CH. IJAZ AHMAD, J.--I intend to decide Writ Petition No.6311/2000 and W.P. 7103/2000 by one consolidated judgment having similar facts and law.
2. Sole grievance of the petitioners is that the Commissioner (Enforcement) passed the order against the petitioners without providing personal hearing to the petitioners and appointed Inspectors.
3. Mr. Faisal Islam learned counsel for petitioner submits that the impugned order is not sustainable in the eyes of law and the same was passed against the petitioner without providing personal hearing to the petitioner and he relied upon the following judgments:- PLD 1965 S.C. 90 (Zakir Ahmad's case); PLD 1990 S.C. 666 (Maryam Yunus Vs. Director of Education).
1994 SCM R 1299 (Ghulam Mustafa JatoPs case).
1998 SCM R 429 (Muhammad Tariq Vs. PIA).
PLD 1959 S.C. 45 (Chief Commissioner's case)
1994 SCf 1R 2232 (Anisa Rehman's case).
"S.L. Kapoor Vs. Jagmohan and others" (A.I.R. 1981 S.C. 136).
"Union of India Vs. Swadeshi Cotton Mills AIR 1981 S.C. 818).
4. Mr. Imtiaz Ahmad Siddiqui, Advocate for petitioner submits that Section 263 of the Companies Act is itself code and does not allow the respondent to take action against the petitioner without providing personal hearing to the petitioner as Section 263 does not prohibit to pass order without issuing a notice to the petitioner.
5. Learned Deputy Attorney submits that it is interim order passed by the Commissioner (Enfr.) and petitioners have all the rights to agitate the matter before Inspectors while appearing and submitting record before the Inspectors. He further submits that requirement of natural justice does not available to the petitioners as per principle laid down by the Hon'ble Supreme Court in un-reported judgment in C.P. No.501/78 (Khaqan Industries Ltd. Vs. Islamic Republic of Pakistan) decided on 23.9.1978.
6. I have given my anxious consideration to the contentions of learned counsel for the parties and perused the record, It is better and appropriate to reproduce Section 263 of Companies Ordinance, 1984 to resolve the controversy between the parties:- "263. Investigation of affairs of company on application by members or report by registrar. The Authority may appoint one or more competent persons as inspectors to investigate the affairs of any company and to report thereon in such manner as the Authority may direct-
(a) in the case of a company having a share capital, on the application of members holding not less than one-tenth of the total voting powers therein;
(b) in the case of a company not having a share capital, on the application of not less than one- tenth in number of the persons entered on the company's register of members;
(c) in the case of any company, on receipt of a report under sub-section (5) of Section 231 or on a report by the registrar under sub-section (6) of Section 261."
As far as Section 263 is concerned, (corresponding provisions in the Companies Act, 1913, Section 138) the corporate law authority, constituted under Section 11 of the said Ordinance has been empowered to appoint one or more competent persons as Inspector to investigate the affairs of the company and to report thereon in such manner as the authority may direct in the case of a company having a share capital, on the application of members holding not less than 1/10th of the voting power therein, It is pertinent to mention here that the powers of investigation vesting in the authority u/S. 263 are not the same as vesting in the Court under the Companies Ordinance, 1984 or the Companies Act, 1913. Mere reading of the aforesaid section clearly reveals that there are certain pre-conditions upon the authority to appoint Inspector to investigate the affairs of Company. The pre-conditions imposed upon the authority on the basis of the aforesaid Section are as follows:- Company having a share capita!.- On an application of members holding not less than 1/10th total voting power therein.
Not having a share capital.- On the application of not less 1/10th in number of persons entered on the company register of members; On receipt of a report under Section 231 of sub-section (5) which is reproduced hereunder:- "(5) Where an inspection of the books of account and books and papers of the company has been made under this section by an officer authorised by the Authority, such officer shall make a report t the Authority."
0n receipt of report by Registrar u/S. 261, sub-section (6) which is reproduced as under:- "(6) It the information or explanation or book or papers required by the registrar under sub-section
(1) is not furnished within the specified time, or if after perusal of such information or explanation or books or papers the registrar is of opinion that the document in question or the information or explanation or books or papers the registrar is of opinion that the document in question or the information or explanation or book or paper discloses an unsatisfactory state of affairs, or that it does not disclose a full and fair statement of the matter to which it purports to relate, the registrar shall without prejudice to any other provisions, and whether or not action under sub-section (3) or subsection (4) has been taken, report in writing the circumstances of the case to the Authority."
It is pertment to mention here that in the present case action was taken by the Commissioner Enforcement on the application received by him from the Deputy Managing Director, of Investment Corporation of Pakistan who submitted application to the authority without providing personal hearing to the petitioner, therefore, case cited by respondent's counsel is distinguished on facts and law and the relevant observation of the cited case is as under for comparison:- We find that the learned Judge in the High Court has rightly held that the action taken by the Registrar of the Joint Stock Companies fell under sub-section (5) of Section 137 of the Act, and there was no occasion to invoke sub-section (6) thereof. We have already stated that on a complaint having been received, the Registrar had called upon the petitioner-company to furnish an explanation and to produce certain documents as required by subsection (1) of the aforesaid section. On receipt of the petitioner's reply the Registrar apparently formed the opinion mentioned in sub-section (5) of the section, namely, that the documents in question disclosed an unsatisfactory state of affairs, and therefore, it was his duty to report the matter in writing to the Federal Government. On receipt of the Registrar's report it was open to the Federal Government, under Section 138 of the Act, to appoint one or more competent inspectors to investigate the affairs of the Company and to report thereon in such manner as the Government may direct, It seems to us that in the procedure followed by the Registrar in this case all the requirements of Section 137 were fully satisfied, and there was, therefore, no question of issuing any further notice to the petitioner-company, or giving it any further opportunity of being heard."
This Court has already held in Mian Mehraj Din and brothers Vs. Steel Mills and others (1996 CLC 516), that Section 265-A is complete code in itself and no person is bound to approach first the Corporate Law Authority u/S. 263 of the Ordinance before invoking jurisdiction under Section 265-A as there is nothing in both the sections to that effect, therefore, Section 263 is also Gode in itself, It is also settled proposition of law that such investigation is a serious matter and should not be ordered except on good or satisfactory / grounds, In arriving to this conclusion I am fortified by A.I.R.S 1969 S.C. 707 "Rohtas Industries Ltd. Vs. S.D. Agarwal and another" After addition of Article 2-A in the Constitution the public functionaries cannot pass any order without providing personal hearing to the concerned persons as the same is in violation of Injunction of Islam, It is common principle which governs the administration of justice in Islam that in case of liability with penal or quasi-penal consequence and or deprivation of basic rights a notice as well as ar> opportunity of hearing are of absolutely necessity as held by the Hon'ble Supreme Court in reported judgment Pakistan and others Vs. Public at Large and another (PLD 1987 SC 304). It is also settled proposition of law that Legislature knows the Rule of Natural Justice and where it does not prescribe any Rule different from the Rules of natural justice, it means that the Rules of natural justice are followed, In, arriving to this conclusion I am fortified by the following judgments:- Commissioner of East Pakistan Vs. Fazal-ur-Rehman (PLD 1964 SC 410).
Ghulam Muhammad Vs. Muhammad Sharif (PLD 1969 SC 398).
The action of respondents is not in accordance with the practise of respondents as is evident form reported judgment decided by Corporate Law Authority in Muhammad Khuram Vs. Muhammad Waqar (1991 CLC 378) which shows as under:- "In order to take cognizance of the case and to investigate into the affairs of the Company a notice pursuant to Section 263 of the Companies Ordinance, 1984, was issued to the Secretary of the Company, and also to Mr. Muhammad Waqar Director of the Company to show-cause in writing as to why the appointment of Inspector under Section 263 of the Companies Ordinance, 1984 may not be made." It is settled proposition of law that consistent practise of the department has a force of law. I am fortified by the reported judgment of the Hon'ble Supreme Court in Nazir Ahmad Vs. Govt, of Pakistan (P.L.D. 1970 SC 453).
In view of what has been discussed above, the impugned orders are set aside as per laid down in Syed Mir Muhammad's case (PLD 1981 SC 176) and cases are remanded to Commissioner Enforcement, who is directed to decide the same in accordance with law. The petitioners are directed to appear before Commissioner Enforcement on 4.5.2000, who shall decide the same within 20 days till 24.5.2000. Disposed of in the aforesaid terms.