Law: Companies Ordinance, 1984

Section: 188

(a) Companies Ordinance (XLVII of 1984)--Ss. 188(1)(b), 209, 265, 305 & 309---Application for Scrutiny of accounts of company through an Auditor/Chartered Accountant,---Serious allegations of embezzlement and misappropriation of company's funds against respondents---Respondents' plea that company was not in a financial position to afford another audit as prayed for---Validity---Company being a family concern of both parties being shareholders thereof--Serious disputes regarding accounts existed between the parties---According to respondent-Director, company was not in a good financial position---Case of investigation through an Inspector was made out from material available on record--Scrutiny of accounts of company for disputed period would not be harmful in such circumstances---High Court directed Security and Exchange Commission of Pakistan to appoint a competent Chartered Accountant/Auditor as Inspector to- investigate affairs of company regarding its accounts for disputed period and submit a detailed report thereon within specified time. PLD 1965 SC 221; PLD 1997 Kar. 376; 1988 CLC 1955; 2005 CLD 463; 1982 SCMR 494 and PLD 2006 SC 328 ref. (b) Companies Ordinance (XLVII of 1984)--- ----S.265--Investigation into affairs of company through an Inspector--Scope---Court before passing an order under S.265 of Companies Ordinance, 1984 would neither hold a full fledged inquiry in the form of a trial nor record formal evidence, but would decide such matter after following summary procedure provided under S.9 thereof---Principles. In proceedings under section 265 of Companies Ordinance, 1984, full-fledged inquiry in the form of a trial is not required to be held nor is any formal evidence to be recorded before passing an order under section 265 of the Ordinance. The court has to only satisfy itself prima facie, of course, on the material placed before it that a case for investigation through an Inspector is called for, it is the Inspector to ascertain and determine the truth or otherwise of the allegations during the investigation to be conducted by him, whereafter he has to submit report to the concerned authority. The matter in fact rests in the discretion of…

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