Order under Section 158(4)(a) of the Companies Ordinance, 1984.
1. The facts leading to this case were that M/s. Punjab Lamp Works Limited, a public listed company was required to hold its Annual General Meeting for the year ended 30th June, 1987, latest by 31st December, 1987 which it failed to do. Accordingly a show cause notice dated 24th November, 1988 was issued to the Chief Executive of the Company for violation of the Section 158(1) of the Companies Ordinance, 1984 and a hearing was fixed on 12th December, 1988.
2. In compliance of the said show cause notice, a written reply dated 27th November, 1988 was submitted by the Chief Executive of the Company in which, inter alia, many legal as well as factual issues were raised. On examination, the reply was not found satisfactory and the Chief Executive was accordingly informed vide this Authority's letter dated 6th December, 1988 to appear on he date of hearing already fixed on 12th December, 1988 in order to explain and present his case.
3. On the date of hearing Mr. Faridul Haq, Advocate appeared on behalf of the Chief Executive, Mr. Khursheed Ahmed, and filed preliminary legal objections. His main objection was that the Corporate Law Authority had violated the principle of natural justice in pre judging the reply of the petitioner as "unsatisfactory" before the date of hearing. In this connection he cited and dwelt upon at great length the rulings of Superior Courts to fortify his contention that pre-judging is a matter which closes the mind of a judicial Authority and the same can be gathered from the pre-dis closer and the formation of the views of Corporate Law Authority in its letter dated 6th December, 1988. No doubt there is no cavil to the proposition that the learned counsel has tried to advance, yet every case revolves around its own peculiar facts and attendant circumstances and as such the ruling cited are of no help to the respondent. This may also be relevant to state that as the reply to the show cause notice was furnished before the date of hearing fixed on 12th December, 1988, it was all the more necessary to inform the respondent to appear on the date of hearing and explain further or to adduce any further evidence, if any, in support of and in addition to his written submissions which were not found satisfactory. In other words further opportunity was afforded to the respondent to improve his case or to raise any further contention in addition to those already furnished. The Authority, thus, on the other hand fully followed and brought into play the principle of natural justice by affording a further opportunity to the respondent by asking him to appear on the date of hearing on 12th December, 1988 which it could have otherwise refused and decided the matter on the basis of the written reply. It may be stated that a 'hearing" does not necessarily mean a "personal or oral learning" and in quasi-judicial proceedings, as are being conducted by Corporate Law Authority, even a written reply is also deemed to be affording sufficient opportunity of hearing. The Authority, therefore, did not pre-judge the issue but found the reply prima facie unsatisfactory after its receipt and also after duly considering it on merit.
4. In view of the above discussion, the preliminary objections raised by the respondent are not sustainable in law as well as on facts.
5. However, deciding the case on merits, it is further held that the contentions of the respondent being raised in his reply dated 27th November, 1988, are not tenable in view of following grounds:--
(i) that the show cause notice was properly service on Mr. Khursheed Ahmed who was Chief Executive of the Company at the material of time i,e, period of default ending 30th June, 1987. The fact is being corroborated as per information gathered from the Company Registration Office, Karachi. The objection on this count is not sustainable and is overruled accordingly.
(ii) that the other contention of the respondent revolved entirely around the actions and circumstances which occurred after directions under Section 170 of the Companies Ordinance, 1984 for holding overdue Annual General Meeting and laying annual accounts thereat. The learned counsel has also dwelt at great length to bring home the point that the default in this case was not "wilful" as well as not committed "knowingly". He has also laboured a lot by profusely citing the dictionary meanings of the words "knowingly" "wilful" and "intention" as well as a lot of case-law.
With due respect to the Superior Courts, here again it may be stated that there are no two opinions to the proposition in view of settled position of law that to prove a default the mala fide intention of the defaulter is to be proved first and also that the default was committed "wilfully" and "knowingly", is to be established. But again applying this settled position of law on the facts of the instant case, the same is not found attracted and its facts are quite distinguishable from the facts prevailing in the cited cases. The contention of the respondent, made during oral submission, as supported by the ruling cited as PLD 1969 Lahore Page 615 (Syed Amir Hussain versus Progressive Papers Ltd.) is also not relevant in view of the fact that it relates to the action subsequent to directions under Section 170 of the Ordinance for which a separate action is provided in terms under Section 171 whereas, the cognizance of the default under Section 158(1) is being taken in this case.
6. The default for not holding Annual General Meeting in time is established beyond doubt in view of the fact that the Chief Executive could have applied on behalf of the Company for extension in time for holding its Annual General Meeting to the Authority in terms of proviso to Section 158(1) of the Companies Ordinance, 1984 which he failed to do. Besides, the directions given under Section 170 ibid were qualified in term of para 3 of the letter dated 3rd December, 1987, which reads:-- "it may be noted that this direction is without any prejudice to the penal and civil consequence of the default on the part of the company and its management in making compliance within the period laid down by Sections 233 and 158 of the Companies Ordinance, 1984."
7. Therefore, the directions under Section 170 do not save any other action which may be taken under the Ordinance for default of non-holding or late holding of Annual General Meeting as well as not laying accounts thereat.
8. The upshot of the above discussion is that looking from every angle the default under Section 158(1) of the Companies Ordinance, 1984 is established beyond reasonable doubt and the Chief Executive is held liable under Section 158(4)(a) D accordingly. However, the Authority has already taken a lenient view by taking cognizance of only one year's default for the year ending 30th June, 1987 and not for other two years i,e, ending 30th June, 1985 and 30th June, 1986. The default in aforementioned years is also being committed by late holding of Annual General Meetings. Taking further lenient view, the Authority is pleased to impose a minimum fine of Rs, 10,000/-(Rupees ten thousands only) as provided under Section 158(4)(a) of the Ordinance, on Mr. Khursheed Ahmed, Chief Executive of the Company, for the year of default ended 30th June, 1987.
9. He is hereby directed to deposit the amount of penalty in the State Bank of Pakistan or in any authorised branch of National Bank of Pakistan under the head of account "1200-Receipts from Civil Administration and Other Function, 1210-Receipts from General" 'Administration, 1213-Economic Regulation-Receipts under the Companies Ordinance", under intimation to this Authority.