LONDON: The Sindh High Court (SHC) has ordered that charges continue against the management of The Resource Group (TRG), with another order for the Chairman of the Resource Group (TRG) Mohammad Kheshji and CEO Hasnain Aslam to appear before the court.
The SHC ruling follows an earlier ruling by the District and Sessions Court in Karachi in February 2023, ordering the continuation of criminal defamation charges against the management and board of Bermuda-based TRG International. The charges were leveled by former CEO of TRG Pakistan, Zia Chishti, contesting the defamatory statements alleged against him in a letter written by TRG International to its parent company, TRG Pakistan.
The accused were listed in the district court as Muhammad Kheshji, Chairman of TRG Pakistan; Hasnain Aslam, CEO, TRG Pakistan; Hassan Farouk, CFO, TRG International; Pat Costello, General Counsel, TRG International; and several current and former directors of TRG International including Zafar Subani, Patrick McGuinness, Khaldoun Latif and John Lyons. They have all denied any wrongdoing.
After being ordered to appear by the district court, the defendants approached the Sindh High Court and obtained a stay order preventing the district court from proceeding further, according to the papers. After a delay of twenty months, the Supreme Court vacated its stay and ordered the proceedings against the accused to continue in the District Court. The next hearing in District Court is scheduled for November 16.
A TRG source said that several of the defendants have now approached the Supreme Court seeking a further halt to the proceedings, indicating that the case will be heard. The court, citing legal precedent, stated that all such grievances should first be heard in the competent court.
The criminal defamation proceedings in Karachi are part of a broader set of legal proceedings between Chishti and the current leadership of TRG, including dueling arbitrations brought against each other in the US. In one arbitration filed by TRG against Chishti in January 2023, TRG claimed that Chishti was not permitted to sell or borrow his TRG shares. TRG has received a stop-work order in Pakistan to freeze Chishti shares pending the conclusion of US arbitration.
On the other hand, Chishti filed an arbitration in the United States alleging criminal, civil, and contractual breaches by TRG, Aslam, Kheshji, and other related defendants. TRG had received a stay on this arbitration, but that stay was rejected by a US federal court last month and the arbitration was ordered to continue. People close to TRG said they are defending the claim in every jurisdiction and will present their facts before the courts in due course. They said the Pakistani proceedings were being handled by their lawyers.
The provisions expected in the three sets of actions could have serious consequences for the TRG and its management. Elections to the TRG board are expected to be held in January 2025, and if Chishti wins his various lawsuits, it could increase his chances of regaining control of TRG. In his public filings, Chishti pointed out that under the current management, TRG’s share price has collapsed and the company has recorded staggering losses including a loss of over Rs 30 billion last year. TRG said the company is doing well and has had no problems.
With the Sindh High Court quashing its stay orders, the trial and sessions court proceedings commenced with notices issued to Kheshji, Aslam, Lyon, McGuinness, Saigol, Subani, Khaldun bin Latif, Costello and Farooq, according to court papers.