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November 19, 2019

SHC orders forensic audit of private health facility

Karachi

November 19, 2019

The Sindh High Court on Monday appointed an official assignee as the commissioner to carry out a forensic audit of a private medical centre of the last five years through any four big audit firms.

The direction came on an application of Dr Mohammad Imran Qureshi and others seeking winding up of the National Medical Centre and its forensic audit, claiming that operations and management of the medical centre were being conducted in violation of the articles and memorandum of association of the company.

A counsel for the petitioners submitted that they have 33 per cent shares of the health facility, which is one of the major private medical centres in the city registered under the company law. The counsel alleged that other shareholders were running the company in an oppressive manner without fulfilling the legal and statutory requirements as contemplated under the law.

He submitted that no meeting of the board of directors was held in the last 10 years and similarly no shareholders’ meeting was held. The high court was informed that the health facility’s directors had not prepared and filed any annual reports and no audited accounts were finalised in the last 10 years and the petitioners had no control over any such affairs of the company.

He submitted that the company despite making huge profits was not paying proper dividends to the petitioners whereas to avoid documentation, transactions were being carried out in cash. The counsel requested the SHC to order a forensic audit of the accounts of the company.

A counsel for the respondents contended that the company was a fully operational, functional and profit-making entity and was being run in accordance with the relevant rules and regulations according to its articles of association. The respondents submitted that the company had a clear operational record of nearly last two decades amply establishing the fact that the medical centre’s affairs were being run in a professional manner.

They submitted that the petitioners had miserably failed to bring on record any material to substantiate their allegations and maintained that the affairs of the company were being governed by its board of directors, the board meetings are convened and all the parties on the board are jointly responsible for the decisions made with respect to the company.

A single bench of the SHC comprising Justice Mohammad Junaid Ghaffar, after hearing the arguments, observed that a case has been made out by the petitioners at least to the grant of prayer for the audit of the company’s accounts and such exercise will not cause any prejudice to any of the parties and it would rather fulfil the requirements of law.

The high court appointed an official assignee as the commissioner to carry out a forensic audit of the National Medical Centre through any of the four big auditor companies for the period from July 1, 2014 to June 30, 2019. The court observed that the chief executive, secretary as well as chartered accountants and accountants of the company shall assist the commissioner and auditors in all manners as may be necessary and any obstacle and hindrance on their part shall be view as contempt of court’s orders and the audit of the company shall be carried out preferably within a period of 90 days.

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