1989 PLP 2103 (CLC)

SALEEM AKHTAR, J.‑‑On 6‑8‑1985 respondent No.1 filed a complaint before respondent No.2 under section 233(6) of the Companies Ordinance 1984 alleging that the petitioner and its directors having failed to file annual accounts have defaulted in compliance with the provisions of section 233 of the said Ordinance. This complaint was directed against petitioner No.2 and Hameed-ud-din who are the Directors of the petitioner No.1 and had failed to file annual accounts for the financial year ending 30‑9‑1983 within the prescribed time of six months. As petitioner No.2 had gone out of Pakistan since August 1984 notice could not be served upon him. However, Hamced-ud-din appeared before respondent No.2 and submitted an application praying that personal attendance of petitioner No.2 may be excused. On 12‑12‑1985 the Advocate for the petitioner No.2 applied for extension of time for filing objections. The case was adjourned by respondent No.2 but he insisted on personal‑attendance of petitioner No.2. On 20‑1‑1986 when the Advocate for the petitioner No.2 again applied for adjournment as the petitioner No.2 was abroad, the respondent No.2 issued non bailable warrant against him. The petitioners then filed this petition challenging the proceedings before respondent No.2. It has been alleged that the petitioner No.2 has nothing to do with the calling of the meeting or submissions of annual accounts. The main ground for challenging the prosecution is that the alleged offence relates to the financial year ending 30‑9‑1983 when Companies Act 1913 was in force and provided a fine of Rs.50 only under section 32(5) of the said Act. Therefore, on promulgation of Companies Ordinance 1984 the petitioner No.2 could not be prosecuted under the said Ordinance which provided higher punishment for the same offence. In nutshell the petitioner's contention is that the penal provision of the Companies Ordinance 1984 cannot be enforced with retrospective effect and the proceeding initiated by the respondents offends against Fundamental Right embodied in Article 12 of the Constitution. Originally the petition was filed by petitioner No.1 but subsequently the petitioner No.2 was joined as a party. In the counter‑affidavit filed on behalf of respondent No.1 it was pleaded that the petitioners were mandatorily required under section 233(1) of the said Ordinance to hold annual general meeting on or before 30th March, 1984. The 10th Annual General Meeting was held on 30th September, 1984 wherein the Annual Account was passed and the same was submitted with the Registrar after a delay of six months. This delay was in contravention of section 233 of the said Ordinance. The petitioners had not filed any application for extension of period for filing annual account. Respondent No.l, therefore, filed the complaint under section 233(6) read with section 476(4) of the Companies Ordinance 1984 praying that petitioner No.2 be punished in accordance with law. This complaint was filed before the District and Sessions Judge Hyderabad, the respondent No.2, who issued non‑bailable warrant against the petitioner No.2 as he had failed to appear. Mr. Shahanshah Hussain, the learned counsel for the petitioners, contended that the action taken by the respondents is in violation of the Fundamental Right conferred on the petitioners. According to the learned counsel the default, if any, was committed while the Companies Act 1913 was applicable. Subsequently on the promulgation of Companies Ordinance 1984 for similar default a higher punishment than the one provided by Companies Act was provided. The learned counsel further contended that the petitioner had not committed any offence under the Companies Ordinance but the offence if any was committed under the provisions of the Companies Act 1913 and, therefore, prosecution under the Companies Ordinance is without jurisdiction. Fundamental Rights as embodied in Articles 9 to 28 find a unique and supreme place in the Constitution. Article 8 guarantees that any law, custom or usage having force of I law in so far it is inconsistent with the Fundamental Rights be void to the extent of inconsistency. The sanctity of the Fundamental Rights has been maintained by providing under Article 8(2) that the State shall not make any law which curtails or takes away any Fundamental Rights and any law so made shall to the extent of inconsistency be void. It is pertinent to note that for purposes of Part 11 of the Constitution dealing with "Fundamental Rights and Principles of Policy" special meaning to the word `State' has been given. It covers Federal Government, Majlis‑s‑Shoora (Parliament), a Provincial Government, Provincial Assembly, and such local or other authorities which are empowered under law to impose any tax or cess. The definition of State is wide and all embracing to include the Federal and Provincial Government, Legislative organs from Majlis‑e‑Shoora which includes National Assembly and Senate to the lowest conceivable authority which is empowered to impose tax or cess. Thus restraint has been placed on their legislative power. In order to ensure its observance a declaration has been given that all laws to the extent of inconsistency will be void and no law shall be made in violation of Fundamental Rights but if it is made then to the extent of inconsistency with any Fundamental Right it shall be void and inoperative. The Fundamental Rights are "beyond the reach of the State including Government and Legislature". 1t may be noticed that while defining State for Part II of the Constitution two organs viz. Executive and Legislature have been included but no reference has been made to the Judiciary. The reasons are obvious. The apprehended breach is always from the Executive and Legislature and not from Judiciary whose role is to enforce the Fundamental Rights and judicially review legislation. Reference can be made to State of Punjab v. Ajaib Singh AIR 1953 SC 101 and Ratilal v. State of Bombay AIR 1953 Bom

242. In the present case Article 12 is attracted which reads as follows:‑ 12.‑‑(1) No law shall authorize the punishment of a person‑‑ (a) for an act or omission that was not punishable by law at the time of the act or omission; or (b) for an offence by a penalty greater than, or of a kind different from, the penalty prescribed by law for that offence at the time the offence was committed. (2) Nothing in clause (1) or in Article 270 shall apply to any law‑making acts of abrogation or subversion of a Constitution in force in Pakistan at any time since the twenty‑thrill day of March, one thousand nine hundred and fifty‑six, an offence." Broadly speaking Article 12 prohibits convictions or sentences under ex post facto laws or a higher punishment than permissible under the law at the time of commission of the offence. This concept is not a new phenomena in the Constitution guaranteeing Fundamental Rights which is analogous to the recognition of Human Rights as set out in Article 11(2) of the United Nations Universal Declaration of Human Rights, section 9(3) of the U.S.A. Constitution Article 20 of the Constitution of India and similar provisions in many other Constitutions of various countries. In Government of India Act 1935 no such provision was enacted. The principles embodied in Article 12 can be found in the judicial pronouncements of Justice Chase of the Supreme Court of U.S.A. in the well‑known case of Calder v. Bull (1793) 3 Dallas 386 and Justice Willis in the celebrated case of Philips v. Eyere (1870) 6 OB 1 Article 12 prohibits making an act a crime for the first time and giving it retrospective effect and further prohibits imposing higher penalty or inflicting greater punishment than what could be imposed or inflicted at the time of the offence. Any law raising the penalty for an existing offence cannot have retrospective effect. We have to consider whether the proceeding against petitioner No.2 is i hit by Article

12. Article 12(a) provides protection against retrospective punishment. No person can be inflicted with punishment in respect of an act or omission which was not punishable at the time he committed or omitted to act. A law which provides punishment for an act which was not an offence at the time of commission of the act is a retrospective law which governs the past acts. Such retrospective laws affect and impair vested rights imposing new punishment or obligation. They are made to disturb the existing rights and conditions of the past. In order to bring the law within the ambit of Article 12 it should be penal in nature imposing punishment. Maintaining the same spirit Article 12(b) contemplates a different situation. A person guilty of an offence cannot be punished by a penalty greater than the penalty provided at the time of commission of the offence. In Farid Khan v. State P L D 1965 Pesh 31 the petitioner was convicted for transportation for life which at that time meant a total rigorous imprisonment of 20 years without any condition that he had to undergo ten years substantive imprisonment. Under new instructions it was provided that a convict has to undergo ten years substantive imprisonment and remission was limited to four years. While referring to clause (b) of Fundamental Right No.4 of the Constitution of Pakistan (1962) it was held:‑‑ "It is clear that clause (b) of Fundamental Right No.4 on which reliance has been placed by Doctor Abdul Rahim does not apply in terms in the present case, for there is no question here of imposing a greater penalty on the petitioners than was prescribed by law at the time the offence was committed. The penalty prescribed by law for the offences committed by the petitioners remains the same. At the same time, however, we agree that if the new instructions have the effect of keeping a prisoner in custody for an aggregate period of more than 20 years, including remission, then it can be said that in practical effect the punishment imposed upon him has become greater than was prescribed at the time he committed the offence. This aspect of the matter is particularly clear from the case of the prisoner in Writ Petition No.467 of 1963. As already stated, this convict has completed an aggregate period of more than 20 years, including remissions, and he would have been entitled to be released on the completion of 20 years, if the memorandum of the 22nd of May, 1961 had not prescribed a new condition, namely, that of substantive imprisonment for ten years. The result is that this prisoner is being compelled to undergo a longer sentence in the aggregate than was prescribed at the time he committed the offence, or was convicted. This result seems to us to be clearly against the spirit, if not the terms of the right embodied in clause (b) of Fundamental Right No.4 granted by the Constitution. In the matter of the liberty of the subject it is the duty of the Courts to ensure that not only the letter of the law but also its spirit is observed. We must, therefore, hold that the instructions embodied in the memorandum of the 22nd of May, 1961 cannot be allowed to be operated retrospectively in a manner so as to authorize the detention of a 'lifer' for an aggregate period, including remissions, of more than 20 years." In Mohari Lal v. Corporation of Calcutta AIR 1953 Cal 561 the petitioner was prosecuted under the Calcutta Municipality Act 1923 but under a later new Municipal Act greater penalty was levied. This was held to offend Article 20(1) of the Constitution of India and was struck down. In the light of these principles we will now examine the prosecution initiated against the petitioners. It is an admitted position that 10th Annual General Meeting of the Company was held on 30th September, 1984 instead of on 30‑3‑1984 and annual account was filed six months after the due date. The Companies Ordinance 1984 was promulgated on 8‑10‑1984. Before that the Companies Act 1913 was in operation. Therefore when the default was committed by the petitioners the Companies Act 1913 was applicable and the u Companies Ordinance 1984 was not in existence. Under the Companies Act 1913 the omission to file annual accounts within time was a default within the meaning of section 134 of the Act liable to a fine of Rs.50 as provided by Section 32(5) of the Act. Under the Companies Ordinance 1984 Section 233 corresponds with Section 134 of the Act. Non‑compliance with the provision of Section 233 is visited with penalty as provided by Section 230(7) of the Ordinance which reads as follows: 230 ......... (1) . (a) . (b) . (c) . (d) . (2) . (3) . (4) . (5) . (6) . (7) If a company fails to comply with any of the requirements of this section, every director, including chief executive and chief accountant, of the company who has knowingly by his act or omission been the cause of such default shall‑‑ (a) in respect of a listed company, be punishable with imprisonment for a term which may extend to one year and with fine which shall not be less than ten thousand rupees nor more than twenty thousand rupees, and with a further fine which may extend to two thousand rupees for every day after the first during which the default continues; and (b) In respect of any other company, be punishable with imprisonment for a term which may extend to six months and with fine which may extend to five thousand rupees. Explanation.‑‑ The term `chief accountant' shall include the chief accountant or any other person, by whatever name called, who is charged with the responsibility of maintenance of books of accounts of the company." It is patently clear that the punishment now being imposed for an offence) committed prior to promulgation of the Companies Ordinance 1984 is greater than the penalty which would have been inflicted at the time of default. The punishment under section 230(7) of the Ordinance is different and higher than the one provided under the Act. Therefore such a provision of the Companies Ordinance could not be made applicable retrospectively in respect of an offence or default committed under the Companies Act. Mr. Anwar Mansoor the learned counsel for the respondents has referred to section 508 of the Ordinance which reads as follows:

508. Repeal of laws and savings.‑‑ (1) The laws mentioned in the Seventh Schedule shall stand repealed to the extent specified in the fourth column thereof from the date of coming into force of this Ordinance: Provided that (i) .......... (ii) any document referring to any former law relating to companies shall be construed as referring to the corresponding provision of this Ordinance. (iii) .. (iv) Where any offence has been committed under any former law relating to companies, proceedings may be taken under this Ordinance in respect of such offence after the commencement of this Ordinance, in the same manner as if the offence had been committed under the corresponding provision of this Ordinance. (2) The mention of particular matters in this section or in any other section of this Ordinance shall not prejudice the general application of section 6 of the General Clauses Act, 1897 (X of 1897), with regard to the effect of repeals." This hardly saves the situation. Section 508 (ii) and (iv) permits prosecution of a person under the Ordinance in respect of offence commuted under the provision of the Companies Act. As discussed above for offences under the Act, larger and different penalty has been provided under the Ordinance. Therefore the complaint filed against the petitioner No.2 and Hameeduddin before the respondent No.l violates the provisions of Article

12. In response to the notice issued to the Attorney‑General Mr. M. Zahiruddin Khan, Advocate, has appeared and is of the view that the action taken against petitioner No.2 offends Article

12. We therefore declare that the complaint filed by respondent No.1 against petitioner No.2 and Hameeduddin and all proceedings taken in persuance thereof by respondent No.2 violate the provisions of Article 12 and are struck down. The petition is allowed. AA./T‑60/K Petition accepted.