' SAEEDUZZAMAN SIDDIQUI, J.-The petitioner has challenged the imposition of penalty on them under section 22 of the Securities and Exchange Ordinance of 1979 by the respondents for an alleged violation of rule 12(4) of the Securities and Exchange Rules, 1971. The petitioner has been directed to pay a sum of Rs, 5,000 for the alleged violation and a further sum of Rs, 1,000 for each further day the violation allegedly continued on their part. (For the sake of bravity and convenience we will hereafter refer the Securities and Exchange Ordinance of 1979 and the Securities and Exchange Rules of 1971 as 'the Ordinance' and 'the Rules' only respectively). The circumstances giving rise to the filing of the petition may be stated as follows :
1. On 17th December, 1973 the petitioner issued notice of the 8th Annual General Meeting of the shareholders of the Company to be held on 31st of December, 1973 at 2 p. m. In the registered office of the Company. One of the items in the Agenda that meeting related to the consideration of audited accounts and the reports of Auditors and Directors of the Company for the period ending 30th June, 1973. The petitioner claimed that such a meeting was held and the copy of the minutes of the Annual General Meeting held on 31st December, 1973 produced as Annexure "C" to the petition (which is not disputed before us) do show that such meeting was held and it considered all the items in the agenda except that which related to consideration of reports of Directors and Auditors and the balance sheet and profit and loss accounts. It is alleged by the petitioners that the reports of auditors and the Directors of Company could not be placed in ' the Annual General Meeting of the Company held on 31st December, 1973 as the accounts and balance-sheet were not ready and, therefore, the meeting was adjourned to 28th March, 1974 for consideration of the same.
From the copy of the order of Registrar of Joint Stock Companies, N.-W. F. P. Peshawar, dated 26th January, 1974 filed as Annexure "B" to the petition, it appears that the petitioner filed an application before the Registrar dated 27th December, 1973 praying for extension of time to present the Annual balance-sheet and profits and loss accounts for the year ending 30th June, 1973 which was granted and 3 months' time was allowed to the petitioner to submit the same. It is an admitted position that the audited balance-sheet and profit and loss account along with the reports of directors and auditors of Company was placed before the adjourned meeting on 28th March, 1974 within the extended period allowed by the Registrar and the same was adopted. The Authority under the Ordinance by its letter dated 12th January, 1974 called upon the petitioner to show-cause why action should not be taken against them for having failed to submit the annual Accounts of the Company fourteen days before the holding, of Annual General Meeting as required under rule 12(4) of The Rules. In reply to the above show-cause notice the petitioner submitted their explanation on 30th January, 1974 in which amongst other it was contended that on account of certain difficulties in the finalization of the accounts the same could not be presented in time and, therefore, they applied to the Registrar of Joint Stock Companies concerned, for allowing them 3 months' time to submit the same which was granted and, therefore, there was no violation of Rules on their part as the accounts were duly filed and circulated as required by law within the extended period allowed by the Registrar for submission of annual accounts. The Authority under the Ordinance however after hearing the petitioner took the view that the Annual General Meeting of the Company was held on 31st December, 1973 and as the accounts and the annual report was not submitted to the Authority and circulated to the share-holders and the Stock Exchange, 14 days before the holding of the said meeting as required under rule 12(4) of 'The Rules,' the violation on the part of petitioner was established and accordingly the petitioner was fined Rs, 5,000 for the said violation and was further directed to pay a sum of Rs, 1,000 for each further day the default continued. Aggrieved by this order the petitioner submitted a revision petition to the Secretary, Ministry of Finance, Government of Pakistan on 9th February, 1974 but the same was rejected. The contention of the petitioner before the revisional authority, that the accounts were duly circulated and filed 14 days before the holding of adjourned Annual General Meeting which was convened on 28th March, 1974 and, therefore, rule 12(4) of "The Rules" was duly complied was not accepted. A review petition filed thereafter by the petitioner before the Central Government also failed. The petitioner, therefore filed the present petition challenging the aforesaid orders. We heard Mr. Syed Iqbal Ahmed, Advocate for the petitioner and Mr. S. M. Noorul Hassan for the respondent.
' The learned counsel for the petitioner contends before us that there was no non-compliance by the petitioner of any rules as the copies of the annual accounts were duly circulated and filed as required under rule 12(4) of the Rules before the holding of the Annual General Meeting of the Company on the adjourned date of 28th March, 1974. Alternatively it is contended by the learned counsel that the contravention of the Rule is punishable under section 22 of the Ordinance only if the default is proved to be "willful." It is contended that in view of the order of Registrar of the Joint Stock Company extending the time for submission of annual accounts and balance-sheet by 3 months, the filing and circulation of accounts by the petitioner within the extended period could not be held as a default muchless a "willful" non-compliance of rule 12(4) of the Rules. On these premises the learned counsel urged before us that the order imposing penalty on the petitioner is wholly without jurisdiction. Mr. Noorul Hassan, the learned counsel for the respondents on the other hand contended that the order of Registrar Joint Stock Companies granting time to the petitioner to file the accounts was passed under the provisions of Companies Act, which could not affect the obligations of petitioner under the Ordinance which was a special law designed for specific purpose. The default committed by the petitioner with reference to the provisions of Ordinance, therefore, in the submission of learned counsel, could not be adjudged in the light of the order passed by the Registrar of Companies, under the Companies Act. The learned counsel for the respondents accordingly urged that under rule 12(4) of 'the Rules' the petitioner was required to circulate a copy of the annual report, together with the balance-sheet and the profits and loss account to its share-holders and simultaneously furnish a copy of the same to the Stock Exchange and the Authority appointed under the Ordinance at least 14 days before the holding of Annual General Meeting which was notified by the petitioner as 31st December, 1973 and since the petitioner admittedly did not circulate and file the annual accounts within the aforesaid period they were rightly penalised under the Ordinance. We are not impressed by the contention of the learned counsel for the respondents. The annual general meeting mentioned in sub-rule (4) of rule 12 of 'the Rules' refers the Annual General Meeting of the Company as defined under the Companies Act: Such a meeting under the provisions of section 76 of the Companies Act, could be held in the case of a newly incorporated company within 18 months of its incorporation and thereafter at least once in every calendar year but not later than 15 months after the holding of the last preceding general meeting. In the case before us the last Annual General Meeting of the Company was held on 30th December, 1972 and, therefore, the next Annual General Meeting was to be held on or before 30th December, 1973 but not later than 31st March, 1983. It is not disputed before us that the Registrar of Joint Stock Companies under the provisions of the Companies Act has the powers to extend the period of holding of such meeting or filing of balance-sheet and annual accounts to a maximum period of 3 months. It is an admitted position that the Annual General Meeting of the Company was held on 31st December, 1973 but the annual accounts were not laid before it for which the Registrar of Joint, Stock Companies had granted extension of 3 months to the petitioner. The petitioner, therefore, adjourned the Annual General Meeting of the Company to 28th March, 1974 for consideration of the same. It is not in dispute that 14 days before the holding of adjourned meeting the accounts were circulated amongst the share-holders of the Company and copies thereof were also filed before the Stock Exchange and the Authority appointed under the Ordinance as required by law and the same were duly adopted in the adjourned meeting held on 28th March, 1974. In view of the order of Registrar, Joint Stock Company, passed under section 131 of the Companies Act, permitting the petitioner to file the balance-sheet and the annual accounts within 3 months from 31st December, 1973, we are of the view, that the adjourned meeting of the Company held on 28th March, 1974 persuant to the decision taken by the Company in its Annual General Meeting held on 31st December, 1973, was, for all intent and purposes, the Annual General Meeting of the Company held for the purposes of consideration of annual accounts and balance-sheet of the Company and therefore, circulation of accounts amongst the shareholders of Company and filing of copies thereof before the Stock Exchange concerned and the Authority appointed under the Ordinance by the petitioner, 14 day before the holding of the adjourned meeting amounted to substantial compliance of rule 12 (4) of the 'Rules'. In any case in the circumstances of the case we are satisfied that the alleged default if any could not be treat as 'willful' within the meaning of section 22 of the Ordinance in view the order of Registrar granting time to petitioner to file the account an balance- sheet within three months from 31st December, 1973. W accordingly accept this petition and declare the order dated 21st January 1974 passed by the respondent No, 2 imposing fine on the petitioner in t sum of Rs, 5,000 on account of alleged 'willful' non-compliance of rule 12 (4 of the Rules and further fine of Rs, 1,000 per day for the period the allege non-compliance continued and the subsequent order passed by respondent No, 1 confirming the order of respondent No, 2, as orders withou any lawful authority and of no legal effect. We will, however, make n order as to costs in the circumstances of the case.