S. TARIQ ASAF HUSAIN, COMMISSIONER (LD)---This order shall dispose of Appeal No,60-A, 60-B, 60-C, 60-D and 70 of 2006 filed under section 33 of the Securities and Exchange Commission of Pakistan (the "Commission") Act, 1997 against:-
(a) the order dated 26-8-2004 passed by the respondent (Appeal No,60-A).
(b) the order dated 21-3-2005 passed by the respondent (Appeal No,60-B).
(c) the order dated 11-8-2005 passed by the respondent (Appeal No,60-C).
(d) the order dated 27-12-2005 passed by the respondent (Appeal No,60-D).
(e) the order dated 16-8-2006 passed by the respondent (Appeal No,70).
' Collectively referred to as "Impugned Orders".
2. In terms of the provisions of section 245(1) of the Companies Ordinance, 1984 (the "Ordinance"), Service Fabrics Limited (the "Company") was required to prepare and transmit its quarterly accounts respectively to the shareholders, stock exchanges, Registrar and the Commission within one month of the close of the quarters ending 31-12-2003, 31-3-2004, 30-6-2004, 31-12-2004, 31-3- 2005, 30-9-2005 and 31-3-2006. The Company, however, failed to comply with the aforementioned requirements.
3. Show-cause notices ("SCNs") were issued to the appellants under section 245(3) read with section 476 of the Ordinance. The appellants replied to the SCN and hearing in the matter was held.
The respondent, after hearing the parties, took a lenient view and instead of imposing maximum penalty of Rs,100,000 on each appellant for each quarter, imposed the following penalties through the Impugned Orders:-- Sr. No. Penalty Imposed onOrder dated 26-8-04Order dated 21-3-05Order dated 11- 8-05Order dated 27-12-05Order dated 16-8-05Total penalties Quarter ending 31-12-03, 31-3-04 Quarter ending 30-6-04Quarter ending 31-12-04, 31-3-05Quarter ending 30-9-05Quarter ending 31-3-06
1. Farooq Hameed, Chief Executive10,000 25,000 30,000 30,000 5,000 10,000
2. Muhammad Hameed, Director10,000 5,000 10,000 30,000 5,000 60,000
3. Ijaz Hameed, Director10,000 5,00 10,000 30,000 5,000 60,000 4.
Aamer Hameed, Director10,000 5,000 10,000 30,000 5,000 60,000 5.
Tariq Hameed, Director10,000 5,000 10,000 30,000 5,000 60,000
6. Sajid Salim Minhas, Director10,000 5,000 10,000 30,000 5,000 60,000
7. Muhammad Salim, Director10,000 5,000 10,000 30,000 5,000 60,000
4. The appellants have preferred the instant appeals against the Impugned Orders. The appellants were represented by Muhammad Pervaiz Tahir (the "representative"). The representative at the outset admitted the defaults for non-filing of the quarterly accounts within the prescribed time and pleaded that lenient view may be taken by reducing the penalties. The representative informed the Appellate Bench (the "Bench") that the company ceased its operations in the year, 2004 and is in the process of voluntarily winding up. It was argued that the company has no assets and under the present circumstances cannot pay the penalties to the Commission. The representative also informed the Bench that one of the Appellant namely Muhammad Salim has passed away in the year, 2008.
5. The departmental representative argued that the Commission has already taken a lenient view by imposing lesser penalties as compared to the maximum penalty of Rs,100,000 each for every default provided under section 245 of the Ordinance. The appellants failed to provide quarterly accounts in timely manner to the shareholders, stock exchanges, Registrar and the Commission as required by the Ordinance. It was argued that the Impugned Orders should, therefore, be upheld.
6. We have heard the parties and have perused the record. The penalties imposed on the appellants are paltry compared to the penalties provided under the Ordinance. The Directors are responsible for preparation and circulation of the quarterly accounts in order to provide timely information to all stakeholders and the appellants cannot be let off scot free for having failed to provide the necessary information within the prescribed time. The recurrence of defaults shows that the appellants did not make serious efforts to comply with the provisions of the Ordinance. We have been informed that one of the appellants has passed away in the year, 2008. The penalties have been imposed on the Chief Executive and Directors in their personal capacity and they are directed to deposit the penalties from their own resources and not from the coffers of the company.
' In view of the foregoing, the penalty to the extent of Muhammad Salim is being set aside. The other appellants are directed to deposit the fine within (15) days of receipt of this order.