This relates to an appeal filed by the Appellant against an order dated 7 May, 2001(impugned Order) passed by the Executive Director (Specialized Companies) of the Commission. Applications for early hearing as well as for interim relief have also been filed with this appeal.
2. The Appeal came up for hearing before Appellate Bench No.1 on 29 May, 2001 at 10:00 a.m. Mr. Ather Minhala and Mr. Yahya Khan Afridi, Advocates, appeared for the Appellant. Ms. Irum W. Butt, Director (Leasing) represented the Respondent.
3. The counsel for the Appellant elaborated the arguments as presented in the Memo of Appeal and, in particular, as follows:- a) The impugned Order envisages the appointment of an inspector u/s 265 (b) of the Companies Ordinance, 1984 with such terms of reference as have been covered in the parameters to the special audit being conducted under Rule 19(2) of the Leasing Companies (Establishment and Regulation) Rules, 2000. b) An order passed invoking section 265(b) envisages that there is a prima facie case that requires investigation without pre-judging the relevant issues; no where in the order does it say "appears to be" but in fact makes absolute and definite assertions. c) The impugned order is substantially the same as the show cause notice and tantamounts to being an extended statement of the show cause notice and ignores the response and documents provided by the Appellant in pursuance of show cause notice No.SC/LES-ED/205/2001 dated 9 March, 2001. d) The impugned order has passed a judgement on the financial health of the Appellant Company and, has therefore, entered the domain of investigator before even such an investigator has commenced his assignment. e) While there is no malafide, the Respondent has exercised authority in excess of her discretionary powers. f) Certain crucial negotiations that are in process between the Appellant and potential foreign investors have been marred by the Order of appointment of an investigator and the ensuing publicity.
4. The representative of the Respondent made the following submissions: a) The leasing companies (Establishment and Regulations) Rules, 2000 are sub-servient to provisions of Companies Ordinance, 1984 and, therefore, Section 265 overrides the said rules made under section 506 ibid. b) The terms of reference of investigation envisages an in-depth analyses and report of various aspects of the financial health of the Appellant Company and are not covered by parameters of the special audit being conducted under Rule 19(2) of the Leasing Companies (Establishment and Regulations) Rules, 2000. c) M/s. F. R. Merchant, Chartered Accountants have been appointed on 16 February, 2001 to conduct the special audit under the leasing rules and are expected to furnish the said report within the next one week. Mr. Hussain Chaudhry, Chartered Accountant, has been appointed as the investigator on 9 May, 2001 and has accepted the assignment.
5. The counsel for applicant requested that since negotiations with potential foreign investors are at a mature stage one week time may be granted to produce necessary documents in support of their assertion. He accordingly requested adjournment for one week. Case is adjourned to 11th June, 2001. Director (Leasing) SEC will ask the inspector telephonically not to commence investigation till next hearing.