Quashment of NAB Proceedings Judgment

PLJ 2012 Cr.C. (Lahore) 789 (DB)

Present: Sagheer Ahmad Qadri and Ibad-ur-Rehman Lodhi, JJ.

ABDUL KARIM and others--Petitioners

versus

STATE and others--Respondents

Crl. Misc. Nos. 4-Q & 10-Q of 2011, heard on 13.9.2012.

Criminal Procedure Code, 1898 (V of 1898)--

----S. 569-A--National Accountability Bureau Ordinance, 1999, S. 5(r)--Inherent powers--Violation of mandatory provision--Notice for seven days--Requirement of law--Acquittal of charge--Quashment of proceedings--Notice issued by the Governor, State Bank of Pakistan calling upon the petitioners/accused persons to show cause within seven days, as to why they should not be proceeded against on the allegation of "willful default" under National Accountability Bureau Ordinance, 1999--Two notices, which are mandatorily required to be issued in accordance with the provisions of Ordinance, have not been issued by meeting the requirement of law--The first notice for the period of 30-days is required to be issued by the Financial Institution and then subsequent thereto a notice for seven days is the requirement of law issued by the Governor, State Bank of Pakistan--Violation of mandatory provisions contained in Section 31(d) of the Ordinance would render the very initiation of proceedings and all subsequent acts wholly illegal and void and the legality would not be curable by subsequent order of the Governor, State Bank of Pakistan with the result that the entire proceedings were held liable to be quashed--Mandatory requirement as contained in Section 5(r) read with Section 31(d) of the Ordinance have not been followed in their letter and spirit and filing of reference and subsequent proceedings pending pursuant thereto are thus nullity in the eye of law and are liable to be quashed--Pending proceeding was quashed.         [P. 793] A, B, C & D

PLD 2001 Karachi 311, ref.

Faiz Rasool Khan Jalbani and Kh. Saeed-uz-Zafar, Advocate for Petitioner.

Mr. Haroon-ur-Rasheed Cheema, Addl. D.P.G. for NAB.

Date of hearing: 13.9.2012.

Judgment

Ibad-ur-Rehman Lodhi, J.--Through this common judgment we intend to dispose of Crl. Misc. No. 10-Q/2011, Crl. Misc. No. 4-Q/2011 and W.P. No. 3754/2011, seeking quashment of proceedings pending in pursuant of Accountability Reference No. 14/2007 in Accountability Court No. III, Lahore.

2.  The history in brief, relevant for the purpose of disposal of present petitions is that a Reference was filed on the complaint of Governor, State Bank of Pakistan against the petitioners/accused persons for proceeding under Section 9(a)(viii) of National Accountability Bureau Ordinance, 1999 punishable under Section 10 thereof. The petitioners are directors of Classic Knit Wear Private Limited, which availed a financial facility of Rs. 32.522 Millions with markup to install a Knitwear Garments project at Bhiki, Faisalabad Road, District Sheikhupura from Pak Libya Holding Company Private Limited, Karachi. The petitioners/accused failed to discharge the liability as per the terms and conditions and allegedly misappropriated the hypothecated machinery of the project. Some criminal proceedings, in pursuant to FIR No. 19/2002 and suit for recovery before the Hon'ble Sindh High Court, were initiated but notwithstanding the disposal of the suit wherein a consent decree was passed on 04.06.1999, the liability was not satisfied and a Reference under the provisions of National Accountability Bureau Ordinance had to be filed.

3.  On having appeared before the learned Accountability Court, on behalf of petitioners/accused, applications under Section 265-K Cr.P.C., were preferred seeking their acquittal of the charges framed against them. The applications were taken up by the learned Judge Accountability Court No. III, Lahore on 29.01.2011 and were dismissed. The findings so arrived at are made basis of the challenge through present above said petitions.

4.  The learned counsel for the petitioners argued with reference to various provisions of National Accountability Bureau Ordinance, 1999 and the case law on the subject in support of the petitions and sought the quashment of the proceedings pending before the learned Accountability Court in pursuant to Accountability Reference No. 14/2007 and acquittal of the accused/petitioners from the change against them in the said reference.

5.  The learned Addl. Deputy Prosecutor General for NAB opposed the petitions and maintained that the Reference was filed after fulfilling all legal requirements and a complete trial would be the requirement of the law in which NAB intend to produce complete evidence to prove the charges against the petitioners.

6.  We have heard the learned counsel for the parties and perused the record.

7.  The Hon'ble Supreme Court of Pakistan has examined different provisions of National Accountability Bureau Ordinance in case of Khan Asfandyar Wali and others versus Federation of Pakistan through Cabinet Division, Islamabad and others (PLD 2001 Supreme Court 607). For the present purposes a part of paragraph 219 of the said judgment is being reproduced herein below for ready reference:--

"However, in order to ensure across-the-board accountability we order the following directions for the application of Section 5(R) of the impugned Ordinance. The same shall be suitably incorporated in the Rules to be framed under Section 34 of the Ordinance, which shall on promulgation become part of the Ordinance.

(i) No prosecution for `wilful default' shall be launched before the expiry of 30 days statutory notice and an additional 7 days' notice shall also be served on the alleged defaulter to satisfy Governor, State Bank of Pakistan that he has not committed any `willful default'. The report of Governor, State Bank of Pakistan as to the prima facie, guilt or innocence will be subject to the final decision of the Accountability Court. The same procedure will be followed with regard to recovery of other public dues falling within the contemplation of Section 5(r) of the Ordinance. The Governor, State Bank of Pakistan shall record his recommendations within 7-days with reasons therein."

The provisions of Section 5(r) of National Accountability Bureau Ordinance, 1999 are to the following effect whereby "wilful default" has been defined as under:

"Wilful default" a person [or a holder of public office] is said to commit an offence of willful default under this Ordinance if he does not pay, [or continues not to pay,] or return or repay the amount [due from him] to any bank, financial institution, cooperative society, Government department, statuary body or an authority established or] controlled by Government on the date that it became due [as per agreement containing the obligation to pay return or repay] or according to the laws, rules, regulations, instructions, issued or notified by [the State Bank of Pakistan or the bank,] financial institution, cooperative society, Government of Pakistan, statutory body or an authority established or controlled by a Government, as the case may be, and a [thirty days notice has been given to `such person or holder of public office "] -------------------

            [Provided further that in the case of default concerning a bank or a financial institution a seven days notice has also been given to "such person or holder of public office" by the Governor, State Bank of Pakistan.--------------------------

Section 31-D of Ordinance reads as under:--

            "Inquiry, investigation or proceedings in respect of imprudent bank loans, etc.--Notwithstanding anything contained in this Ordinance or any other taw for the time being in force, no inquiry, investigation or proceedings in respect of imprudent loans, defaulted loans or re-scheduled loans shall be initiated or conducted by the National Accountability Bureau against any person, company or financial institution without reference from the Governor, State Bank of Pakistan.

            Provided that cases pending before any Accountability Court before coming into force of the National Accountability Bureau (Second Amendment) Ordinance, 2000, shall continue to be prosecuted and conducted without reference form the Governor, State Bank of Pakistan.

8.  In the present case the notice, as was required under Section 5(r) of the Ordinance, was issued by the Pak Libya Holding Company Private Limited/Financial, Institution on 18.10.2002 whereas the notice for seven days, which is the requirement of law to be issued by the Governor, State Bank of Pakistan, was issued on 09.01.2002. Copy of the notice, issued by the Governor, State Bank of Pakistan calling upon the petitioners/accused persons to show cause within seven days, as to why they should not be proceeded against on the allegation of "willful default" under National Accountability Bureau Ordinance, 1999.

It is abundantly clear that two notices, which are mandatorily required to be issued in accordance with the provisions of Ordinance, have not been issued by meeting the requirement of law. The first notice for the period of 30-days is required to be issued by the Financial Institution and then subsequent thereto a notice for seven days is the requirement of law issued by the Governor, State Bank of Pakistan.

9.  In the present case, we have observed that the Governor, State Bank of Pakistan has issued notice on 09.01.2002 whereas the notice issued by the Pak Libya Holding Company Private Limited was issued on 18.10.2002 which undoubtedly are not the requirement of law.

10.  The learned Division Bench of Karachi High Court in case of Messrs Kaloodi International (Pvt.) Ltd. And another versus Federation of Pakistan and others (PLD 2001 Karachi 311) has held that reference made in violation of mandatory provisions contained in Section 31(d) of the Ordinance would render the very initiation of proceedings and all subsequent acts wholly illegal and void and the legality would not be curable by subsequent order of the Governor, State Rank of Pakistan with the result that the entire proceedings were held liable to be quashed. A reference to Khan Asfandyar Wali's case (Supra) was also made by the Karachi High Court.

11.  In the case in hand the mandatory requirement as contained in Section 5(r) read with Section 31(d) of the Ordinance have not been followed in their letter and spirit and filing of reference and subsequent proceedings pending pursuant thereto are thus nullity in the eye of law and are liable to be quashed.

12.  Resultantly, the petitions are allowed and the proceedings pending in the learned Accountability Court at Lahore in pursuance of Accountability Reference No. 14/2007 are quashed.

(A.S.)   Petitions allowed