' This petition under section 305 of the Companies Ordinance, 1984 read with section 309 thereof has been preferred by the Registrar for seeking winding up of the defendant company, on the grounds that the company has defaulted in holding four consecutive annual general meetings, it has suspended its business for the last about ten years, that the company has failed to hold elections of Directors since 1997, the company is not maintaining its registered office at the notified address in terms of the Ordinance, it has failed to pay dividends to its shareholders and has not filed statutory returns besides it has failed to make mandatory compliances as required under the law. Accordingly, a show-cause notice dated June 13, 2003 in terms of section 309 of the Ordinance was issued to the respondent Company to appear before the Securities and Exchange Commission of Pakistan on July 1, 2003 at 10-00 a.m. However, no one appeared on behalf of the company on the said date. In view of the above mentioned circumstances, the Commission, vide order dated 1-7-2003 gave sanction to the petitioner to initiate the proceedings for Winding up of the respondent company. Hence this. Petition.
2. In response to notice, objections on behalf the respondent company were filed by Zakaria Ghani, the Chairman/Chief Executive of the Company.
3. It was stated in the objections that the respondent was not afforded an opportunity of being heard as the deponert was confined in Central Prison Karachi. It was further stated that the petition was incompetent for want of proper sanction of the "Authority" within the stipulated time, and that no prima facie case for winding up of the respondent company was made out. It was however admitted that the meetings of the company could not be held and that the returns could also not be filed. It was pleaded in the objections that authorization of the Commission to the Registrar was illegal and was granted without making proper investigation and without providing an opportunity of hearing to the respondent.
4. The arguments addressed by learned counsel for the parties were heard.
5. It was contended on behalf of the petitioners that the substratum of the company was lost, neither the annual general meetings of the company were held nor the election of the Directors could take place. Neither dividend was paid to the shareholders nor the statutory returns were filed.
It was further argued that despite issuance of Show-cause Notice neither a reply was submitted nor anyone from Company appeared before the Authority viz. Commission, on the given date and time. It was submitted that the petition was competently filed by authorization; and was substantiated by proper sanction of Authority.
6. Conversely, it was contended on behalf of respondent that the sanction by authority was improper, as neither the respondents were served with a show-cause notice nor they were provided an opportunity of hearing or making any representation. Thus the respondents were deprived of a fundamental right. - It was further contended that no investigation in the affairs of the company was got conducted.
7. The arguments rendered at the bar have been given due and proper consideration, and the material placed on the record has been examined.
8. Admittedly this petition has been filed for winding up of respondent company by pressing into service the provisions of section 309 of the Companies Ordinance 1984. Clause (b) of section 309 of the Ordinance postulates that the Registrar was not entitled to present a petition for winding up of the company unless such a prior sanction of Authority has been obtained in this behalf. As stipulated in the proviso below clause (01 of section 309 ibid no such sanction shall be given by the Authority unless the company has first been afforded an opportunity of making a representation and being heard.
9. On close examination of the petition it transpires that though a copy of show-cause notice dated June 13, 2003 purporting to have been served upon respondent company by Commissioner has been placed on record. But no proof of service thereof is available on record to show as to whether same was, in fact, served upon the respondent company. It is one of the allegation in the petition that the company does not have its registered office on the place mentioned in form 'A' furnished under section 156 of the Companies Ordinance. During the course of arguments also, learned counsel for the petitioner persistently pressed the above ground. Except a photostat copy of the show-cause notice, no material has been placed on record to substantiate service of notice.
10. In the given circumstances, more particularly due to specific denial of the respondents it could not be said with certainty that the statutory show-cause notice issued by the Commissioner was actually served upon respondent company. In view of lack of proof with regard to service of show- cause notice it could not be concluded that the respondents were afforded a meaningful opportunity of being heard or to move a representation before necessary sanction was granted to the Registrar.
11. Service of show-cause notice could not be ignored in the circumstances, where it attracts penal consequences, on the analogy of the well-settled principle that penal provisions are to be construed strictly.
12. Moreso, it has been repeatedly held that an authority vested with quasi-judicial authority connected with adjudication or determination of entitlement of rights of the citizens must be vigilant and conscious while exercising their powers. The case reported as Obedullah and 2 others v. Inspector General Frontier Crops, Quetta 1997 SCMR 1883 can be cited with convenience, if any reference is needed.
13. As abundantly evident, the Commission seems to have passed the order without ascertaining the fact of service or show-cause notice upon the respondents.
14. In that event order dated 1-7-2003 passed by the Authority whereby sanction was accorded to the Registrar for filing this petition for winding up was rendered void ab initio and a nullity.
15. Petition for winding up as prayed thus could not be granted in view of inherent infirmity as indicated herein above.
16. Be that as it may, while going through the objections filed by the respondents one cannot ignore the factum that the allegation /grounds urged and pressed for winding up of the company have not been substantially and satisfactorily rebutted.
17. Needless to emphasize that the purpose of service of show-cause notice is to bring to the knowledge of person concerned the violation and the acts of omission and commission alleged to have been committed by him. By participating in the instant proceedings the acts of omission and commission and violation of law allegedly committed by the respondents have been communicated to them. The show-cause notice, thus shall be deemed to have been served upon them.
18. The petitioner shall accordingly be required to submit a reply and may make a representation to the Commission within three weeks of the announcement of this order. The respondent company shall then be provided an opportunity of hearing by Authority viz. Commission and after considering all the aspects, it shall pass an appropriate order. However, if in case the Commission after considering the facts and circumstances was satisfied that the circumstances warranted for preferring a petition for winding up, it shall be required to pass necessary sanction orders within six weeks, after the receipt of reply of show-cause notice, if any, furnished by respondent and after providing opportunity of hearing to the responding company.
19. Present petition is disposed of in the above terms.