This Order shall dispose of the proceedings initiated against the Directors of M/s. Al-Jadeed Textile Mills Limited (hereinafter referred to as the "Company") for default made in complying with the provisions of Sub-section (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 Registrar and the Commission, its quarterly accounts for the 1st quarter ended December 31, 2004 by January 31, 2005 and 2nd quarter ended March 31, 2005 by May 31, 2005.The Company failed to file the aforesaid accounts with the Commission. Failure of the Company to comply with the aforesaid requirements necessitated action against the Directors of the Company in terms of Sub-section (3) of Section 245 of the Ordinance. Consequently, show cause notices dated April 06, 2005 and July 20, 2005 were served on all the Directors including the Chief Executive of the Company calling upon them to show cause as to why penalties as provided under Sub-section (3) of Section 245 read with Section 476 of the Ordinance may not be imposed on them.
3. In response to the show cause notice dated April 06, 2005, Mr. Asif Karim, Chief Executive of the Company contended vide his letter dated April 19, 2005 on behalf of all the Directors that their Company has not been operating since July 2002 and management is looking for good trust worthy investors to put up a new project for the Company. It was further submitted that the Company is facing financial crises and there is no competent staff to deal with the affairs of the Company. It was further added that the management has cleared all its outstanding dues against the banks and other creditors using the directors' personal resources. He thus requested for condonation of default regarding non-submission of quarterly accounts .As regards show cause notice dated July 20, 2005, the Chief Executive of the Company contended vide his letter dated July 23, 2005 that they have already dispatched the quarterly accounts for the 2nd quarter ended 31.03.
2005 on June 10, 2005.
4. The explanation furnished by the Chief Executive of the Company has been considered but not found satisfactory. In order to afford an opportunity of personal hearing, the matter was fixed for hearing on June 14, 2005, which was adjourned and re-fixed for June 22, 2005 and then for July 08, 2005. The hearing was again adjourned on the request of the Company and re-fixed for July 18, 2005. However, neither anybody appeared for hearing on the given date and time nor any written explanation was received. To afford a final opportunity the case was fixed for August 16, 2005.The Company again requested to adjourn the hearing as their Chief Executive was out of city. The matter was, therefore, re-fixed for September 13, 2005 but again adjourned on the request of the Company and was finally fixed for October 10, 2005.
5. On the date of hearing Mr. Asif Karim, Chief Executive of the Company appeared for hearing.
During the hearing he reiterated the same arguments as were advanced in his letter dated April 19, 2005. He however, added that the Company is lying closed since July 2002 and that during the said period his father also expired which caused delay in finalization of accounts. He submitted that they have now paid all liabilities to the banks and other creditors and now they are going to revive the Company. He also promised to send the accounts for the quarter ended December 31, 2004 within next two days.
6. The explanation furnished has been examined and not found cogent. It is the duty of the Directors of the Company to ensure compliance with all the statutory requirements. Accordingly, the Directors of the Company are responsible for timely preparation and circulation of quarterly accounts to its members and file the same with the Registrar and the Commission within prescribed time. The Company has, however, failed to file the requisite quarterly accounts with the Commission within prescribed time. The accounts for the 1st quarter ended December 31, 2004 have been received in the Commission on October 17, 2005 i.e. with a delay of 8 months and 16 days where as, the accounts for the 2nd quarter ended March 31, 2005 have been filed with the Company Registration Office, Karachi with a delay of 14 days. These accounts have not been filed with the Commission till-date which is a separate mandatory requirement. The track record of the Company is also unsatisfactory, as the Company has failed to file its half-yearly accounts since March 31, 2002 and quarterly accounts since December 31, 2002. The Directors have also failed to offer any cogent reason to justify the defaults.
7. In view of the above, the defaults under Section 245 are considered willful and deliberate.
However, keeping in view the financial crises being faced by the Company and their intention regarding revival of the Company, I, in exercise of powers conferred upon me under Sub-section
(3) of Section 245 read with Section 476 of the Ordinance, instead of imposing maximum fine of Rs.
100,000 on every Director and a further fine of Rs. 1,000 per day for the continuous default, impose a token fine of Rs. 10,000/- (Rupees ten thousand only) on the Chief Executive and each of the Directors of the Company in the following manner: {{TABLE}} S. No Name of Director Penalty (Rupees)
1 Mr. Asif A. Karim, Chief Executive 10,000 2 Mr. Harris A. Karim, Director 10,000 3 Mr. Shoaib Siddique, Director 10,000 4 Mrs. Zarina A. Karim, Director 10,000 5 Mr. Tahir Mohammad, Director 10,000 6 Mrs. Nafisa A. Karim, Director 10,000 7 Mrs. Shahida Arif, Director 10,000 Total 70,000
8. The Chief Executive and other Directors of the Company are hereby directed to deposit within 30 days of the date of receipt of this Order the aforesaid fine totaling Rs.70,000/- (Rupees seventy thousand only) in the Commission's designated bank account No. 10464-6 maintained at HBL, Central Branch-2, HBL Plaza, I.I Chundrigar Road, Karachi or by a DD/Pay order issued in the name of Commission 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 Directors in their personal capacity, therefore, they are required to pay the said amounts from their personal resources.