Nishat Raffiq & Ors. (Appellant) VS Securities & Exchange Commission (Respondent)

ORDER SHEET

Judgment Sheet

IN THE HIGH COURT OF

SINDH AT KARACHI

Misc. Appeal No. 01 of 2009

Before :

Mr. Justice Nadeem Akhtar

Justice Mrs. Kausar Sultana Hussain

Appellants : Nishat Rafiq, Mohammad Naeem, Syed Fayyaz

Mazhar, Fida Hussain Samoo, Sikandar Khalil

Mangal, Walid Zafar Ahsan and Zareen Ashfaq

through Shaikh Javed Mir, Advocate.

Respondents 1 & 2 : Securities and Exchange Commission of Pakistan

and Tahir Mahmood, Executive Director

(Enforcement) SECP through Mr. Furqan Ali,

Advocate.

Respondent No.3 : Federation of Pakistan, through Secretary

Ministry of Commerce, called absent.

Dates of hearing : 22.11.2018, 29.11.2018 and 11.12.2018

J U D G M E N T

NADEEM AKHTAR, J. – This appeal is directed against order dated 24.02.2009 passed by respondent No.2 / Executive Director (Enforcement) of Securities & Exchange Commission of Pakistan (‘SECP’) under Sections 74, 86 and 492 read with Sections 476 and 498 of the Companies Ordinance, 1984, (‘the Ordinance’) and Rule 11 of the Companies (Issue of Capital) Rules, 1996. Through the impugned order, following fines and penalty were imposed on the appellants in their personal capacity who were Chief Executive and Directors of Union Insurance Company of Pakistan Limited at the relevant time, with direction to deposit the same within thirty (30) days :

(i)Fine of Rs.5,000.00 on each of the appellants under Section 74(2) of the Ordinance for contravening the provisions of Section 74(1) of the Ordinance ;

(ii)Fine of Rs.125,000.00 on each of the appellants under Section 498 of the Ordinance for violating Section 86 of the Ordinance ; and

(iii)Penalty of Rs.150,000.00 on each of the appellants for making misstatement punishable under Section 492 of the Ordinance.

2.It is contended by learned counsel for the appellants that they are not pressing this appeal to the extent of the fine and penalty imposed under Sections 74 and 492 of the Ordinance, and that they will be pressing the appeal only to the extent of the fine imposed on them by respondents 1 and 2 under Section 498 of the Ordinance. It is further contended that a fine under Section 498 can be imposed only in cases where no other penalty or punishment is provided in the Ordinance. He submitted that since fine and penalty were not only provided under Sections 74 and 492, but were also imposed upon the appellants, the imposition of fine under Section 498 was unjustified and as such is liable to be set aside.

3.At the very outset, learned counsel for respondents 1 and 2 submitted that this appeal, which has been filed under Section 485 of the Ordinance, is not maintainable under the said Section as well as under Section 33 of the Securities and Exchange Commission of Pakistan Act, 1997 (‘the SECP Act’). According to him, if the appellants were aggrieved with the impugned order they ought to have filed an appeal before the Appellate Bench of SECP. It was urged by him that in view of the above position, this Court does not have jurisdiction to entertain or decide the instant appeal.

4.We have heard learned counsel for the parties at considerable length and have also examined the material available on record. For the purposes of this appeal, Section 485 of the Ordinance and Section 33 of the SECP Act are relevant and as such the same are reproduced here for the sake of convenience and ready reference :

SECTION

485 OF THE ORDINANCE :

“485. Appeals against orders etc. – (1) Any person aggrieved by an original order, directive or judgment of the Commission or the Federal Government, other than an order, directive or judgment passed on a revision or review application may, within thirty days thereof, as an alternative to making an application for revision or review to the Commission or the Federal Government, as the case may be, prefer an appeal to the High Court within whose jurisdiction the order, directive or judgment is passed :

Provided that no appeal under sub-section (1) shall lie from an order which does not dispose of the entire case before the Commission or the Federal Government, as the case may be, or an order against which an appeal lies before the Appellate Bench of the Commission.

SECTION

33 OF THE SECP ACT :

“33. Appeal to the Appellate Bench of the Commission. –

(1)Except as otherwise provided any person aggrieved by an order of the Commission passed by one Commissioner or an officer authorized in this behalf by the Commission, may within thirty days of the order, prefer an appeal to an Appellate Bench of the Commission constituted under sub-section (2).

Provided that no appeal shall lie against ----

(a)an administrative direction given by a Commissioner or an officer of the Commission ;

(b)an order passed in exercise of the power of revision or review ;

(c)a sanction provided or decision made by a Commissioner or an officer of the Commission to commence legal proceedings ; and

(d)an interim order which does not dispose of the entire matter.

(3A) .........

5.On our query that an appeal under Section 33 of the SECP Act lies to the Appellate Bench of SECP only if the order impugned is passed by one Commissioner or an officer authorized in this behalf by SECP whereas the order impugned herein was passed by Executive Director (Enforcement) of SECP, learned counsel for respondents 1 and 2 placed reliance on Notification No.S.R.O.1061(I)/2005 dated 18.10.2005 issued by SECP regarding delegation of its powers and functions to its Commissioners. He invited our attention to serial No.27 of item No.2 mentioned in the above Notification regarding the powers delegated by SECP to its Executive Director (Enforcement Department) which reads as follows :

S.No.

Relevant Section of the Companies Ordinance, 1984

Nature of power / function

476(1)(c)

To impose a fine (other than fine in addition to, or in lieu of imprisonment) as provided for any offence, contravention of, or default in complying with provisions of the Companies Ordinance, 1984, applicable to matters of listed companies allocated to Enforcement Department and/or which fall within the jurisdiction of Executive Director through delegation of powers.

6.Under Sub-Section (1) of Section 485 of the Ordinance, no appeal shall lie to the High Court from an order against which an appeal lies before the Appellate Bench of SECP ; and, Sub-Section (1) of Section 33 of the SECP Act provides that any person aggrieved by an order of SECP passed by one Commissioner or an officer authorized in this behalf by SECP may within 30 days of the order prefer an appeal to the Appellate Bench of SECP constituted under Sub-Section (2) of Section 33 ibid. In the proviso to the said Sub-Section (1), such cases are enumerated that are not appealable before the Appellate Bench of SECP. It may be noted that the case of the appellants does not fall in any of the cases enumerated in the proviso to the said Sub-Section (1). The above provisions of law as well as the Notification issued by SECP authorizing its Executive Director (Enforcement Department) to impose fine etc. clearly show that appeal against the impugned order passed by the Executive Director (Enforcement) / respondent No.2 ought to have been filed before the Appellate Bench of SECP ; and, in view of the bar contained in Sub-Section (1) of Section 485 of the Ordinance, the present appeal is not maintainable.

7.In view of the above, this appeal and listed application are dismissed with no order as to costs.

J U D G E

J

U D G E