2010 PLP 1214 (CLD)
SERVICE FABRICS LIMITED and 7 others — Appellants Versus DIRECTOR (ENFORCEMENT) — Respondent
| Citation | 2010 PLP 1214 (CLD) |
| Forum / Court | Securities and Exchange Commission of Pakistan |
| Bench Members | N/A |
| Parties | SERVICE FABRICS LIMITED and 7 others — Appellants Versus DIRECTOR (ENFORCEMENT) — Respondent |
| Primary Law | Companies Ordinance (XLVII of 1984) |
Q1: What are the key laws and sections cited in 2010 PLP 1214 (CLD)?
This judgment primarily cites: Companies Ordinance (XLVII of 1984) as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 2010 PLP 1214 (CLD)?
The case was heard and decided by the Securities and Exchange Commission of Pakistan bench comprising: N/A.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 2010 PLP 1214 (CLD) (SERVICE FABRICS LIMITED and 7 others — Appellants Versus DIRECTOR (ENFORCEMENT) — Respondent). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Headnotes / Summary
S. 158
Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33
Failure to hold Annual General Meetings
Appeal to the Appellate Bench of the Commission
Company which under the provisions of S.158(1) of the Companies Ordinance, 1984, was required to hold its Annual General Meetings within specified period, having failed to hold such meetings, penalties were imposed on Chief Executive and Directors of the company in terms of S.158(4) of the Companies Ordinance, 1984
Representative of the company admitted the default for non-holding of Annual General Meetings and pleaded before Appellate Bench that lenient view could be taken by reducing the penalties
Representative informed the Appellate Bench that the company had ceased its operation and was in the process of voluntarily winding-up and that the company had no assets and that in such circumstances it could not pay the penalties to the Commission
Failure of the company to hold Annual General Meeting, had deprived the shareholders of their statutory right to receive the Annual audited account of the company
Transmission of timely, adequate and meaningful information to the investors/shareholders, was essential for conducting the affairs of the company; and non-holding of the Meetings had deprived the investors/shareholders from participating in matters such as approval of accounts, appointment of auditors and election of Directors
Company made repetitive default which had shown that the act of not holding the Annual General Meetings, was wilful
Commissioner had already taken a lenient view by not imposing the maximum penalty on the Directors of the company
Penalties had been imposed on the Chief Executive and Directors in their personal capacity and they were directed to deposit the penalties from their own resources and not from the coffers of the company
Penalty to the extent of deceased Director was set aside and other Directors were directed to deposit the fine within 15 days.
Judgment & Decree
S. TARIQ ASAF HUSAIN, COMMISSIONER (LD).
This order shall dispose of Appeal No.60-E, 60-F, 60-G of 2006 filed under section 33 of the Securities and Exchange Commission of Pakistan (the "Commission") Act, 1997 against:-- (a) the order dated 7-6-2004 passed by the respondent (Appeal No.60-E). (b) the order dated 29-6-2005 passed by the respondent (Appeal No.60-F). (c) the order dated 24-3-2006 passed by the respondent (Appeal No.60-G). Collectively referred to as "Impugned Orders".
2. In terms of the provisions of section 158(1) of the Companies Ordinance, 1984 (the "Ordinance"), Service Fabrics Limited (the "Company") was required to hold its Annual General Meetings ("AGMs") for the year ended 30-9-2003 on or before 31-1-2004; for the year ended 30-9-2004 on or before 31-1-2005 and for the year ended 30-6-2005 on or before 31-10-2005 respectively. The failure of the company to hold the AGMs necessitated action against the company and its directors in terms of section 158(4) of the Ordinance.
3. Show-cause notices ("SCNs") were issued to the appellants under section 158(4) read with section 476 of the Ordinance. The appellants failed to respond to the SCNs. The appellants' representative, however, appeared before the respondent on the date of hearing and was heard. The respondent, dissatisfied with response of the appellants, passed the Impugned Orders and imposed penalties on the appellants in the following manner:-- In Rupees Sr.No. Penalty imposed on Order dated 7-6-2004 Order dated 29-6-2005 Order dated 24-3-2006 Total Penalties
1. Messrs Service Fabrics Limited 25,000 20,000 45,000
2. Farooq Hameed, Chief Executive 20,000 25,000 20,000 65,000
3. Muhammad Hameed, Director 25,000 20,000 45,000
4. Ijaz Hameed, Director 25,000 20,000 45,000
5. Aamer Hameed, Director 25,000 20,000 45,000
6. Tariq Hameed, Director 25,000 20,000 45,000
7. Sajid Salim Minhas, Director 25,000 20,000 45,000
8. Muhammad Salim, Director 25,000 20,000 45,000
4. The appellants have preferred the instant appeals against the Impugned Orders. The appellants were represented by Muhammad Pervaiz Tahir (the "representative"). The representative at the outset admitted the defaults for non-holding of the AGMs and pleaded that lenient view may be taken by reducing the penalties. The representative informed the Appellate Bench (the "Bench") that the company ceased its operations in the year, 2004 and is in the process of voluntarily winding up. It was argued that the Company has no assets and under the present circumstances cannot pay the penalties to the Commission. The representative informed the Bench that one of the Appellants namely Muhammad Salim has passed away in the year, 2008.
5. The departmental representative argued that the Commission has already taken a lenient view by imposing lesser penalties as compared to the maximum penalty of Rs.50,000 each for each default provided under section 158 of the Ordinance. The appellants failed to hold the AGMs and deprived the shareholders from receiving the audited annual accounts of the Company. It was argued that the Impugned Orders should, therefore, be upheld.
6. We have heard the parties and have perused the record. The appellants failed to hold the AGMs which deprived the shareholders of their statutory right to receive the annual audited accounts of the Company. Transmission of timely, adequate and meaningful information to the investors/ shareholders is essential for conducting the affairs of the company and non-holding of AGMs deprive the investors/ shareholders from participating in matters such as approval of accounts, appointment of auditors and election of Directors. The company made repetitive default which shows that the act of not holding the AGMs was wilful. The respondent has already taken a lenient view by not imposing the maximum penalty on the appellants. We have been informed that one of the appellants namely Muhammad Salim has passed away in year, 2008. The penalties have been imposed on the Chief Executive and Directors in their personal capacity and they are directed to deposit the penalties from their own resources and not from the coffers of the Company.
7. In view of the above, the penalty to the extent of Muhammad Salim is being set aside. The other appellants are directed to deposit the fine within (15) days of receipt of this order. H.B.T./38/SEC Order accordingl