Civil Court dismisses K-Electric’s plea to restrain former director from public disclosure

December 10, 2025 (MLN): The Court of the Senior Civil Judge, Karachi South, has dismissed K-Electric’s (KE) application seeking to restrain its former director, Asad Ali Shah, from making public statements regarding the power utility’s financial affairs, according to the company’s filing on PSX.

In an order issued on December 2, 2025, Senior Civil Judge Altaf Hussain Khoso recalled the ad-interim injunction previously granted on January 24, 2023, ruling that the concerns raised by Shah regarding government receivables and accounting practices were matters of public interest and did not constitute a breach of confidentiality.

Background of the Dispute:

The suit (New Civil Suit No. 434/2025) arose after Shah, a former board member, sent a letter to the Securities and Exchange Commission of Pakistan (SECP) on January 10, 2023.

The letter highlighted concerns regarding KE's financial statements, specifically the accumulation of approximately Rs355 billion in receivables from the Government of Pakistan and the company's policy on "hook connections".

KE had argued that Shah violated his confidentiality declaration by circulating "sensitive information" to the SECP and the Mutual Funds Association of Pakistan (MUFAP), allegedly causing market manipulation and damaging the company's reputation. The utility sought a permanent injunction to stop him from publishing further comments in print or social media.

Court’s Findings:

The court rejected KE’s arguments, stating that the plaintiff failed to establish a prima facie case for an injunction.

The judge observed that the information disclosed by Shah such as the massive government receivables and write-off claims was already available in the public domain through KE's own financial statements and statutory disclosures.

"The mere fact that such disclosures are unfavourable or inconvenient to the plaintiff does not render them 'confidential' so as to attract contractual restraint," the order read.

Public Interest and Fiduciary Duty:

The court emphasized that directors owe fiduciary duties not only to the company but also to shareholders and the investing public.

The judge ruled that communicating concerns about potential financial misstatements, governance lapses, or statutory breaches to a regulator falls within the "legitimate exercise of those duties".

The order noted that Shah’s letter addressed serious issues, including:

Receivables: The accumulation of Rs355 billion in government receivables.

Hook Connections: The recording of revenue from illegal "hook connections," which Shah argued was contrary to NEPRA's confirmation in 2014 that such connections are illegal.

Transparency: Concerns over write-off claims and inadequate disclosures.

The court held that these are matters of public importance affecting the energy sector and investors, and therefore, their communication to the SECP and MUFAP was protected by "qualified privilege".

Absence of Malice Dismissing the claim of ulterior motives, the court found that KE produced no material demonstrating malice or personal vendetta on Shah’s part. The judge concluded that the letter was issued in good faith to safeguard investor confidence and transparency.

The court further ruled that the balance of convenience tilted in favor of the defendant, as granting an injunction would unjustifiably restrain him from exercising his statutory and constitutional obligations.

Consequently, the application under Order 39 Rule 1 & 2 CPC was dismissed, and the prior stay order was recalled.

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