Copyright brecorder
ISLAMABAD: The Appellant Bench of the Securities and Exchange Commission of Pakistan (SECP) has dismissed an appeal filed by an insurance company against issuance of showcause notice as well as inspection and inquiry conducted against a company. A two-member bench of the SECP ruled that the order has disposed of Appeal No. 80 of 2021 filed by SPI Insurance Company Limited (the “Appellant”) under Section 33 of the Securities and Exchange Commission of Pakistan Act, 1997 (the “SECP Act”) against the order dated March 19, 2021 (the “Impugned Order”). The SECP Appellate Bench has finally issued the order in favour of the SECP where the company has allegedly overstated premium revenue and understated its claimed expenses, resulting in overstatements. The SECP order revealed that the Respondent departments including SECP vehemently denied the allegation levelled against it regarding the conduct of an indiscriminate and roving enquiry against it regarding the conduct of an indiscriminate. The bench ruled that the Respondent (SECP/ Adjudication department) further contended that it was, in fact, the Appellant company who, under various pretexts, repeatedly sought deferments, thereby causing substantial delays in the submission of complete and requisite information to the inspection team. It was further stated that after issuance of the Inspection Order, the Appellant continued to evade the inspection proceedings for a period extending to almost two years. The inspection team was eventually able to undertake the first on-site visit to the Appellant’s premises and subsequently conducted a total of seven visits, culmination with the final visit. Accordingly, the Respondent asserted that any delay in the finalization of the inspection findings is solely attributable to the Appellant and not to any inaction or lapse on part of the Commission or its inspection team while also submitting that complete record was still not provided to the inspection team. With regard to the objection of the Appellant, regarding the sub-delegation of the powers by an officer of the Commission, the Respondent stated that the appointment of the inspection team is a matter of due procedure adopted to carry out the “order of the inspection” in its true spirit, while asserting that the appointment of the inspection team by Shahid Nasim (Executive Director, Specialized Companies Division) vide the Inspection Order was rightly exercised in terms of the powers delegated to him by the Commission vide the Notification. The Respondent stated that, such appointment cannot in any manner be construed as an impermissible sub-delegation of powers. The respondent (SECP) further submitted that the issuance of a warning in respect of a particular instance of non-compliance, identified as part of the composite findings arising out of the inspection, cannot, in any manner whatsoever, be construed as amounting to closure or settlement of the entire set of findings. It was further contended that the issuance of the SCN was duly warranted on the basis of the inspection team’s observations, and that there exists no legal prohibition or bar precluding the Respondent from initiating such proceedings and that the principles of double jeopardy do not apply to the matter at hand. The SECP Bench has heard the arguments of both parties and perused the record along with the relevant legal provisions. At the outset, the Bench notes that the Appellant has preferred this appeal primarily on technical grounds concerning the manner in which the inspection was conducted, the alleged sub-delegation of powers by the officer, and the contention that the issuance of a show-cause notice was impermissible following the issuance of a warning letter. While the appellant has denied the violations established against it in the Impugned Order, such denials were devoid of any cogent legal arguments to substantiate the position, accordingly, the Bench is inclined to decide the matter strictly within the ambit of the grounds raised in the appeal and the arguments presented by the parties. The Bench is also of the considered view that the principle of double jeopardy is not applicable to the facts and circumstances of the present case. Upon careful examination of the record and hearing the arguments of both parties, it is evident that the Warning Letter issued to the Appellant addressed a specific and limited set of non-compliances observed during the inspection. In contrast, the SCN issued thereafter pertains to a distinctly separate set of violations and findings that were identified and documented by the inspection team as part of their comprehensive review. The issuance of the SCN was, therefore, not a reiteration or repetition of the matters covered in the Warning Letter, but rather an initiation of formal proceedings with respect to additional breaches. Consequently, the Appellant cannot be said to have been subjected to multiple proceedings or penalized twice for the same offence. Copyright Business Recorder, 2025
