| Case ID |
23095bf1-6e1b-4c8c-9731-f608e6126793 |
| Body |
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| Case Number |
W.P. No. 57647 of 2019 |
| Decision Date |
Nov 11, 2019 |
| Hearing Date |
|
| Decision |
The Lahore High Court directed the Securities and Exchange Commission of Pakistan (SECP) to register the charge of any other financial institution and the security documents of Alarabiya Sugar Mills Ltd under Sections 100, 105, and 448 of the Companies Act, 2017, in accordance with Regulations 4 and 18 of the Companies (General Provisions and Forms) Regulations, 2018. This decision was made with the concurrence of both the National Accountability Bureau (NAB) and the petitioner-company. The court emphasized the necessity for the SECP to comply with the legal requirements, allowing the petitioner to secure necessary financing from Bank Alfalah Limited, especially given the urgent commencement of the sugarcane crushing season on November 4, 2019. The constitutional petition was thus disposed of, ensuring that the petitioner-company could proceed with its financial arrangements without further legal impediments. |
| Summary |
In the landmark case W.P. No. 57647 of 2019, adjudicated by the Lahore High Court on November 11, 2019, Alarabiya Sugar Mills Ltd sought judicial intervention against the Securities and Exchange Commission of Pakistan (SECP) and others. The petitioner aimed to register a charge of a financial institution and associated security documents under the Companies Act, 2017, specifically Sections 100, 105, and 448, aligned with Regulations 4 and 18 of the Companies (General Provisions and Forms) Regulations, 2018. However, the SECP had placed the registration on hold due to concerns raised by the National Accountability Bureau (NAB) under Section 23 of the National Accountability Ordinance, 1999, which cautioned against the transfer of the company's properties and shareholdings amidst ongoing inquiries into the company's directors and shareholders.
The petitioner-company argued that the SECP's inaction was hindering its ability to secure critical financing from Bank Alfalah Limited, which was imperative for the commencement of the sugarcane crushing season starting November 4, 2019. Represented by prominent lawyers Salman Aslam Butt, Muhammad Shoaib Rashid, and Ahmed Raza, the petitioner contended that the caution imposed by NAB should not obstruct the company's financial transactions essential for its operations.
On the respondent's side, represented by Ruman Bilal, SECP justified the hold by referencing a letter from NAB dated July 17, 2019, which directed the SECP to mark caution on the company's property transfers due to ongoing inquiries. The legal discourse delved into whether criminal proceedings or inquiries against a company's directors or shareholders should impede the rights of the shareholders and whether such cautions on share transfers effectively amount to a transfer of shareholdings, potentially violating the NAB Ordinance.
After extensive deliberations and framing of several constitutional moot points addressing the interplay between the Companies Act and the NAB Ordinance, the Lahore High Court, led by Justice Jawad Hassan, concluded that with the concurrence of both the petitioner-company and NAB, the SECP should proceed with the registration of the charge as initially requested. The court emphasized the need for SECP officials to adhere to legal mandates, thereby enabling the petitioner to finalize its financial arrangements without further delays. This decision underscored the court's role in balancing regulatory compliance with the practical business needs of companies, ensuring that legal obstacles do not unnecessarily impede economic activities. The swift resolution was particularly crucial given the time-sensitive nature of the sugarcane crushing season, highlighting the court's commitment to facilitating timely justice in commercial disputes. This case serves as a significant precedent in delineating the boundaries between corporate regulatory bodies and accountability agencies, ensuring that companies can operate effectively while adhering to legal frameworks aimed at maintaining integrity and accountability in the corporate sector. |
| Court |
Lahore High Court
|
| Entities Involved |
National Accountability Bureau,
Securities and Exchange Commission of Pakistan,
Alarabiya Sugar Mills Ltd
|
| Judges |
Jawad Hassan
|
| Lawyers |
Salman Aslam Butt,
Muhammad Shoaib Rashid,
Ahmed Raza,
Ruman Bilal
|
| Petitioners |
Alarabiya Sugar Mills Ltd
|
| Respondents |
Others,
Securities and Exchange Commission of Pakistan
|
| Citations |
2020 SLD 916 = 2020 CLD 748
|
| Other Citations |
Not available
|
| Laws Involved |
Companies Act, 2017,
National Accountability Ordinance, 1999
|
| Sections |
100,
23
|