justice delayed 038

Justice delayed & wrongdoers’ profitability

A recent five-member judgment of the Supreme Court has settled an important question of Pakistani company law. It has also exposed a deeper weakness in our justice system: even when fraud is ultimately defeated, the victim may receive no meaningful compensation for the years consumed in recovering what was unlawfully taken.

In Abdul Razzaq v Registrar of Companies, Securities and Exchange Commission of Pakistan and others, Civil Appeal No. 125 of 2025, decided on April 22, 2026, the Court held that the passage of time could not protect a fraudulent entry in a company’s register of members.

The ruling affirms Naila Naeem Younus v Indus Services Limited (2022 SCMR 1171), under which a petition for rectification of the register under section 126 of the Companies Act, 2017 is not barred by limitation where shares have been taken through fraud.

The decision is legally compelling. The register of members determines who owns shares, receives dividends, votes at meetings and exercises corporate control. A fraudulent alteration is therefore not a technical defect. It can amount to stealing ownership through manipulation of the company’s official record.

The Court has rightly refused to allow deception to become title merely because it remained concealed for several years. Fraud is usually designed to remain undiscovered. Applying a rigid limitation period in favour of the person concealing it would reward the very conduct that the law is meant to prevent.

The judgment also resolves the uncertainty arising from Bentonite Pakistan Limited v Bankers Equity Limited (2023 SCMR 1353), in which observations had suggested that Article 181 of the Limitation Act could apply to company-law proceedings. The larger bench has clarified that a rectification petition is not an “application” governed by that provision.

This doctrinal clarity is welcome. The harder question is what justice means after the fraud has lasted for years.

A person fraudulently deprived of shares may lose dividends, voting rights, managerial control and participation in rights or bonus issues. The wrongdoer may meanwhile control the company, use its assets and finance the litigation from benefits derived through the disputed shareholding.

After 10 or 20 years, an order restoring the shares may correct the register. It does not necessarily compensate the victim.

This problem extends far beyond company law. In Pakistan, fraudulent possession and prolonged litigation often operate together. Land, inheritance, commercial assets and corporate rights are appropriated through false documents or manipulated records.

Once challenged, the beneficiary denies everything, seeks adjournments, produces further documents and carries the matter through every available forum.

Delay becomes a business strategy. The wrongdoer retains the asset while the victim pays to recover it. Even after losing, the wrongdoer may be required only to return property that never lawfully belonged to him. Nominal costs do little to alter this calculation.

A rational legal system must ensure that fraud and frivolous litigation are economically unattractive. Otherwise, the expected gain from wrongdoing remains greater than its expected cost.

Pakistan needs to move towards a genuine cost-based justice system. This does not mean obstructing access to courts or punishing honest litigants who fail to prove a bona fide claim. It means distinguishing genuine disputes from proceedings maintained through deliberate falsehood, concealment, forged documents or tactical delay.

The Code of Civil Procedure, 1908 provides for costs, and the federal Costs of Litigation Act, 2017 recognises actual, adjournment and special costs in specified circumstances. The larger principle should be applied far more effectively: an innocent litigant should not be forced to finance the other side’s abuse of judicial process. Where fraud is established, courts should ordinarily consider restoration of all benefits obtained from the disputed property, interest for the period of deprivation, realistic legal expenses and enhanced costs where false or vexatious pleas prolonged the case.

In corporate cases, this could include an account of dividends, bonus and rights shares, remuneration obtained through control, and other measurable benefits flowing from the fraudulent entry. Section 126(4) also permits referral of fraudulent conduct for proceedings under section 127. Such referrals should be made where the evidence warrants them.

The constitutional dimension should not be ignored. Article 10A of the Constitution guarantees fair trial and due process, while Articles 23 and 24 protect property. A right restored after decades, without compensation for its prolonged deprivation, is only partially vindicated.

The Supreme Court has correctly ruled that fraud cannot shelter behind the calendar. Our jurisprudence must now adopt the accompanying principle that fraud cannot profit from the judicial calendar either.

Justice must do more than correct an entry after years of litigation. It must remove the financial benefit of wrongdoing, compensate the victim as far as reasonably possible and impose realistic costs on those who misuse courts to preserve the proceeds of fraud. Only then will delayed justice cease to be an investment for the wrongdoer.

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Dr. Ikramul Haq, Advocate Supreme Court, Adjunct Faculty at Lahore University of Management Sciences (LUMS), member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE), holds an LLD in tax laws. He was full-time journalist from 1979 to 1984 with Viewpoint and Dawn. He also served Civil Services of Pakistan from 1984 to 1996.

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The PM’s Youth Business & Agriculture Loan Scheme duly represents the Federal Government’s commitment to ensure entrepreneurship-led growth. Through provision of interest-free and low-markup financing, the scheme is enabling young Pakistanis to establish their own businesses, expand agricultural ventures, launch startups, and become employers. This is an ongoing initiative which has demonstrated quite significant impact, as till now Rs 365.5 billion have been disbursed to over 625,740 borrowers, which has contributed to the creation of nearly 1.96 million jobs. It is pertinent to mention here that while it is hoped that funds will be allocated for the continuation of the scheme during financial year 2026-27 in an impressive and progressive manner, thereby further strengthening entrepreneurship, small and medium enterprises (SMEs), agriculture, and innovation, quite appreciably a 25 percent quota has been reserved for women to ensure that young women also have equal access to financing and economic opportunities. The PM’s Youth Laptop Scheme is also an ongoing initiative under which six lakh laptops have so far been distributed among talented students across Pakistan. Under its Phase-IV, another one lakh laptops are being distributed. In the next phase, PM’s Chromebooks will be distributed to students nationwide, including those hailing from underserved and grassroots communities, in order to further enhance digital learning opportunities. Digital transformation is a key priority of the Federal Government’s youth development agenda. The PM’s Digital Youth Hub is Pakistan’s first national youth platform for connecting young people with opportunities across the PM’s Youth Programmes and the 4Es Framework, including education, employment, scholarships, internships, entrepreneurship, and technology. With already more than 800,000 registered users, over 16 million downloads, and over 114,000 job listings, the platform is ensuring transparent and merit-based opportunities. Sports development is another priority of the Federal Government. More than 300,000 young athletes have already so far participated in the PM’s Youth Talent Identification activities. The Federal Government is expanding sports disciplines from 12 to 23 while also establishing professional facilities. The approval of Pakistan’s first National E-Sports Policy in the very near future will further open opportunities in the rapidly growing global digital entertainment industry. Furthermore, the National Youth Employment Policy aims to create sustainable employment opportunities for Pakistan’s youth, including 32.4 million NEET (Not in Education, Employment, or Training) youth, by aligning skills development with market demands and high-growth sectors. The policy commendably focuses on youth entrepreneurship, workforce readiness, digital skills, and expanding access to decent employment opportunities, with a target of achieving 100 percent absorption of new labour-force entrants by 2030 and also increasing female labour force participation to 35 percent. Further, the National Adolescent & Youth Policy empowers Pakistan’s youth aged 10-29 years through education, skills development, employment, health, and social inclusion. The policy has been developed through consultations with 50/60 thousand youth across 40+ cities and provides a framework for youth development and nation-building.

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