1 raised different queries initiated by the reviewer appointed by the respondent No,1, which was replied by the respondent No,
1. The respondent No,2 through the impugned circular restrained the petitioner disqualified him from carrying out the order of the listed companies.
4. Impugned circular reads as under:-- .........Circular No,19 Reference No, EMD /D -II /31/2002 Appointment of External Auditors by the Listed Companies.
5. December 27, 2002.
6. Attention of the listed companies is invited towards the Listing Regulation No,37 (xxxvii) of the Karachi Stock Exchange Listing Regulations is whereby the said companies are required to appoint as external auditor only those firms of auditors which have been given a satisfactory rating under the Quality Control Review Programme of the ICAP.
(2) In this connection, the ICAP has issued a list of practicing firms of Chartered Accountants with satisfactory Quality Control Review Ratings on the basis of audit reports issued up to October 31, 2002. A copy of the list is attached as Annexure. This list shall be updated by ICAP from time to time.
7. A copy of which will be available on ICAP's Website (www.Icap.Org.Pk). (3) The Audit Committees and Board of Directors of listed companies are advised to take into account Quality Control Review Ratings of the auditors ensure compliance with Listing Regulation No,37 (XXXVII), before recommending appointment of auditors to the shareholders in the annual general meetings. An appointment of auditor(s), which does not comply with this requirement would be a violation of the Listing Regulations and would expose the companies to Consequential action.
(4) It may further be noted that the SEC has penalized certain auditors under the Companies Ordinance, 1984. The listed companies may also wish to consider is while appointing statutory auditors.
8. (Ashfaq Ahmad Khan)
9. Director (E and M).
10. The respondent No,2 SECP issued direction to Stock Exchanges in Pakistan for insertion of the direction contained in the impugned circular to the effect that the companies listed shall not be audited, by the auditors as per directions contained in the impugned circular.
11. Mr. Abrar Hassan learned counsel for petitioner at the outset has contended that the directions contained in the impugned circular is not beneficial in nature, it is violative of section 254 of the Companies Ordinance, 1984 as well as Article 18 of the Constitution of Pakistan. It is next urged that section 21(a) of the Chartered Accountants Ordinance, 1961 does not envisage any qualification between member of the Institute of Chartered Accountants therefore the embarkment on the basis of directives of the SECP cannot be given effect because statute overrides subordinate legislature in the form of the circular is not in conformity with law. In support of the above contentions reliance is placed on Khawaja Imran Ahmed v. Noor and another 1992 SCM R 1152 dictum laid down is any restriction, even if provided by law would be hit by Article 18 of the Constitution which freedom of trade or business or profession subject to the provisions contain therein. This view finds support from the case of Shaukat Ali and others v. Government of Pakistan through Chairman Ministry of Railways and others PLD 1997 SC 342. In order to appreciate the arguments advanced by the learned counsel for the parties it is necessary to reproduce section 27 subsection (2) (k) (kk) of the Chartered Accountants Ordinance 1961 as under:--
(k) the regulation and maintenance of the status and standard of professional qualification of members of the institute;
(kk) the issue of directives to the members of the Institute on professional matters; As per Section 28 of the Ordinance 1961 Federal Government has powers to direct bye-laws to be made or to amend bye-laws.
12. It is manifestly clear that according to the quality control form, review check list to draw up the modus operandi and for reviewers with the objection of the 'peer view' to be five rather than punitive intended to indicate the areas tu1 demands member's special attention. According to the ICAPs Quality Control Review (QCR) program paras ,cc 's as under:-- ......In the event a firm is found to be grossly negligent in the review by the QCR committee or when "not in accordance" conclusion is reached in the revisit also, the firm is referred to the investigation committee, deeming such result as indicative of professional misconduct. However, the QCR Committee may not refer to those firms with a "not-in-accordance" conclusion in the visit, when there is a considerable improvement in comparison with the previous review provided that the Committee concludes that firm is not grossly negligent...
13. Mr. Asim Manzoor Khan learned counsel for respondent No,1 contended that in terms of clause 20 of the framework of Quality Control review the matter could be referred to investigation committee for action according to law, despite of the revisits and instructions the petitioner did not adhere to thereby the object of QCR program was hampered. It is next urged that if alternate remedy is available by way of appeal under the Ordinance, 1961 therefore petition is not sustainable in law.
14. Same line of arguments were adopted by the learned counsel appearing for respondent No.2.
15. Undoubtedly Securities and Exchange Commission of Pakistan is a statutory entity established under section 3 of the Act 1997. Commission is responsible for the pur' pose of certain functions to regulate the finance in stock exchange and any other securities mark. In exercise of powers of the authority under the Companies Ordinance 1984 including any power of the Federal Government delegated to the authority u , *- Ordinance, 1969. It seems that subsection (2) of secti n the Act XLII 1997 has conferred to the Commission powers, for performing its function and powers. The respondent No,2 writing, direct a stock exchange to make any regulate r amend or rescind any regulation already made, period as it may specify in their behalf therefore aft: directions were issued to all the three stock exe*nges country, thereby respondent No, 2 incorporated its red;, the directives contained in the impugned circular as well ', listing Regulation No,37 of the Karachi Stock Exchan: are not discriminatory and or violative of Islamic Re Pakistan but the same are issued for the purpose of fr of good governance.
16. The Companies Ordinance, 1984 and the Securities and Exchange Commission of Pakistan Act, 1997 focus on distinct legislative concerns to be regulated in separate areas where the B scope of the law is limited squarely fall within the ambit of listing the companies for such exchange. The respondent No, 2 through the impugned circular has imposed additional qualification of the members of institute of Chartered Accountant the wires of being appointed auditors of the listed companies with respondent No,2 there is no conflict between impugned circular and the procedure provides under the laws applicable.
17. Contention of the learned counsel for petitioner that the impugned circular is in conflict with Article 18 as it imposes a restriction on the ability of the petitioner to engage in his profession is discriminatory is not tenable in-law.
18. We are of the considered view that the petitioner has not been discriminated against others however a check and balance is to be maintained in all circumstances for the purpose of carrying out audit of the companies listed with respondent No.2 For the foregoing reasons we find no merits in this petition which is accordingly dismissed.