KARACHI, May 28: A division bench of the Sindh High Court has dismissed in limine a government appeal against the Single Judge judgment of April 16, 1999, in Suit No 1448/1999 which pertained to interpretation of section 21 of the Modarba Ordinance.

The bench, comprising the Chief Justice of the Sindh High Court, Justice Saiyed Saeed Ashhad, and Justice Ghulam Rabbani, also held that “There is no doubt that the law has very clearly given the right to the Registrar to institute such inquiry but, when giving such notice for inquiry, it is necessary for the Registrar to inform the company sought to be investigated into as to what is the purposes of that inquiry.”

The appeal was filed by the Registrar of the Modarba Companies and Modarbas and the Corporate Law Authority, against the judgment in favour of A. R. T. Modarba Management (Pvt) Ltd.

The suit was filed by the respondents, A. R. T. Modarba Management, seeking a declaration that the impugned orders of October 29 and 31, 1998, passed under section 21 of the Modarba Ordinance, were illegal, mala fide, and void and in violation of the rules of natural justice and the constitution.

Represented by counsel Abid Zuberi, they had also sought permanent injunction against the defendants and persons acting under or through them, restraining them from conducting any inquiry in respect of them and the first and second Tri-Star Modarbas in terms of the impugned orders dated October 29, 1998, and/or taking any adverse or coercive action against the plaintiff and the Modarbas.

They had also sought suspension of the two orders during the pendency of the suit.

The Single Judge, while disposing of the suit, had held that it was in fact an inquiry to investigate into those irregularities. Indeed the defendant No 1 had very candidly in their written statement as well as the counter-affidavit had stated that they were involved in the exercise of digging out information.

If this was the purpose, then it would have been only proper for them to inform the plaintiffs that the inquiry that they had instituted was to investigate into those circumstances so that the plaintiff could be forewarned.

He had observed that in a society like ours where the government functionaries are given to high-handedness generally an apprehension grips an organisation whenever they are subjected to an inquiry by the executive.

The order had said it was now well established that the executive could not conduct a roving inquiry to find out something to condemn the subject of the inquiry. The judge had referred to PLD 1992 SC 485.

“The inquiry ought to be into certain specified circumstances of which the subject of the inquiry must be aware.”

It is obvious that the law-makers did not intend that any notice for this inquiry be given and thus no notice rather prior notice for such inquiry to be conducted was necessary. But what was definitely necessary was that the subject of the inquiry must be informed as to what was the inquiry about.

The Single Judge was of the view that such intimation would be in accord with the principles of natural justice and its absence violative of the said principles. My findings in respect of this issue, therefore, are in the negative in terms of the discussion above.

The question had arisen as to what relief could the plaintiffs claim, consequent upon the issuance of the impugned letters. It was clear that the impugned letters themselves were lawful inasmuch as the Registrar had full authority to institute such inquiry. But it was only the format of the letter instituting the inquiry which was contrary to the principles of natural justice.

It was therefore held that the letters for inquiry in the format that they were written, were not in accord with the principle of natural justice and to that extent these were unlawful and without any legal effect. However, it was held that the appellants/defendants were within their rights to serve a fresh letter describing therein as to what was the purpose of the inquiry.

The division bench held that a bare perusal of the impugned judgment revealed that the Single Judge had come to the conclusion that the orders dated 29. 10. 1998 and 31. 10. 1998 issued by appellant No 1/defendant No 1 were in violation of the principle of natural justice as the purpose of the aforesaid two orders was to conduct a roving inquiry to find out something wrong in the establishment of the respondents to condemn them.

Relying on the pronouncement of the Supreme Court in the case of Assistant Director, Intelligence and investigation Vs M/s B. R. Herman & Others, reported in PLD 1992 SC 485, it was further observed that the inquiry ought to be into certain specified circumstances of which the subject of the inquiry must be aware.

Upon the above discussion the bench held that instead of filing the suit and the present appeal on disposal of the suit on above terms, the respondents ought to have based a fresh order for an inquiry stating therein the purpose for which the inquiry was to be conducted so as to enable the respondents to permit itself to face the inquiry.