Security clearance needed again on change of management: SHC

KARACHI: The Sindh High Court (SHC) on Friday dismissed Labaik’s petition against withdrawal of security clearance for induction of its four new directors including Axact Chairman Shoaib Ahmed Sheikh in Axact’s TV observing that security clearance on change of management at every stage was required under the law.
The court directed the Ministry of Interior to process the security clearance of the petitioner as per practice in vogue and once the security clearance was finalised either way, the Pemra would proceed in accordance with the law.
The court observed that in the case of Labaik Private Limited not only the majority of the shares in the paid-up capital of the company were sold out by the sponsor director but the control of the company itself was handed over to the new management and that too in clear violation of the section 30 of the Pemra Ordinance.
The court observed that as per Form A annual return of the petitioner company’s transfer of shares from sponsor directors was made on October 30, 2012 in favour of new management whereas request to the Pemra to allow change of management was made on March 25, 2013 and on this count alone the licence of the petitioner company was liable to be cancelled as provided in Rule 30 (d) of the Pemra Ordinance.
The court however set aside the Ministry of Information’s policy advice to Pemra regarding stoppage of the transmission of the Axact’s TV through any distribution network.SHC’s division bench headed by Justice Sajjad Ali Shah observed in the judgment on the Labaik petitions against withdrawal of security clearance that the legislature had vested the Pemra with powers to ensure that no broadcasting and licences were granted to a person who was not citizen or resident of Pakistan or to foreign company recognised under the foreign law or to a company whose majority of shares were owned and controlled by the foreign nationals or companies and transmission of the channel ensured the preservation of sovereignty, security and integrity of the country.
The court observed that foreign funded companies or persons should not be allowed access to mind of the people of the country or allowed to generate public opinion to suit their purposes as nation could be conquered without war if the minds of the people were conquered. For this reason, the court observed that even Pakistani national or local companies funded or sponsored by foreign funded organisation were not entitled to broadcasting and transmission licence under section 25 of the Pemra Ordinance and obtaining security clearance as required rule 9(5) of course was to carry out the purpose of the Pemra Ordinance 2002.
The court observed that there was no bar or probation on the trade or profession had been imposed by the government however what all required was security clearance, the antecedent of management and directors and the source of funds they would invest in such trade or profession which was one of the requirement of the Ordinance before giving them access to the minds of the people.
The court observed that petitioner’s counsel contention that once security clearance had obtained there was no requirement to obtain fresh clearance could not sustain under section 30 of the Pemra Ordinance as law contemplated security clearance of the management and not of the company. The court observed that on every change of shareholding of a company, the investment of existing management was taken out and new management made investment and at that juncture the authority had to ensure that the security clearance of the management was undertaken in order to find out the source of investment and security clearance at every change of management was required.
The court observed that Rule 30 (d) itself provides that authority had power to revoke or suspend the licence of broadcast media or distribution service in case where licensee was a company and its shareholders transferred a majority of shares in the issued or paid-up capital of the company or its control to person not being original shareholder of the company without written permission of the authority.
The court observed that in the case of Labaik private limited not only the majority of the shares in the paid-up capital of the company were sold out by the sponsor director but the control of the company itself was handed over to the new management and that too in clear violation of the section 30 of the Pemra Ordinance. The court observed that as per Form A annual return of the petitioner’s company transfer of shares from sponsor directors was made on October 30, 2012 in favour of new management whereas request to the Pemra to allow change of management was made on March 25, 2013 and on this count alone the licence of the petitioner company was liable to be cancelled as provided in Rule 30 (d) of the Pemra Ordinance.
The court observed that entire investment was made by the new management after the recalling of security clearance and there was no order whereby the petitioner’s licence for broadcasting and transmission had been recalled therefore it was still open for the new management to successfully run through the security clearance and might validly operate their business in accordance with the law.
It is pertinent to mention that SHC had reserved the judgment on petitions of Labaik private limited against withdrawal of NOC for Axact TV’s four directors and the policy advice of Ministry of Information to Pemra to ensure stoppage of Axact’s TV transmission.
Petitioners counsel had submitted that there was no requirement of security clearance under the Pemra laws for change of management. He submitted that Ministry of Information could not issue direction to Pemra for stoppage of the transmission of any TV channel expected the due process of the law.
Additional Attorney General Salman Talibuddin had submitted that Bol News and Bol Entertainment were entirely illegal companies under section 206 of the Companies Ordinance incorporated to run the Labaik private company.
He submitted that Shoaib Sheikh and other directors were inducted in the company in October 2012 as per details of SECP record where the Shoaib Sheikh was shown as CEO of the Labaik prior to filing application before Pemra for inclusion as new directors in the company which was illegal. The federal law officer submitted that at all stages there was requirement of Pemra to act keeping in mind the public interest and must scrutinise as to whom the management of channel was being handed over.
Pemra counsel Kashif Hanif submitted that under section 25 of the Pemra Ordinance the licence of channel could not be granted to foreign company or company whom shares were owned by foreign company. He submitted that NOC was given in haste without fulfilling the requirement and it was subsequently withdrawn by the competent authority. He submitted that security clearance was mandatory for issuance of TV licence or change in management and prayed court to dismiss the petitions.
Pakistan Broadcasters Association (PBA) counsel Behzad Haider submitted that in order to equal treatment of the law the petitioner company be directed to apply and obtain security clearance for its new owners and directors before commencing transmission of its TV channel. He submitted that in case the petitioner was granted or allowed to commence transmission of its channel without subjecting the petitioner to same level of scrutiny and security clearance as one through which applicants’ members had gone through, it would be discriminatory and unfair to PBA members.
The applicant counsel submitted that it was widely propagated by the petitioners that their security clearance was withdrawn on instigation of PBA and its TV broadcaster members as they were rival to them despite the fact that security clearance was withdrawn by the Ministry of Interior on non-completion of required legal process.