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Petitioner: Muhammad Hanif Abbasi VS Respondent: Imran Khan Niazi and others
Court Name: Supreme Court of Pakistan Judge(s): Mian Saqib Nisar, Umar Ata Bandial, Faisal Arab Title: Muhammad Hanif Abbasi vs Imran Khan Niazi and others Case No.: Constitution Petition No. 35 of 2016 Date of Judgment:2017-12-15 Reported As: 2018 P.S.C. 41 Result: N/A
JUDGMENT
JUDGMENT MIAN SAQIB NISAR, CJ.--- This petition filed under Article 184(3) of the Constitution of the Islamic Republic of Pakistan, 1973 ("Constitution"), in substance essence seeks a declaration by this Court that respondent No.1, Mr. lmran Khan Niazi ("the Respondent"), is not qualified to be and is disqualified from being a member of the National Assembly; and that upon his seat from constituency NA-56 (Rawalpindi-VII) falling vacant, respondent No.4, the Election Commission of Pakistan ("ECP") be directed to hold fresh election in the constituency. 2. The Respondent is the Chairman of Pakistan Tehreek-e-Insaf ("PTI"), respondent No.2, a political party formed in 1996 and governed by, inter alia, the Political Parties Order, 2002. PTI has been contesting general elections held in the country since 1997. In its first contest in 1997, PTI did not win any seats in any legislature. In the next election held in 2002, the party secured only one seat in the National Assembly, namely, by the Respondent who was elected from NA-71, Mianwali-I. PTI boycotted the following general elections held in 2008. However, it contested the 2013 general election in which the party secured 33 seats in the National Assembly and rezpectively obtained 30, 4 and 61 seats in the Provincial Assemblies of Punjab, Sindh and Khyber Pakhtunkhwa ("KPK"). In the National Assembly, the PTI became the third largest majority party, while in the KPK Provincial Assembly it holds near majority and was able to form the government in coalition with Qaumi Watan Party and Jamaat-e-lslami. 3. On 3.4.2016, the International Consortium of Investigative Journalists ("ICIJ") released certain information that had been hacked from the database of a Panama-based law firm, namely, Mossack Fonseca. This information described as the Panama Papers was published worldwide in both print and electronic media. It reveals the names of hundreds of persons who formed offshore
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companies in various tax haven jurisdictions for obtaining secrecy and tax immunity of private property and wealth secured by means that, inter alias include fraud, money laundering and tax evasion. The list of such persons covers rich people from all over the world, including heads of states, their relatives and associates, politicians and public officials, etc. 4. Strikingly conspicuous Pakistani nationals mentioned in the Panama Papers are the three children of former Prime Minister of Pakistan, Mian Muhammad Nawaz Sharif, namely, Mr. Hussain Nawaz, Mr. Hasan Nawaz (sons) and Ms. Mariam Safdar (daughter). Allegations were leveled against them by the political opposition that they own properties in London which were acquired by their father in 1990s through the misuse of his authority whilst he held the office of Prime Minister of Pakistan for two terms in 1993 and in 1997. Following worldwide outrage against political leaders abroad, the opposition in the Parliament and other political parties demanded that the Prime Minister should resign. Attempts were made for the constitution of a Judicial Commission to inquire into the allegations but as that did not materialize, the Respondent filed a petition under Article 184(3) of the Constitution (Const.P.No.29/2016) before this Court. This petition was decided by a larger Bench of five honourable Judges whereby two of the honourable Judges in the bench ("the Minority"), for the reasons recorded by them, disqualified Mian Muhammad Nawaz Sharif from being a Member of the National Assembly, thus ending his tenure as the Prime Minister of the country. On the other hand, the other three learned members of the Bench ("the Majority") whilst taking serious note of the allegations and the supporting material, directed the constitution of a Joint 'Investigation Team (JIT) to probe further the questions highlighted in the Majority judgment of the Court and to report back thereon to the Court in order for the petition (Const.P. No.29/2016) to be finally decided. The JIT reported adversely against the Prime Minister and members of his family. Considering 'admitted material the learned 5 member Bench by their unanimous judgment dated 28.07.2017 disqualified the then Prime Minister and directed the filing of References under the National Accountability Ordinance, 1999 against him and his abovementioned family members. Petitioner's case: 5. After filing of Constitution Petition No.29 of 2016, Mr.Muhammad Hanif Abbasi ("the Petitioner") who is a member of Pakistan Muslim League (Nawaz) ["PML(N)"j the former Prime Minister's party, filed the instant petition under Article 184(3) of the Constitution. He was the PML(N) candidate from NA-56 Rawalpindi-VII in the last general election of 2013 but lost the election to the Respondent. On the grounds set out in this petition the following relief is sought by the Petitioner:-- "I.Call upon Respondent No.1 to show the authority of law under which he purports to hold membership of the National Assembly, and his seat, NA-56, may kindly be declared vacant with the consequential direction to Respondent No. 4 to hold election in this constituency in accordance with law. II. Declare Respondent No. 1 to be not qualified for, and disqualified from being a member of the National Assembly; Ill. Declare Respondent No. 1 to be ineligible from holding or retaining any office of a registered political party as provided under the Political Parties Order, 2002; IV. Direct that any contributions or donations acquired through prohibited sources by Respondent No. 1 and No. 2 may be confiscated in favour of the State; V. Declare Respondent No. 2 to be a foreign-aided party; VI. Direct Respondents No. 3, 4 and 5 to probe and investigate into the financial misdeclarations, misappropriation and evasion of Respondents No. 1 and 2; VII. Direct Respondent No. 3 to carry out a comprehensive and detailed probe to scrutinize the tax returns and assets declarations of Respondent No. 1; VIII. Grant such other relief as this Honourable Court may deem just and appropriate and in the interest of justice; and"
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6. Mr. Muhammad Akram Sheikh, learned Sr. ASC for the petitioner at the very outset of his submissions on a Court query categorically stated that the petition is in the nature of quo- warranto, the primary object whereof is to seek disqualification of the Respondent as a Member of Parliament (relief Clauses No.1, II and III). He also unequivocally stated that the petitioner does not seek dissolution of or imposition of any ban upon the PTI. The other reliefs sought (relief Clauses No.IV to VII) are statedly incidental to the above-noted main relief. Whereas Clause IV asks for a direction that contributions or donations collected by the Respondent and the PTI through sources prohibited under the Political Parties Order, 2002 ("PPO") be confiscated in favour of the State, and Clause V seeks a declaration that PTI is a "foreign-aided political party" within the meaning of the PPO for having received foreign funds from prohibited sources, it follows from the submission of learned counsel that the directions in Clauses VI and VII are not pressed by him. 7. Learned counsel for the petitioner has accordingly articulated the following written formulations (submitted in Court):-- "i. Whether Respondent No. 1 has made false declarations -- statements while issuing the certificates for the years 2010 to 2013 under section 13(2)(a) of the Political Parties Ordinance 2002 pledging therein that no funds from any source prohibited under the law were received by the Party? ii. Whether Respondent No. 1 has failed to disclose assets and concealed an offshore company while submitting his 'statements of assets and liabilities' therefore liable to be declared disqualified from being elected or remain member of the Parliament by this august court under Article 62 and 63 of the Constitution? iii. Whether Respondent No. 1 is guilty of offences of 'corrupt practice' and 'tax evasion' by declaring that the Banigala property is a gift from his former wife in his 'statements of assets and liabilities' whereas, admittedly, she was only a benamidar of the said property? iv. Whether mis-declarations, misstatements and contradictory pleases with regards to Banigala property make Respondent No 1 disqualified under Article 62 (1)(f) of the Constitution? iv. Whether Respondent No. 1 misused the tax amnesty scheme and played a fraud on public exchequer?" Certificate by the Respondent under Article 13(2) of the Political Parties Order, 2002. 8. Learned counsel for the petitioner submitted that PTI is a foreign-aided political party in terms of Article 2(c)(iii) of the PPO as it received contributions prohibited under Article 6(3) thereof read with Article 17(3) of the Constitution. He argued that despite the above-stated position, the Respondent personally issued certificates to the ECP in terms of Article 13(2) of the PPO to the effect that PTI does not receive funds from prohibited sources meaning thereby that it is not a foreign-aided political party. These certificates make a misdeclaration of fact and thus the Respondent has proven himself to be not sagacious, righteous, honest or ameen. He is, therefore, liable to be disqualified from holding elective office or being elected thereto under Articles 62(1)(f) and (g), and 63(1)(p) of the Constitution. The learned counsel conceded that the penalty of dissolution of the PTI as a foreign-aided political party, provided in Article 15 of the PPO, is not available to any person except by order of this Court passed on a reference filed by the Federal Government. Therefore, he maintains that the petitioner confines his prayer only to the consequence of disqualification of the Respondent resulting from his conscious act of issuing false certificates, thereby concealing of the funding provided to his party by foreign entities and nationals. 9. According to the learned counsel, the following facts establish that PTI is receiving prohibited funds. In the year 2010, the Respondent as the Chairman of PTI appointed PTI USA NA LLC, a Texas- based limited liability company, as its agent in the USA registered under the Unites States Foreign Agents Registration Act, 1938 ("FARA"), inter alia, for fund-raising for the PTI in the USA. Subsequently, in 2013 PTI USA LLC, 'a Californiabased limited liability company was substituted by the Respondent
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as PTI's FARA Agent in the USA which retains its said status till date. Pursuant to their FARA registration, each of the said LLCs registered in Texas and California have during their appointment as PTI's FARA Agent admittedly collected and transferred through banking channels funds from USA to PTI Pakistan. According to the learned counsel for the petitioner, the PTI USA LLC (California) was incorporated by an individual who is a US citizen. Two of the directors of PTI NA USA LLC (Texas) are Pakistani, whereas the remaining five are US nationals. He also contended that assuming the said controllers of PTI NA USA LLC (Texas) are US nationals having dual nationality of Pakistan, yet for all intents and purposes, a dual national is a foreigner which renders the PTI a foreign-aided political party. Being limited liability companies registered abroad, PTI USA LLC and PTI NA LLC are juridical entities that for all intents and purposes are a foreign national. Furthermore, both PTI NA LLC and PTI USA LLC received contributions from foreign nationals. From 2010 to 2013, these LLCs collected and transferred over $2.3 million to PTI Pakistan. The incorporation of the PTI USA LLC California is meant to conceal the true identity of its donors which includes both foreign nationals and companies. Its statements filed with FARA show that during 2013 to 2015, it collected US $1 million in the USA as political donations which were transferred to PTI Pakistan. Abraaj Capital Ltd. Dubai, a limited company which owns K-Electric Company, Karachi, sent Rs.56/- million on 7.5.2013 to one Tariq Shafi, the CEO of Crescent Industrial Chemical Ltd. which amount was transferred to PTI for unexplained reasons. Another amount of Rs.58.8 million was received on 26.3.2013 by Tariq Shafi from Harbour Services Inc., Dubai, which was also transferred to PTI. The documents relied upon by the learned counsel for the petitioner are:-- i. Five signed certificates pertaining respectively to the years 2010 to 2014 filed by of the Respondent before the ECP attesting that PTI did not receive any funds from the sources prohibited under the law (pages 288 to 292 of Const.P. No.35/2016); ii. The certificate of formation of PTI USA NA LLC (Texas) dated 9.2.2010 (page 162 of Const.P. No.35/2016); iii. The Respondent's letter to the Justice Department USA dated 15.2.2010 notifying that PTI NA USA LLC (Texas) was appointed as PTI's agent under FARA (page 166 of Const.P. No.35/2016). The aims and objects of the said LLC are mentioned therein; and item No.5 thereof categorically mentions collection of funds for PTI Pakistan; iv. The list of the board of directors of PTI NA USA LLC (page 165 of Const.P. No.65/2016), particularly the names of the directors (at page 168 thereof) out of which five are US nationals and two are Pakistani; v. The Respondent is aware of the facts and records of its FARA Agent and thus cannot claim ignorance about collections of funds made by it. (document at page 173 of Const.P.35/2016); vi. PTI has admitted in its concise statement that PTI NA USA LLC is its declared and lawful foreign agent under the laws of USA empowered to collect political donations and contributions (para 30 at page 9 of CMA 8037/2016). The Respondent has also admitted to this effect at pages 162 and 166 of Const.P. No.35/2016; vii. The FARA Exb.D statement dated 30.10.2014 submitted by PTI USA LLC (California) before FARA (page 277 and another Exb.D statement dated 30.04.2015 on page 287 of Const.P. No.35/2016) wherein it is mentioned that PTI USA LLC (California) received $83,400/- as funds and transferred $90,000/- to PTI Pakistan. There is a discrepancy as apparently the amount transferred was more than the amount collected. He also referred to the party campaign funds disbursements by FARA agent (at page 283 of the petition) and a chart in para 46 at page 16 thereof; viii.The FARA Exb.D for period February, 2010 to June, 2013 (at page-1 of CMA No.7231/2016) showing the names of the persons/ entities that made contributions of less than US $50/- each to PTI NA USA LLC (Texas) includes individuals,foreignnationals, limited companies. etc. This list has been filed by the FARA Agent of PTI before FARA. Another FARA EA) for theperiod November, 2014 to 2015
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(at page 109 of the said CMA) mentions the name of donors making contributions in excessof US $50/- but some of the contributions do not ,have corresponding names; ix. The official website of FARA shows that the donors of PTI NA USA LLC, include foreign nationals; and x. FARA returns and declarations filed by PTI NA USA LLC (Texas) at Pages 162 to 248 of Const.P. No.35/2016; at the same filed by PTI USA LLC California at page 249 to 289 exemplify the allegation of prohibited contributions being received by the PTI's FARA agents. He relied upon the case of Miss Benazir Bhutto vs. Federation of Pakistan and another (PLD 1988 SC 416) to emphasize the significance of accountability of political parties for sources of its funding and how seriously funding from foreign sources is taken by the Constitution. 10.To explain the terms "honest" and "ameen" used in Article 62(1)(f) of the Constitution, learned counsel referred to the cases of Abdul Waheed Ch. vs. Rana Abdul Jabbar (CA No.95 of 2015) and Rai Hassan Nawaz vs. Haji Muhammad Ayub and others (2017 PSC (SC Pak) 215 PLD 2017 SC 70). Concealment of Niazi Services Limited ("NSL") by the Respondent. 11.Learned counsel for the petitioner submitted that the Respondent was the absolute beneficial or real owner of NSL which was an offshore company, owned by three other offshore companies as shareholders, namely, Barclays Private Bank & Trust Limited, Barclay Trust Channel Islands Limited and Barclay Trust Jersey Limited (page 62 of Const.P. No.35/2016). NSL was incorporated and registered as a Iimited liability company on 10.5.1983 (page 22 of Const.P. No. 35/2.016)- and filed its annual tax returns from 1983 till its dissclution on 01.10.2015 (pages 118 and 125 of Const. P. No.35/2016, dissolution notice dated 30.06.2015 at page 117 thereof). He stated that the Respondent admitted that he purchased a flat in the UK ("London 'flat"), however, on solicitors' advice, NSL was established to own the flat (para 6 and 7 of CMA No.7925/2016). The Respondent is an income tax filer in Pakistan since 1982/1983 (both years were mentioned on different dates of hearing) and has been contesting elections since 1997. However, he never declared NSL in his income tax returns or his nomination papers filed before the ECP. Though the flat was sold in 2003, NSL remained in existence till 2015, thus the Respondent was bound to declare his ownership therein notwithstanding whether it owned any property or not. The Respondent also made a miss- declaration in the forms of the Tax Amnesty Scheme, 2000 to the effect that he was the owner of the London flat whereas it was NSL that admittedly owned such property. According to the learned counsel, the said statements amounted to miss-declarations made by the Respondent before the ECP and the tax authorities. Thus, he is not honest or ameen and is liable to be disqualified under Article 62(1)(f) of the Constitution. Learned counsel added that after the sale of NSL's alleged sole property, the London flat in 2003, whether NSL was a shell company is doubtful because the company was kept alive for 12 long years thereafter, until 2015 during which its corporate and other returns continued to be filed by incurring substantial expense including recurring solicitors fees, trustees fees and registry fees; the latter amounting to 350/-, annual return fee evident from page 117 of Const.P. No.35/2016. To incur such a large recurring expense for keeping a mere shell company alive is highly improbable which supports the conclusion that there must be other assets of NSL that the Respondent kept hidden from the public eye. 12.In respect of the plea of concealment in the income tax returns, learned counsel referred to the statement of assets filed by the Respondent under Section 116(2) of the Income Tax Ordinance, 2001 ("the Ordinance, 2001") for the year 2014-15 (pages 24-31 of CMA 7925/16). It is the petitioner's case that when the Respondent became an income tax filer he was a resident in Pakistan. Thus he was bound under the law to disclose both local and foreign assets owned by him as and when he became a filer. Learned counsel submitted that under the Wealth Tax Act, 1963 repealed on 1.7.2003 ("the Act, 1963") the Respondent was bound to declare NSL and the assets owned by it. He referred
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to Sections 4 [particularly sub-section (1)(a)(iii) and (5)] and 14 of the Act, 1963 and the Wealth Tax Forms (old and current). He also referred to Sections 2(64), 4, 9, 10, 11(5) and Section 116(2) of the Ordinance, 2001 to argue that when a resident person files his return he has to declare local and foreign income sources and correspondingly file a wealth statement. The form required to be filed under the Act, 1963 has a specific column for declaring assets. He also referred to a notification dated 26.6.2015. In support of his argument that the Respondent's interest in NSL was an asset which had to be declared under the law, learned counsel referred to the definition of the term "share" in Section 2(58) of the Ordinance, 2001 and stated that since the word "asset" has not been defined in the said Ordinance, therefore, its definition has to be taken from common law and according to him "asset" includes "share". He also argued that the Respondent accepted that he is the absolute owner of NSL (para 7 of CMA No.7925/2016) and also that he is its beneficial owner (para 7 and 21 of CMA No.7925/2016). As per a news item dated 14.5.2016, the Respondent admitted that he formed an offshore company to buy the London flat to avoid paying taxes in the UK during his cricketing days (page 130 No.35/2016). According to the learned counsel these are major contradictions which render the Respondent to be not honest and ameen and therefore disqualified. 13. Coming to the submission regarding concealment of foreign property and NSL before the ECP, learned counsel referred to the statement of assets and liabilities of the Respondent for the years 2013 and 2014 filed in his Annual Returns under Section 42A of the Representation of the People Act, 1976 ("ROPA") with ECP (pages 154 to 156 and 159 to 161 of Const.P. No.35/2016), in which neither the property of nor the shares in NSL or the very existence of NSL is mentioned particularly under para 4(b) and 5(b) of the prescribed statement of assets in the forms. According to him the Respondent was bound to mention his foreign interests in his annual statement of assets and liabilities filed before the ECP under Section 42A of the ROPA. As per the said legal provision, if a person fails to file a statement of assets and liabilities the Chief Election Commissioner shall suspend his membership and he may be prosecuted for committing corrupt practices. Apart from the London flat, NSL was a juristic entity, incorporated and run for the benefit of the Respondent. Accordingly his ownership in NSL had to be mentioned in the declaration till dissolution of NSL on 2015. In this context learned counsel relied upon Rai Hassan Nawaz's case (supra). 14.As regards the Tax Amnesty Scheme, learned counsel submitted that in 2000 the Respondent availed the incentive of a tax amnesty under the said Scheme announced by the then government under Section 59D of the Income Tax Ordinance, 1979 to whiten the amount of Rs.2/- million equivalent to the price of UK 117000/- paid for the London flat. For the said relief the Respondent paid income tax of Rs.240,000/-. However, NSL was not mentioned by the Respondent in his declaration under the Amnesty Scheme. He referred to the form of declaration of undisclosed income (page 50 of CMA No.7925/2016) filed under the Amnesty Scheme, wherein the Respondent admitted that in the income year 1983-84 (this is assessment year 1984-85), he had an undisclosed income of 117000 equal to Rs.2/- million to whiten the same, the Respondent paid tax in the amount of Rs.240,000/- (para 7 of CMA No.7925/2016). . He submitted that what the Respondent could only whiten under the Amnesty Scheme is his personal incomes and not the London flat which was owned by NSL as a juridical entity. The claim by the Respondent that he had declared that London flat is a mis-statement exposing him to disqualification. Even otherwise the Respondent concealed the beneficial ownership of the flat for approximately 17 years (from 1983 to 2000) until he filed Nomination Papers for contesting the general elections in 2002. Thus the Respondent is not honest and ameen and liable to be disqualified under Article 62 of the Constitution. Alleged false and contradictory declarations about the Banigala property. The crux of the submissions of the learned counsel in this regard is that the Respondent is guilty of
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money laundering and tax evasion with regard to his property in Banigala and the contradictory pleas taken in this regard amount to misdeclaration rendering the Respondent liable to be disqualified under Article 62(1)(f) of the Constitution being not sagacious and honest and ameen. According to the learned counsel, the above submission is borne out by the following facts. 15.The Respondent entered into an agreement for the purchase of land measuring 300 kanals and 5 marlas in village Mora Noor, Tehsil and District Islamabad vide agreement to sell dated 13.3.2002 (concise statement CMA No.7925/2016) for a total sale consideration of Rs.43.5 million payable by 30.06.2002. The concise statement states that Rs.6.5 million was paid as advance (page 15 of CMA No.7925/2016). However, the written, agreement records that initially Rs.300,000/- was paid for expenses by cheque followed by payments of Rs.3.0 million on 13.3.2002 and Rs.3.5 million on 21.3.2002 totaling Rs.6.5 million. An amount of Rs.36.2 million was then paid in five installments made through cheques and another cash payment of Rs.800,000/- through cash (seller's acknowledgment receipts a pages 75 and 76 of CMA No.7925/2016). Learned counsel for…
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