Companies Ordinance: section 242 mandates a firm to file accounts in 30 days: SECP

The Securities and Exchange Commission of Pakistan (SECP) has ruled that Section 242 of the Companies Ordinance mandates a company to file accounts along with required documents and reports with the registrar within 30 days from the date of the general meeting.
While deciding a case of a spinning mill, SECP Appellate Bench-IV comprising Fida Hussain Samoo Commissioner Insurance and Zafar Abdullah Commissioner SCD, stated that section 242 of the ordinance mandates the company of filing accounts along with required documents and reports with the registrar within 30 days from the date of the general meeting and if the filing provision is violated by any company then it should be dealt with the penal provision contained in sub section 4 of section 242 of the Ordinance.
Further, in view of the "Literal Rule" of statutory interpretation the section 744 of the Ordinance lays down the obligation of "issuing, circulating and publishing" the accounts along with different documents and reports. The words "issued, circulated or published" mentioned in the section are meant for the shareholders or the creditors of the company. Furthermore, section 244 of the Ordinance imposes certain penalty for violation of improper "issue, circulation and publication.
In view of the recognised interpretational rules, the provisions of Section 242 and Section 244 of the Ordinance are inter alia independent with respect to the filing, issue, circulation and publication perspectives under the Ordinance. Non-filing of the documents under Section 242 cannot he presumably considered a violation of Section 244 on the basis that since the documents have not been filed with the registrar; therefore, the same could not be treated as "issued, circulated or published" to or for the registrar. Therefore, the conclusion drawn by the Respondent (SECP) of the impugned order wherein he stated that "the Accounts of the Company filed under Section 242 of the Ordinance are deemed to have been 'issued, circulated and published" could not be accepted as intended statutory interpretation of the law.
In the light of discussion, SECP Appellate Bench was of the view that while deciding the issue related to section 242 of the Ordinance the respondent (department) has wrongly applied and interpreted section 244 as related provision of section 242. The Respondent's act to issues show cause notice (SCN) under section 242 and 244 read with 476 of the Ordinance was against the fundamental principles of justice and equity, wherein it has been envisaged that a person should be held liable only for the acts committed by him in violation of law. In view of the above discussion, this Bench believes that exercise of issuance of SCN which resulted into the impugned order was void ab initio therefore both could not be sustained.
In view of the aforesaid, the appeal is allowed and the SCN and the impugned order are hereby set aside being illegal and result of misinterpretation of law. Therefore, the case is remanded to the respondent and is directed to initiate fresh proceedings and adjudge the matter independently under Section 242, if any default has been committed by the company in compliance of section 242 of the Ordinance. The SECP Appellate Bench has allowed the appeal and show cause notice and impugned orders have been set aside being illegal as a result of interpretation of law.