2026 PLP 749 (CLD)

ARBAB MUHAMMAD TAHIR, J.

The appellants through the instant Intra Court Appeal in terms of section 3(2) of the Law Reforms Ordinance, 1972 (hereinafter Ordinance ), impugn judgment, dated 12.08.2025 passed by the learned Single Judge whereby W.P. No.2105/2025 titld Crescent Bahuman Limited and another v. Securities and Exchange Commission of Pakistan and others was allowed and the show-cause notice dated 14.04.2025 issued by the Securities and Exchange Commission of Pakistan (hereinafter Commission ) was set-aside as void ab initio. The show-cause notice was challenged by respondents Nos.4 and 5 on the ground that the same matter was pending adjudication before the learned Lahore High Court in Company Petition No.34548/2024 filed under sections 286 and 287 of the Companies Act, 2017 (hereinafter Act of 2017 ) by the present appellants.

2. At the outset, learned counsel for the respondents has raised objection on the maintainability of the instant Intra Court Appeal on the ground that the law applicable in the instant case is the Act of 2017 provides the right of appeal under section 480 thereof to an aggrieved person against any order before the appropriate appellate forum. Further that the proceedings pursuant to the show-cause notice were to culminate in an order, which for the purposes of the section 480 of the Act of 2017 ought to have been an appealable order. He has, therefore, argued that the instant appeal is not maintainable in view of the proviso to subsection (2) of section 3 of the Ordinance. Reliance has been placed on the case of National Bank of Pakistan through President and another v. Muhammad Adeel and others (2024 SCMR 982), International Islamic University, Islamabad through Rector and another v. Syed Naveed Altaf and others (2024 SCMR 472), JS Bank Limited, Karachi and others v. Province of Punjab through Secretary Food, Lahore and others (2021 SCMR 1617), Mst. Karim Bibi and others v. Hussain Bakhsh and another (PLD 1984 SC 344), Technical Education and Vocational Training Authority through Chief Executive Officer v. Muhammad Arshad and another (PLD 2023 Lahore 241), Liaqat Ali v. District Collector, Gujrat and 4 others (2022 MLD 1195 Lahore), Zahid Idrees Mufti v. Deputy Commissioner, Capital Development Authority and 2 others (2021 MLD 1909 Islamabad), Dr. Aftab Hassan Minhas v. National Council for Homeopathy through Registrar/Secretary and 3 others (2015 PLC (C.S.) 991).

3. Conversely, learned counsel for the appellants has argued that the instant Intra Court Appeal is maintainable as the appellant has impugned the judgment passed by the learned Single Judge on other legal, inter alia, misinterpretation sections 256 and 257 of the Act of 2017. It has further been argued that the proceedings pursuant to issuance of the show-cause notice stood terminated as a result of the impugned judgment, therefore, the question of appeal under section 480 of the Act of 2017 does not arise. Reliance has been placed on the cases of Rehm Dad v. Province of Punjab through Chief Secretary, Lahore and others (PLD 2024 SC 499), Federal Board of Revenue through Chairman, Islamabad and others v. Messrs Hub Power Company Ltd. and others (PLD 2023 SC 207), Federal Board of Revenue through Chairman, Islamabad and others v. Abdul Ghani and another (2021 SCMR 1154).

4. Learned counsel have been heard and the record perused with their able assistance.

5. Before adverting to the question of maintainability, it is essential to examine, in detail, the statutory scheme envisaged under the Act of 2017, particularly the mechanism set in motion upon initiation of proceedings under section 256 thereof, so as to ascertain the nature of such proceedings and the stage at which they culminate.

6. Section 256 of Act of 2017 contemplates the initiation of proceedings upon an application seeking an investigation into the affairs of a company on the grounds enumerated therein. Upon receipt of such application, the Commission is required to apply its mind to the allegations and form a prima facie opinion as to whether the circumstances warrant further inquiry. At this stage, in order to comply with the mandate of due process and the principles of natural justice, the Commission proceeds to issue a show-cause notice to the company, its directors, or other concerned persons, calling upon them to explain as to why an investigation should not be ordered.

7. The issuance of a show-pcause notice under section 256 of the Act of 2017 is thus merely the commencement of a quasi-judicial process. The person to whom the show-cause notice is issued, is afforded an opportunity to submit a detailed reply, along with supporting material, in rebuttal of the allegations. The Commission may also afford an opportunity of personal hearing, and is empowered to call for further information or documents as it may deem necessary. This stage is inherently adjudicatory in nature, as the Commission is required to objectively assess the material placed before it.

8. Upon consideration of the reply and the record, the Commission proceeds to form an opinion under section 257 of the Act of 2017. This provision empowers the Commission, if it is satisfied that there are circumstances suggesting that the business of the company is being conducted with intent to defraud, or in a manner oppressive to its members, or otherwise in a manner warranting investigation, to order an investigation into the affairs of the company and to appoint one or more inspectors for the said purpose. Conversely, if no sufficient grounds are made out, the Commission may decline to proceed further, bringing the proceedings to a close at that stage. The order passed under section 257, therefore, constitutes the first substantive determination of the rights and obligations of the parties.

9. Where the Commission decides to order an investigation, the matter enters the investigative phase, governed by the subsequent provisions of the Act. The inspectors so appointed exercise statutory powers to conduct a comprehensive inquiry into the affairs of the company. In terms of sections 258 to 263 of the Act of 2017, the inspectors are empowered, inter alia, to call for and examine books of account and other records, to require the production of documents, to examine officers and other persons on oath, and to extend the investigation to related bodies corporate where necessary. These provisions confer wide-ranging powers to ensure that the investigation is effective and meaningful.

10. Upon completion of the investigation, the inspectors are required to submit a report to the Commission in terms of section 264 of the Act of 2017. The report may be interim or final, depending upon the nature and progress of the investigation, and contains the findings of the inspectors with regard to any irregularities, misconduct, fraud, or other actionable matters discovered during the course of the inquiry. The submission of the inspectors report does not conclude the proceedings. Rather, it triggers the next stage of statutory action. The Commission is empowered to take appropriate measures on the basis of the report, including, but not limited to, initiating prosecution against delinquent persons, applying to the Court for appropriate relief, or issuing such directions as may be necessary to regulate the affairs of the company.

11. It is, therefore, evident that the show-cause notice issued under section 256 of the Act of 2017 is the preliminary step in a continuous statutory process. The proceedings do not attain finality at that stage; rather, they culminate in a formal order passed by the Commission either under section 257 of the Act of 2017, or under the subsequent enforcement and adjudication provisions, after completion of investigation and consideration of the inspectors report. Significantly, the Act of 2017 provides a comprehensive appellate mechanism against such orders. Section 480 of the Act expressly confers a right of appeal upon any person aggrieved by an order of the Commission made under the Act. The appellate forum is vested with the jurisdiction to examine the legality, propriety, and correctness of the order so passed. The existence of this statutory remedy manifests the legislative intent that all grievances arising out of proceedings initiated under sections 256 and 257, and the consequential actions taken thereunder, are to be addressed within the four corners of the Act of 2017. It thus becomes clear that the proceedings initiated under section 256 of the Act of 2017 are part of a structured and continuous statutory mechanism, which necessarily culminates in an appealable order under section 480 thereof.

12. Subsection (2) of section 3 of the Ordinance, provides that an appeal shall lie to a Bench of two or more Judges of a High Court from an order made by a Single Judge of that Court under clause (1) of Article 199 of the Constitution of the Islamic Republic of Pakistan, not being an order made under sub-paragraph (i) of paragraph (b) of that clause. The Proviso to subsection (2) of section 3 of the Ordinance of 1972 provides that the appeal referred to in subsection (2) of section 3 shall not be available or competent if the application brought before the High Court under Article 199 arises out of any proceedings in which the law applicable provided for at least one appeal or one revision or one review to any court, tribunal or authority against the original order.

13. It is necessary to examine the meaning and scope of the expression proceedings , as employed in the proviso to subsection (2) of section 3 of the Ordinance. The referred term has not been defined in the Ordinance; however, it has been authoritatively interpreted by the august Supreme Court in Mst. Karim Bibi and others v. Hussain Bakhsh and another (PLD 1984 SC 344). In the said judgment, the august Supreme Court approved the following definition: The term proceedings is a very comprehensive term, and, generally speaking, means a prescribed course of action for enforcing a legal right, and hence it necessarily embraces the requisite steps by which judicial action is invoked. A proceeding would include every step taken towards the further progress of a cause in Court or before a Tribunal, where it may be pending. It is the step towards the objective to be achieved, say for instance the judgment in a pending suit. The proceeding commences with the first step by which the machinery of the law is put into motion in order to take cognizance of the case. It is indeed a comprehensive expression and includes all possible steps in the action under the law, from its commencement to the execution of the judgment.

14. The above definition clearly demonstrates that proceedings is not confined to a particular stage, order, or forum. Rather, it denotes the entire course of action prescribed by law, commencing from the initial invocation of jurisdiction and continuing through all subsequent steps taken in furtherance of the cause. It was further explained that the expression refers to proceedings taken under a statute which provides a structured mechanism for enforcement of rights, typically involving a hierarchy of authorities. In this context, it was observed that The reference is clearly to the proceedings taken under any statute which prescribes a hierarchy of officers or authorities for the carrying into effect the purposes of such statute including the enforcement of rights, if any, created thereunder.

15. It is, therefore, obvious that proceedings encompass all stages under the statute, including the initial action, intermediate steps, and subsequent remedies such as appeal, revision, or review. Each of these stages is merely a step in the same proceedings and not an independent or separate proceeding. It, therefore, commences with the first step whereby the machinery of law is set in motion, such as the filing of an application, and continues until the matter is finally concluded. All intermediary stages are integral parts of the same proceedings, being steps towards achieving the ultimate objective contemplated by the law.

16. In Karim Bibi s case, the august Supreme Court held that the test laid down by the legislature under the proviso is that if the law applicable to the proceedings from which the Constitutional Petition arises provides for at least one appeal against the original order, then no appeal would be competent from the order of a Single Judge in the constitutional jurisdiction to a Bench of two or more Judges of the High Court . The expression original order has also been interpreted in the referred judgment. It was further held that the requirement of availability of an appeal under the law applicable is not in relation to the impugned order in the constitutional petition, which may be the order passed by the lowest officer or authority in the hierarchy or any order passed by higher authorities in appeal, revision or review.

17. The august Supreme Court in the recent judgment in the case of National Bank of Pakistan through President and another v. Muhammad Adeel and others (2024 SCMR 982) has held that the proviso to subsection (2) of section 3 of the Ordinance is proceedings specific and not parties specific. For the sake of convenience the relevant portion is reproduced below.- The main test to determine whether an ICA is available under the proviso to Section 3(2) of the Ordinance is to see whether the proceedings, in which the original order has been passed, provide for an appeal, revision or review (collectively referred to as "appeal," for convenience) to any Court, Tribunal or authority against the original order. Applying this test what needs to be seen and verified is whether the proceedings provided for an appeal against the original order and not whether parties to the proceedings enjoyed the right to appeal against the original order. The proviso under Section 3(2) of the Ordinance is proceedings specific and not parties specific. So it matters less if one of the parties to the proceedings is not entitled to right of appeal against the original order passed in the said proceedings. See Karim Bibi v. Hussain Bakhsh (PLD 1984 SC 344) and Muhammad Abdullah v. Deputy Settlement Commissioner, Centre-I, Lahore (PLD 1985 SC 107). (Emphasis supplied) Reliance is also placed on the law enunciated in the cases of International Islamic University, Islamabad through Rector and another v. Syed Naveed Altaf and others (2024 SCMR 472).

18. In the instant case, the proceedings, within the meaning of the proviso to subsection (2) of section 3 of the Ordinance commenced with the filing of an application and issuance of show-cause notice under section 256 of the Act of 2017. Such proceedings were, in law, to culminate in an order to be passed by the Commission in exercise of its statutory jurisdiction under the Act, determining the rights and liabilities of the parties. Against such order, an express remedy of appeal is provided under section 480 of the Act of 2017. Therefore, the proceedings in question are those in which the law applicable provides for at least one appeal against the original or culminating order. In terms of the settled principle laid down by the august Supreme Court in Mst. Karim Bibi s case, it is the availability of an appeal within the statutory proceedings that attracts the bar, irrespective of the nature of the interlocutory action/order impugned in the constitutional petition. Consequently, the bar contained in the proviso to subsection (2) of section 3 of the Ordinance is attracted to the instant case. Consequently, the instant Intra Court Appeal is not maintainable and is, accordingly, dismissed leaving the parties to bear their own costs. UN/26/Isl Appeal dismissed.