Law:

Section:

Insurance Ordinance (XXXIX of 2000)-------Ss. 18, 21(5) & 156---Capital contribution by the shareholders' fund to statutory fund, distribution of---Revenue account statement of the participant 'Takaful Funds' of the company for the relevant period, depicted a transaction/contribution of Rs.10,000,000 from the fund to the Group Health of the company---Total amount of capital contributed by the shareholder's fund to the group family, amounting to Rs.8,403,282 was repaid back to the shareholders' fund of the company---No further capital contribution was available in the group family statutory fund to be distributed to another statutory fund of the company---Contribution of Rs.10,000,000 from the group family to the group health of the company, was not available, as there was no outstanding balance of the capital contribution available in the group family, which could have been distributed to another fund---Company had created a right of its own to set off the loss of one supplementary fund with the surplus of another, and that too, in contradiction with the provisions of S.18(1) of Insurance Ordinance, 2000 and S.21(5) thereof---Provisions of S.18(1) of Insurance Ordinance, 2000 required that the assets of a statutory fund should be used/consumed for expenditures of and within the bounds of that statutory fund---Any capital contribution by the shareholders' fund to any of the statutory fund had to be distributed, in the manner as stipulated under S.21(5) of the Insurance Ordinance, 2000--- If there was no capital contribution available in a particular statutory fund, then the assets/funds of that statutory fund could not be distributed to any other statutory fund, even to offset the deficit in such other statutory fund---Default of Ss.18(1) & 21(5) of Insurance Ordinance, 2000 was established as the company's group family had distributed an amount of Rs.10,000,000 to the company's group health over and above the capital contribution---Directors of the company were gauged against a higher standard of accountability which required them to be vigilant and perform their duties with due care, but in the present case the Directors had failed to do that---In view…

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