1. This is an appeal against the order dated July 7, 2001 passed by the Executive Director, Company Law Division (CL), Securities and Exchange Commission of Pakistan ('the Commission") u/s 271 of the Companies Ordinance, 1984 ('the Ordinance") whereby the Executive Director directed Addl.
Registrar, CRO, Karachi to initiate proceedings against the management of M/s Shaheen Pay TV
(Ltd) ('the Company") u/s 230, 233, 234, 236, 268 and 271 of the Ordinance in the Courts of competent jurisdiction.
2. The appeal came up for hearing today wherein Mr. Muhammad Afzal Siddiqui, Advocate appeared on behalf of the Appellants. Mr. Munawwar Ali Bhatti, Deputy Director, (CL Division) appeared on behalf of Respondent No. 1 and Mr. F. B. Sial, Nominee Director, Shaheen Foundation, Respondent No.3, was present in his own capacity.
3. The impugned order was passed in pursuance of the Inspector's Report dated October 12, 2000 submitted by Mr. Nauman Mahmood, ACA of M/s Awais Haider Zaman Rizwani, Chartered Accountant appointed vide order u/s 263 of the Companies Ordinance, 1984 dated 11-7-2000 of Commissioner (Company Law).
4. The Counsel for the appellants pleaded before the Bench that the Executive Director (CL) passed the impugned order without any lawful authority. Furthermore, no opportunity of hearing after the issuance of show cause notice was granted to the appellants. He stated that the impugned order was also based upon the Inspector's report which is malafide, biased, predetermined and without any basis whatsoever.
5. Mr. Munawar Ali Bhatti, Dy. Director on behalf of Respondent No.1 defended the order of the Executive Director (CL) stating that on receipt of Inspector's reports the order in appeal had been passed merely to record the opinion formed by Executive Director (CL) and to authorize Additional Registrar, CRO, Karachi to apply to the Court of competent jurisdiction for order u/s 271. He stated that on receipt of Inspector's report appointed u/s 263 of the Ordinance, the role of the Commission merely is to examine such report and if serious matters reported, to apply to Court for appropriate order. He stated that it is Court which passes order u/s 271 after providing opportunity of being heard to directors or officers concerned. He explained that while forming opinion u/s 271 ibid, Executive Director (CL) was not legally bound to provide opportunity of being heard to directors and he rightly formed and recorded his opinion and authorized Addl. Registrar to apply to Court for order u/s 271.
6. After considering the arguments of both the parties and examining the record, this Bench is of the opinion that the order passed by Executive Director (CL) on 7th July, 2001 meant only to initiate the consequential action after Inspector's report had been received. The scheme of law in this regard is that report of an inspector appointed u/s 263 of the Companies Ordinance, 1984 is admissible in any legal proceedings as evidence of the opinion of inspector and the Commission has to only form its opinion whether the matter is referable to a Court of law or not. It is the Court which passes order u/s 271 ibid, after providing an opportunity of being heard to directors & officers. In the eyes of law, the so called order dated July 7, 2001 of Executive Director (CL) is not an order but a document meant to record his opinion u/s 271 and then authorizing Additional Registrar to take the matter to Court. Hence no appeal lies against it. In fact, confusion has arisen as the Executive Director (CL) issued show cause notices to the directors unnecessarily and then recorded his opinion in a style in which generally an order is written.
7. The appeal is disposed of in the terms mentioned herein above.