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Petitioner: INTIKHAB A. SYED and others VS Respondent: CHAIRMAN, NAB and others
Court Name: Sindh High Court Judge(s): Ahmed Ali M. Shaikh, Muhammad Karim Khan Agha Title: INTIKHAB A. SYED and others vs CHAIRMAN, NAB and others Case No.:Constitutional Petitions Nos, D-633 of 2016, D-584, D-585, D-586, D-813, D-
1170 of 2013, D-786 of 2012, D-3149, D-8716, D-7058, D-4394 of 2017, D-5148 of 2014, 5856 of 2016 and D-6538 of 2015 Date of Judgment:2018-05-07 Reported As: 2018 CLD 1505, 2019 MLD 127 Result: Order accordingly Judgment ORDER MOHAMMED KARIM KHAN AGHA, J.---By this common order, we propose to dispose of the above petitions filed on behalf of the above mentioned petitioners. In short, inquiries/investigations were initiated and later references filed against the petitioners by the National Accountability Bureau (NAB) under the National Accountability Ordinance, 1999 (NAO) for the offense of corruption and corrupt practices under the NAO and more particularly the offense of wilful default under section 9(viii) of the NAO. 2. In some petitions some of the petitioners are on ad interim pre arrest bail whilst in other petitions the petitioners have applied for quashment of the inquiry/investigation and later the quashment of the references filed against them. 3. Not withstanding the prayers in their petitions all the learned counsel for the petitioners (bar one) have argued that the inquiries/investigations and references filed against the petitioners by NAB should be quashed as NAB no longer has the jurisdiction to hear cases of wilful default under the NAO. This is because following the promulgation of Act No,XXXVIII of 2016 (the Act) which further amended the Financial Institutions (Recovery of Finances) Ordinance, 2001 (the Ordinance) amendments were made to bring the offense of wilful default under the ambit of the Ordinance. Furthermore, as the Ordinance was a special law and the Act was promulgated later in time than the NAO, which was also a special law, the Ordinance as amended by the Act would take precedence over the NAO when the NAO and the Ordinance were in conflict as in the instant case of wilful default. In support of their contentions in this regard learned counsel for the petitioners
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placed reliance on the case of Syed Mushahid Shah v. FIA (2017 SCMR 1218) and an unreported Order of this court in C.P. D No,3673/2017 Azim Ahmed v. State dated 02-10-2017. 4. The Act at section 1(2) specifically provided that the Act shall come into force at once i.e on 13- 08-2016 the day when it was promulgated however learned counsel for the petitioners contended that the Act had retrospective effect largely on the basis that the amendment was in the procedural law as opposed to the substantive law. In this respect learned counsel for the petitioners placed reliance on the cases of Adnan Afzal v. Capt. Sher Afzal (PLD 1969 SC 187), The State v. Maulvi Muhammed Jamil (PLD 1965 SC 681), Rana Abdul Ghaffar v. Abdul Shakoor (PLD 2006 Lahore 64), Malik Gul Hasan and Co. v. Allied Bank of Pakistan (1996 SCMR 237), Sajid Dadabhoy v. NAB (2015 PCr.LJ 729), The State v. Nasim Amin Butt (2001 SCMR 1083), Hafiz Muhammad Abdullah v. Imdad All Shah and another (1972 SCMR 173), Yusuf All Khan Barrister-at- law Lahore v. Messrs Hongkonk and Shanghai Banking Corporation Karachi and another (1994 SCMR 1007), Rai Naeem Shahadat v. Mst. Qamar Munir and others (2004 SCMR 412) and Air League of PIAC Employees through President v. Federation of Pakistan, M/O Labour and Manpower Division Islamabad and others (2011 SCMR 1254). 5. One petitioner, Syed Wajahat Hussain Zaidi in C.P. D-8716/17 agreed with the other petitioners that the Act would take priority over the NAO in respect of the offense of wilful default however he argued that it would only apply prospectively i,e, from the date when it was said to take effect in the Act and not retrospectively. In support of his contention he placed reliance on the case of Muhammed Ashfaq v. State (PLD SC 1973 368). 6. Learned Additional Attorney General for Pakistan on court notice submitted that the Act would have retrospective effect if it solely concerned procedural issues however in his view the Act also made certain substantive legal amendments to the Ordinance. For example, in terms of the maximum sentence and the enlargement of the jurisdiction of the banking courts and as such the Act would not have retrospective effect. He submitted that all already initiated complaint verifications, inquiries, investigations and references under the NAO for the offense of wilful default prior to the Act coming into effect i,e, before 13-08-2016 would continue with the NAB with the exception that in such cases the sentences which could be handed down on conviction .would be governed by the Ordinance which sentences were lower than under the NAO as the accused was entitled to the rule of beneficial interpretation of legislation and in this way no one would be prejudiced. He was of the view that the Section in the NAO dealing with the offense of wilful default starting from the date when the Act came into effect had been impliedly repealed. In this respect he placed reliance Abdul Majid v. The State (PLD 1974 Karachi 309), Badshah Gul Wazir v. Government of Khyber Pakhtunkhwa (2015 SCMR 43), Sarwar Jan v. Mukhtar Ahmed (PLD 2012 SC 217), Saeed Ahmed v. The State (PLD 1964 SC 266), T. Barai Henry Ah Hoe (AIR 1983 SC 150), Taza Khan v. Ahmed Khan (1992 SCMR 1371), Kohinoor Mercantile Corporation v. Hazera Khatoon (PLD 1963 Dacca 238), State of Orissa v. M.A. Tulloch (AIR 1964 SC 1284), Sona v. The State (PLD 1970 SC 264) and Waqar Azim v. The State (2002 YLR 1811). He also placed reliance on section 6(c) of the General clauses Act to show that otherwise the NAO continued in force. 7. Learned Special Prosecutor NAB submitted that a later special law did not automatically take precedence over an earlier special law and based on the objects and purpose of the NAO its provisions regarding the offense of wilful default would prevail over the Act. In this regard he placed reliance on I.G. HQ Frontier Corps v. Ghulam Hussain (2004 SCMR 1397). Even if this was not the case in the alternative he submitted that the Act was only prospective in effect and was not retrospective. According to him the rationale behind the Act which amended the Ordinance was to give effect to this courts decision in the case of Amjad Hussain v. NAB (2017 YLR 1) concerning NAB's own SOP on pecuniary jurisdiction which was upheld by the Hon'ble Supreme Court whereby cases involving less that Rs, 100M would not be taken up by NAB in all but a few exceptional cases with the
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permission of the Chairman NAB and the purpose of the Act in making the amendment was to allow the Ordinance to deal with wilful default cases of less than 100M after its promulgation and allow NAB to deal with wilful default cases of over Rs, 100M as per its own SOP. He also submitted that as a general rule legislation was only retrospective if the legislature had expressly provided that it was to be the case in the concerned legislation and since this had not been done in the Act the Act took effect from the date specifically mentioned i.e 13-08-2016. In this respect he placed reliance on the case of Muhammed Hussain v. Muhammed and others (2000 SCMR 367). 8. Other learned counsel for the respondents notably on behalf of the State Bank of Pakistan and Bank Islami adopted the arguments of Special Prosecutor NAB and in particular stressed that the Ordinance as amended by the Act could not override the NAO which would prevail over the Ordinance in cases of wilful default; that in the alternative the Ordinance as amended by the Act was only prospective in nature and would come into effect on 13.08.2016 as expressly provided in the Act and not retrospectively as it contained substantive changes in the law and not purely procedural ones, that rights of the parties would be adversely effected if the law was made retrospective which would be unjust, that Article 264 of the Constitution in cases of repeal did not effect the cases pending under that law prior to repeal; that section 6 of the General Clauses Act had a similar effect and that since an investigating agency had not even been appointed by the Federal Government under section 20(7) of. the Ordinance despite it being in the field for over 18 months such retrospective effect would further delay the disposal of pending cases which would lead in effect to justice delayed being justice denied. 9. We have considered the submissions of the parties, perused the record, considered the relevant law and authorities cited at the bar. 10.At the outset we observe that we have found the Parliamentary debates surrounding the promulgation of the Act to be of little assistance in understanding why the Act was passed in the face of the similar provision dealing with wilful default under the NAO which we assume the existence of which Parliament would have been aware of. We also do not find NAB's argument that the Act was passed following the case of Amjad Hussain (Supra) to be of much substance since if the Ordinance was to deal only with cases of wilful default being less than Rs,100M and cases above that level being left to the NAB under the NAO then the Act would have expressly and specifically stated this to be the case which it did not. 11. When the National Accountability Bureau Ordinance, 1999 (NABO) was promulgated and repealed the Ehtesab Act, 1997 for the first time in Pakistan's history in its endeavor to thwart corruption and corrupt practices section 9(viii) NABO made wilful default as defined in section 5(r), NABO an act of corruption. Traditionally such an offense had been left to the recovery methods under the civil law. In the case of Asfandyar Wali Khan v. Federation of Pakistan (PLD 2001 SC 607) when the NABO was challenged and in particular the offense of wilful default such offense was upheld by the Hon'ble Supreme Court as being in line with the constitution. The Preamble of the NAO also supported such an offense. For ease of reference the relevant parts of the preamble, section 9(viii), NAO and section 5(r), NAO and are set out below. Preamble. ..................................... "Whereas there is an emergent need for the recovery of outstanding amounts from those persons who have committed default in the repayment of amounts to Banks, Financial Institutions, [Government agencies and other Agencies]. "S. 9(a) Corruption and Corrupt Practices:--(a) A holder of a public office, or any other person, is said to commit or to have committed the offence of corruption and corrupt practices:-- (i) if he accepts ............................................................................................................ (ii) ............................................................................................................
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(iii) ............................................................................................................ (iv) ............................................................................................................ (v) ............................................................................................................ (vi) ............................................................................................................ (vii) ............................................................................................................ (viii) If he commits an offence of wilful default; "S. 5(r) Wilful default"; a Orson or a holder of public office is said to commit an offence of wilful 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, statutory 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 that it is not wilful default under this Ordinance if such person or holder of public office was unable to pay return or repay the amount as aforesaid on account of any wilful breach of agreement or obligation or failure to perform statutory duty on the part of any bank, financial institution, cooperative society, Government department, statutory body or an authority established or controlled by a Government. 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: Provided further that the aforesaid thirty days or seven days notice shall not apply to cases pending trial at the time of promulgation of the National Accountability Bureau (Amendment Ordinance, 2001). (bold added) 12.Since the offense of "wilful default" remains a part of the NAO today over 18 years since it was promulgated during which period a number of different governments have been in office it appears that successive Parliament's have been satisfied with this offense of "wilful default" being a part of the NAO especially as no attempts have been made to expressly amend or delete the offense from the NAO to date. 13.In fact safeguards have been put in place under the NAO to ensure that section 9(viii) as defined by section 5(R) is not abused through section 31(C) and (D) NAO which are set out below for ease of reference. "S.31 (C). Court to take cognizance of offence with prior approval of the State Bank. No Court established under this Ordinance shall take cognizance of an offence against an officer or an employee of a bank or financial institution for writing off, waiving, restructuring or refinancing any financial facility, interest or mark up without prior approval of the State Bank of Pakistan. (bold added) S.31 (D). Inquiry, investigation or proceedings in respect of imprudent bank loans, etc. Notwithstanding anything contained in this Ordinance or any other law 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 from the Governor, State Bank of Pakistan".
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14.Likewise under section 25-A, NAO where a person has been arrested or is in the custody of the NAB or apprehends such arrest or custody for the investigation of the charge against him of wilful default he may at any such stage apply to the Governor of the State Bank of Pakistan (SBP) for reconciliation of his liability through the conciliation committee which the Governor if he deems fit may refer the matter. An elaborate mechanism as to how the conciliation committee is to function and go about its task is then set out in the rest of section 25-A, NAO. 15. On conviction under section 9(viii), NAO section 10, NAO sets out the punishment whilst section 15, NAO also imposes certain other disqualifications on the convict. Sections 10 and 15 are set out below for ease of reference: "S.10. Punishment for corruption and corrupt practices: (a)A holder of public office or any other person who commits the offence of corruption and corrupt practices shall be punishable with rigorous imprisonment for a term which may extend to 14 years and with fine and such of the assets and pecuniary resources of such holder of public office or person, as are found to be disproportionate to the known sources of his income or which are acquired by money obtained through corruption and corrupt practices whether in his name or in the name of any of his dependents, or benamidars shall be [.. ..] forfeited to the appropriate Government or the concerned bank or financial institution as the case may be. (b) The offences specified in the Schedule to this Ordinance shall be punishable in the manner specified therein. (c) The Federal Government may, by notification in the official Gazette, amend the Schedule so as to add any entry thereto or modify or omit any entry therein. (d) Notwithstanding anything to the contrary contained in any other law for the time being in force an accused, convicted by the Courts of an offence under this Ordinance, shall not be entitled to any remission in his sentence." "S.15. Disqualification to contest elections or to hold public office.--(a) Where an accused person is convicted of an offence under section 9 of the Ordinance, he shall forthwith cease to hold public office, if any, held by him and further he shall stand disqualified for a period of ten years, to be reckoned from the date he is released after serving the sentence, or seeking or from being elected, chosen, appointed or nominated as a member or representative of any public body or any statutory or local authority or in service of. Pakistan or of any Province: Provided that any accused person who has availed the benefit of subsection (b) of section 25 shall also be deemed to have been convicted for an offence under this Ordinance, and shall forthwith cease to hold public office, if any, held by him and further he shall stand disqualified for a period of ten years, to be reckoned from the date he has discharged his liabilities relating to the matter or transaction in issue, for seeking or from being elected, chosen, appointed or nominated as a member or representative of any public body or any statutory or local authority or in service of Pakistan or of any Province. (b) Any person convicted of an offence under section 9 of the Ordinance shall not be allowed to apply for or be granted or allowed any financial facilities in the form of any loan or advances or other financial accommodation by any Bank or Financial Institution owned or controlled by Government, for a period of 10 years from the date of conviction." (bold added) 16.When the Ordinance was promulgated in 2001 (in order to repeal and with certain modifications re enact the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act 1997) after the NAO it did not mention the offense of wilful default so it can be deemed that so far as Parliament was concerned right up to 13-08-2016 when the Act was passed the offense of Wilful default was covered by the NAO and not the Ordinance. 17.When the Act was passed the following amendments which are relevant to the case in hand were made to the Ordinance whereby a new section 2(g) was added and section 20(6) was
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substituted and anew subsections 20(b)(7), (8) and (9) were added which are set out below for ease of reference: "S.2(g)" willful default" means (i) deliberate or intentional failure to repay any finance, loan, advance or any financial assistance received by any person from a financial institution after such payment has become due under the terms of any law or an agreement, rules or regulations issued by the State Bank of Pakistan; (ii) utilization of finance, loan, advance or financial assistance or a substantial part thereof, obtained by any person from a financial institution for a purpose other than that for which such finance, loan, advance or financial assistant had been obtained and payment in part or full not made to the financial institution; or (iii)removal, transfer, misappropriation or sale of any assets collateralized to secure a finance, loan, advance or financial assistance obtained from a financial institution without permission of such institution. (bold added) "S. 20(b) (6), (7), (8) and (9). (6)All offences under this Ordinance shall be triable by a Banking Court in accordance with section 7. All offences. except for the offence of willful default, shall be bailable, non-cognizable and compoundable. (7)Notwithstanding anything to the contrary provided in any other law for the time being in force, action in respect of an offence of wilful default shall be taken by an investigating agency, to be nominated in this behalf by the Federal Government, on a complaint in writing filed by an authorized officer of a financial institution after it has served thirty days notice upon the borrower demanding payment of the loan, advance or financial assistance.. (8)An offence of wilful default shall be cognizable, non-bailable and non-compoundable and punishable with imprisonment which may extend to seven years or fine, not exceeding the amount of default, or with both. (9)Any person convicted of the offence of wilful default by a Banking Court shall not be eligible to receive any loan, advance or finance from any financial institution for a period of ten years and shall not be permitted to contest any election as a member of the Majlis-e-Shoora (Parliament), any Provincial Assembly or a local body for a period of five years, after serving out a sentence after conviction. 18.Thus, it would appear that for the first time Parliament with deliberate intent through the express language of the above referred sections intended that cases concerning wilful default could also be tried under the Ordinance from 13-08-2016 which was the date when the Ordinance, as amended by the Act, came into effect. 19.The first issue before us is therefore whether the Offense of wilful default can be applied under both the NAO and the Ordinance i,e, in essence have two similar cases running in parallel or only under either the NAO or the Ordinance especially as the offense of wilful default has not been expressly repealed from the NAO and if so under which of the two laws. i.e the NAO or the Ordinance as amended by the Act. 20.In considering this issue we have been mindful of the fact that both the NAO and the Ordinance are both special laws with non obstante clauses, the intention of Parliament, the principle of law of redundancy whereby no part of a statute can be rendered redundant and if the Ordinance is found to prevail over the NAO from which date it would be applicable and how such existing cases should be treated. 21. As can be seen from a comparison of the definition and offense of wilful default under the NAO and the Ordinance they are similar in nature but NOT identical especially bearing in mind that since the case of Abdul Aziz Memon v. Federation of Pakistan (PLD SC 2013 594) the NAO applies equally to individuals as to public office holders. To a certain extent it can be said that through the
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Act Parliament has simply added the offense of wilful default from the NAO to the Ordinance which appears to be a logical step to take since it is the Ordinance which primarily deals with defaulted loan cases as opposed to the NAO which deals with all manner of other corruption cases under section 9, NAO. 22. The significant differences however between section 5(R), NAO and section 2(g) of the amended Ordinance seem to be that whilst the Ordinance only applies to financial institutions and their customers the NAO is of wider application. 'Financial Institutions is defined in section 2(a) of the Ordinance as under "(a) "financial institution" means and includes (i) any company whether incorporated within or outside Pakistan which transacts the business of banking or any associated or ancillary business in Pakistan through its branches within or outside Pakistan and includes a Government savings bank, but excludes the State Bank of Pakistan; (ii) a modaraba or modaraba management company, leasing company, investment bank, venture capital company, financing company, unit trust or mutual fund of any kind and credit or investment institution, corporation or company; and (iii) any company authorized by law to carry on any similar business, as the Federal Government may by notification in the official Gazette, specify; (bold added) 23. The scope of section 5(R), NAO therefore appears to be a little wider as a part from financial institutions it also applies to co-operative societies, government departments, statutory bodies, and authorities established or controlled by a Government which appear to be missing from the definition of "financial institution" under the Ordinance which in simplistic terms seems only to cover the relationship between banker and customer during the ordinary course of banking business. 24. Not withstanding this slight difference in definition in our view to a certain extent it could be said…
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