Law: Companies Ordinance, 1984

Section: 227,229

Companies Ordinance (XLVII of 1984)--- ----Ss. 227 229---Employees' provident funds and securities---Penalty---Scope---Trustees of the appellant (Trust) were imposed upon penalties for having breached the provisions of S. 227 of the Companies Ordinance, 1984, by maintaining huge amount of funds in the form of cash and cash equivalent whereas they were bound to deposit the fund amount in the special savings account---Validity---Trust had breached the provisions of S. 227 of the Companies Ordinance, 1984 by maintaining substantial amount of funds in the form of cash and cash equivalent when they were duty bound to deposit the fund amount in the special savings account---Contention of appellant that the violation was unintentional and that all funds were subsequently deposited in the Bank had no merit as no evidence was provided to that effect---Impugned order was upheld. ORDER This Order is passed in the matter of Appeal No. 13 of 2019 filed under section 33 of the Securities and Exchange Commission of Pakistan (Commission) Act, 1997 (SECP Act) against the order (Impugned Order) dated 16/01/19 passed by the Executive Director, Corporate Supervision Department (Respondent). 2. The brief facts of the case are that examination of the annual audited accounts of Zahidjee Textile Mills Limited (Company) for the year ended 30/06/16 (Accounts) revealed that the Company had a provident fund balance of Rs. 86.634 million. The Company vide letter dated 07/09/17 provided a copy of the certificate which showed that balance of the provident fund as on 30/06/16 is Rs. 82.616 million and the amount was with the Trustees (Trustees) of Zahidjee Textile Mills Limited Provident Fund Trust (Appellant) in the form of cash and cash equivalent. Subsequently, the Company, vide its letter dated 16/02/18, provided the breakup of Rs 82.616 million reflecting that Rs. 17.826 million was held in cash and Rs. 30.705 million was kept in the form of prize bonds. In view of the aforesaid information provided by the Company, the Trustees of the Appellant were prima facie found in violation of provisions of section 227(2) of the Companies Ordinance, 1984 (Ordinance) by not depositing provident fund…

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