KARACHI, Dec 15: The Sindh High Court issued on Monday notices to the Securities and Exchange Commission of Pakistan, National Clearing Company of Pakistan Limited (NCCPL) and Karachi, Lahore and Islamabad bourses in a petition moved by two ‘financier’ banks against SECP directives altering the terms of their contracts with the NCCPL to their detriment.

The petition, filed by the United Bank Limited and the IGI Investment Bank Limited, said the SECP arbitrarily issued directives on Oct 14 and Nov 12 amending with retrospective effect their agreements with the clearing company.

In his brief submissions before a division bench comprising Justices Khilji Arif Hussain and Syed Mahmood Alam Rizvi, Advocate Kazim Hasan stated on behalf of the petitioners that the impugned SECP directives were ‘confiscatory’. They were aimed at protecting eight or so leading brokers, who controlled the share market in Pakistan.

Besides being repugnant to the law and constitutional provisions guaranteeing the freedom to hold and enjoy property and carry on trade and occupation, the directives were not published in the official gazette and were, therefore, of no legal effect, the lawyer said.

The petition, he submitted in response to a court query, had nothing to do with the removal of the floor placed on the share prices. Mr Hasan was assisted by Advocate Qayyum Abbasi.

Declining the counsel’s plea for an interim order against any ‘confiscatory’ action by the respondents, the bench told him that it was issuing urgent pre-admission notices for Tuesday.

Meanwhile, the suit instituted by two brokerage houses (‘financees’) for voidance of the continuous-funding-system transactions entered into by them with the creditor banks is also fixed for hearing before Justice Gulzar Ahmed on Tuesday. The court had passed an injunction ordering status quo till Dec 16 in respect of the plaintiffs’ CFS contracts.

In their counter-blast, the petitioner banks said they lent short-term loans to brokers under the CFS scheme. However, the SECP directive issued on Oct 14 extended the maturity period from 22 days to 44 days without assigning any reason and with retrospective effect. Another directive issued on Nov 12 exempted the brokerage houses from repayments until after expiry of five days from the removal of the floor.