Law:

Section:

Modaraba Companies and Modaraba (Floatation and Control) Ordinance (XXXI of 1980)------- --------S. 10-------Companies Ordinanc47,CLVII of 1984), Ss. 496 & 503------- .Issuance of guarantees by Modaraba company to its clients conducting ultra vires business-------Imposition of penalty-------Appellant/Modaraba company had issued guarantees to, its clients, without any enabling provision of the prospectus-------Stance of the appellant having been found to be unsatisfactory, penalty of fine Rs.25,000 on each of the Directors of the appellant company was imposed------- Validity-------Section 10 of Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980, had provided that no Modaraba would be a business against Islamic Injunctions; and the Religious Board had to certify in writing that the Modaraba was not a business opposed to Injunctions of 'Islam before Registrar could permit the floatation of such Modaraba------- Issuance of guarantees, was also a business, which had not been allowed by the Religious Board-------Appellants, in the present case, had undertaken ultra vires business by allowing said guarantees in violation of S.496 of the Companies Ordinance, 1984-------Since the issuance of guarantees, was not specifically allowed through the prospectus, it could not be deemed to have been allowed; and express approval from the Registrar in terms of'S.10 of Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980, was required-------Penalty was rightly imposed on the appellants; and no reason existed to interfere with the impugned order. THIS ORDER PASSED BY: TAHIR MAHMOOD, COMMISSIONER (CLD):--------------- This order is in Appeal No. 23 of 2014 filed under section 33 of the Securities and Exchange Commission of Pakistan Act, 1997 by above stated Appellants against the order dated 03/04/2014 (the "Impugned Order") passed by the Respondent. 2. The brief facts of the case are that IBL Modaraba Management (Pvt.) Limited is the management company of First IBL Modaraba (the "Modaraba Company") and during off-site examination of the quarterly accounts of the Modaraba for the quarter ending 31/03/13, it was observed that in violation…

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