Brig. (Retd) N. Humayune ("Appellant") has filed an appeal No. 2 of 2004 under section 33 of the Securities and Exchange Commission of Pakistan Act, 1997 against an order dated 30-12-2003 ("Impugned Order") passed by Commissioner (Company Law Division).
1. MacDonald Layton & Company Ltd. ("Company") of which the Appellant is the chief executive, was required under sub-section (1) of section 245 of the Companies Ordinance, 1984 to prepare and transmit its quarterly accounts for the period ended 31-03-2003 by 30-04-2003 to its shareholders, stock exchanges, registrar and the Commission. However, the accounts were filed on 06-08-2003 with delay of 3 months and 5 days. After giving an opportunity of hearing to the management of the Company, the Commissioner (CLD) imposed a penalty of Rs.10,000/- under section 245 on the Appellant. Not being satisfied with this order, the Appellant has filed the instant appeal before the Appellate Bench.
2. On the date of hearing held on 09-04-2004, the Appellant dilated upon the financial problems faced by the Company. He stated that the Company assets representing its credit line were being illegally held by Muslim Commercial Bank Ltd. and Habib Bank Ltd against false claims for the last 17 years. He informed the Bench that the banks had filed numerous cases against the Company in different courts of the country. In addition, the Company had initiated cases in the Hon'ble Sindh High Court against the Government of Iraq for contractual defaults and cancellation of some contracts. He argued that due these reasons, the Company has been out of business. He stated that the Company has been without any staff for the last 6 years and the present management has not been paid any salaries during this time. He stated that the Company was waiting for the outcome of the court cases, which if decided in the Company's favor would revive its fortunes.
3. He argued that the financial constraints were the real reason behind the defaults and there was no willful intention on part of the management to commit the statutory defaults. He stressed that unless it could be proven that the Appellant had willfully and deliberately failed to comply with the provisions of the Ordinance, he could not be penalized. In all his appeals, the Appellant has made numerous prayers, most of which are irrelevant and extraneous to the issue at hand and also outside the jurisdiction of the Bench. During the hearing, the Appellant also pleaded that a general dispensation should be granted to the Company from the performance of its legal and corporate functions under law as the Company's future would be decided one or the other within this year. In addition, the Appellant has prayed for the cancellation/revocation of the Impugned Order.
4. We have heard the Appellant and also perused the documents submitted by him. In his pleadings before us, the Appellant has not denied that mandatory provisions of law have been violated by the management of the Company. Instead he has based his entire argument on the fact that the violations were committed due to financial problems of the Company and consequently, these violations cannot be termed as willful and deliberate. As much as one may sympathize with the Appellant, it is a hard fact that mandatory statutory provisions have been violated by the Company and the management. And in our view, financial constraints cannot be allowed to become an excuse for violating the law. The Appellant's contention that his default is not willful cannot be accepted. The Company and its management including the Appellant are very much aware of their responsibility under the law. Being a listed company, these responsibilities take an added meaning and consequence. In any case, the Commissioner (CLD) has already taken a lenient view because of the financial position of the Company, and not penalized all the directors. In addition he has only imposed a token penalty on the Appellant. The Appellants contention before us that this penalty cannot be paid due financial problems of the Company is misconceived. The penalties imposed by the Commissioner are not on the Company, but on the Appellant in his individual capacity as the chief executive, and therefore have to be borne by the Appellant and not the shareholders of the Company. We therefore find no reason to interfere with the Impugned Order. As for the other reliefs sought by the Appellant, they are not within the jurisdictional ambit of the Appellate Bench.