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S. ZAFAR SHAH vs SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN Ss — 2022 CLD 164 LAHORE-HIGH-COURT-LAHORE

Case information

Citation
2022 CLD 164 LAHORE-HIGH-COURT-LAHORE
Court
Lahore High Court
Year
2022
Reporter
CLD
Parties
S. ZAFAR SHAH vs SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN Ss
Subject matter
Criminal
Provisions referred to
S. 34---C; S. 249---A; S. 255; Pakistan Act (XLII of 1997); Companies Act (XIX of 2017); Companies Ordinance; Companies Act

Fields are extracted from the reported citation and judgment text. Where a detail is not stated in the record, it is not shown.

Judgment text as reported

S. ZAFAR SHAH VS SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN Ss. 255 & 260---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S. 34---Companies Act (XIX of 2017) S. 249---Audit of companies---Duties of auditor---Penalty for non-compliance with provisions by auditors---Violation of International Standard on Auditing ("ISA")---Scope---Appellant accounting firm impugned order of Securities and Exchange Commission of Pakistan (SECP) whereby show-cause notice was issued to it and subsequently penalty was imposed on it by holding that appellant committed violations of S. 255 of Companies Ordinance, 1984 and ISA, while conducting audit of a company---Contention of appellant, inter alia, was that show-cause notice was not issued with lawful authority as SECP was not regulator for the appellant and could not hold it to account for auditing standards and alleged ISA violations---Validity---Auditors report must violate provisions of the Companies Ordinance, 1984 for SECP to exercise jurisdiction over it and impose penalty---Section 234 obligated auditors to follow International Accounting Standards however, no provision existed in Companies Ordinance, 1984 dealing with auditing standards, and a provision dealing with such auditing standards was only inserted in Companies Act, 2017---Appellant was therefore justified in asserting that SECP had no jurisdiction/authority to impose penalty on account of its alleged failure to observe provisions of ISA, as at relevant time, Companies Ordinance, 1984 did not contain any provision for enforcing such auditing standards---Proceedings against appellant were therefore nullity in eye of law and were set aside---Appeal was allowed, accordingly.

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