IHC Dismisses Petition against Appointment of Independent Directors in a Listed Company

IHC Dismisses Petition against Appointment of Independent Directors of a Listed Company:

This week, Justice Babar Sattar of the Islamabad High Court dismissed a writ petition wherein the petitioner had challenged the elections of independent directors of the Security Papers Limited (SPL), a subsidiary of the State Bank. The petitioners had alleged that the candidates, amongst them Secretary Commerce and CEO of a public sector insurance company, were ineligible to become independent directors. The petitioner alleged that the respondent candidates were either in service of Pakistan or they were employees of a public sector company. In this meaning, they were not independent directors.

The Court suspended the notification of the elections and resultantly the  elections were halted.

However, on the next date of hearing, when all of the parties were present in the court, the Court was apprised by the counsels of the respondents that the petitioner, who was also one of the candidates for the said elections, himself was not eligible to be independent director: he was also in service of a public limited company.  His argument was self-defeating. The Court also held that the principal jurisdiction for assailing appointment of directors is the companies court under Section 166 of the Companies Act, 2017.  The Court observed that the petition seemed to be part of an effort to circumvent the jurisdiction of the companies court by filing a writ petition; this was not appropriate because the legal maxim: that which cannot be done directly cannot be done indirectly as well.

3 Lacs Cost Imposed on the Petitioner

The Court taking this ground along with others into account dismissed the petition along with cost of 300000/PKR, which shall be paid by the petitioner to the respondent No. 4, the S.P.L.

Two of the respondents,  9 and 12, were represented by our Partners, Mr Umer Ijaz Gilani and Mr. Jahanzaib Durrani respectively. The principal respondent, Securities Papers was represented by Dr. Tariq Hassan and Barrister Ummar Ziauddin.

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