2010 PLP 72 (CLD)

TAHIR MAHMOOD, EXECUTIVE DIRECTOR (ENFORCEMENT).

This order shall dispose of the proceedings initiated against the Directors of Hamid Textile Mills Limited (hereinafter referred to as the ("Company") for default made in complying with the provisions of subsection (1) of section 245 of the Companies Ordinance, 1984 (the "Ordinance").

2. The facts leading to this case, briefly stated, are that in terms of the provisions of section 245 of the Ordinance, the Company was required to prepare and transmit to the members and simultaneously file with the Registrar and the Commission its quarterly accounts for the 1st quarter ended September 30, 2008, 2nd quarter ended December 31, 2008 and 3rd quarter ended March 31, 2009, within a period of one, two and one month of the close of said quarters i.e. by Oct. 31, 2008, Feb. 29, 2009 and April 30, 2009 respectively. The Company failed to file the afore-said quarterly accounts with the Commission till date. Consequently, show-cause notice ("SCN") dated March 13, 2009 and June 9, 2009 were served on all the Directors including the Chief Executive of the Company calling upon them to show cause as to why penalties as provided under subsection (3) of section 245 read with section 476 of the Ordinance may not be imposed on them for the afore-said contravention.

3. The reply of SCN was submitted by Company Secretary on behalf of all the Directors vide his letter dated June 2, 2009, in which it was narrated that Company will submit the quarterly accounts as soon as possible. 3(sic). In order to give an opportunity to the management of the company to clarify their position, a hearing was fixed on July 30, 2009. On the date of hearing Mr. Khawar Almas Khawaja-Chief Executive appeared before me on behalf of all the Directors to argue the case. During the course of hearing, while admitting the default he contended that due to change of management and delay of annual audit for financial year, 2008 the Company was not able to prepare quarterly accounts in time. He requested for taking a lenient view of the default.

4. I have gone through the record of the Company and have given due consideration to the submissions by the Chief Executive. However, I believe that closure of mill of the Company is not a cogent reason for non-submission of quarterly accounts to the shareholders. In such circumstances it becomes more important for the shareholders that they receive timely information about the affairs of the Company. It is the duty of the directors to ensure compliance with all the statutory requirements, furthermore, directors of the Company are responsible for timely preparation and circulation/ submission of quarterly accounts to its members, registrar and the commission. However, in the instant case the Directors have failed to prepare and file/circulate quarterly accounts within time. Thus the Directors have deprived the shareholders of their statutory right to receive the quarterly accounts in time. I am, therefore, constrained to believe that the Company and its directors including the Chief Executive have wilfully and deliberately committed the defaults in preparation, circulation and filing of afore-said quarterly accounts, which is established from the record.

5. Although the default is established, yet keeping in view an assurance by Chief Executive to submit quarterly accounts as soon as possible, I am inclined to take a lenient view in the matter and instead of imposing maximum fine of Rs.100,000 on every Director and a further fine of Rs.1,000 per day for the continuous default for each quarter, I impose a fine of Rs.100,000 (Rupees one hundred thousand only) on Mr. Khawar Almas Khawaja the Chief Executive of the Company only under subsection (3) of section 245 of the Ordinance, other directors are strictly warned to be careful in future. I hope that directors of the Company will react positively to this lenient view and ensure compliance with mandatory provisions of the Ordinance in future.

6. The Chief Executive of the Company is hereby directed to deposit the afore-said fine of Rs.100,000 (Rupees one hundred thousand only) in the designated Bank account maintained in the name of Securities and Exchange Commission of Pakistan with MCB Bank Limited within thirty days from the receipt of this order and furnish receipted vouchers or pay by a DD/pay order issued in the name of Commission for information and record, failing which proceedings under the Land Revenue Act, 1967 will be initiated which may result in the attachment and sale of movable and immovable property. It may also be noted that the said penalties are imposed on the Chief Executive in his personal capacity and he is required to pay the said amount from his personal resources. H.B.T./44/SEC Order accordingly.