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Petitioner: The STATE through Chairman NAB and others VS Respondent: MUHAMMAD ASIF SAIGOL JUDGMENT
Court Name: Supreme Court of Pakistan Judge(s): Gulzar Ahmed, Qazi Faez Isa, Dost Muhammad Khan Title:The STATE through Chairman NAB and others vs MUHAMMAD ASIF SAIGOL
JUDGMENT
Reported As: PLD 2016 Supreme Court 620 Result: Order accordingly Judgment JUDGMENT QAZI FAEZ ISA, J. A learned Division Bench of the Lahore High Court at Lahore through a common judgment dated 8th July 2003 ("the impugned judgment") had dismissed three criminal appeals filed by Muhammad Asif Saigol ("MAS") against his conviction by the Accountability Court, Lahore in the three separate references filed by the Chairman, National Accountability Bureau ("NAB"), but reduced the sentences of imprisonment to what he had already undergone. The fines imposed by the Accountability Court, which were ordered to be recovered from MAS, the High Court directed, "to be recovered under section 386 of the Cr. P.C. And from the assets of the Companies". 2. That against the impugned judgment both MAS and the NAB filed petitions seeking leave to appeal before this Court and by a common order dated 8th May 2006 leave was granted to inter alia, examine the following: "i. As to whether prosecution has established guilt against the convict by producing convincing evidence, if not so, what would be its effects? As to whether in presence of incriminating material brought against convict, learned High Court was justified under the law to reduce the sentence without taking into consideration that prosecution has established guilt against him." Two of the companies have also filed petitions for leave to appeal because the High Court ordered that the fine should be recovered from the sale of their properties. Vide order dated 8th May 2006 notice was also issued in respect of these two petitions and they were ordered to be fixed along with the above mentioned appeals.
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3. By this common judgment the three appeals filed by MAS, the three appeals tiled by the NAB and the two petitions filed by two of the companies are being decided together because all of the cases arise out of the same common impugned judgment. 4. MAS was the Chief Executive of Mohib Textile Mills Limited, Mohib Fabrics Industries Limited and Mohib Exports Limited (hereinafter collectively referred to as "the Companies") when three separate complaints were submitted by three different financial institutions to the NAB under the National Accountability Ordinance, 1999 ("NAB Ordinance"). The complaints, mentioned hereunder, were investigated by the NAB and subsequently references were submitted by the Chairman NAB to the Accountability Court. (1) Complaint dated 11th December 1999 was filed by the Pakistan Industrial Leasing Corporation Limited ("PILCORP") before the NAB alleging that PILCORP had provided a lease/finance facility to Mohib Textiles Mills Limited, however, the company failed to meet its obligations in respect of the payment of lease rentals under the terms of the lease agreement. Reference No, 10 of 2000 was submitted by the Chairman NAB to the Accountability Court, which charged MAS under section 9(a) (viii) read with item No,1 (a) of the 'Schedule of Offences' to the NAB Ordinance pertaining to wilful default. (2) Complaint dated 13' December 1999 was submitted by Allied Bank Limited to the NAB, wherein it was alleged that the Bank had provided finance facilities to Mohib Fabrics Limited, which were to be repaid as per the agreed schedule, but the company did not make payments as had been agreed. Reference No, 17 of 2000 was submitted by the Chairman NAB to the Accountability Court, which charged MAS under section 9 (a) (viii) read with item No, 1(a) of the 'Schedule of Offences' to the NAB Ordinance. (3) Complaint dated 7th December 1999 was filed by Askari Commercial Bank Limited before the NAB, which stated that Mohib Exports Limited had not repaid the amount that had accumulated on account of the financial facilities provided by the, Bank to the company. Reference No, 18 of 2000 was submitted by the Chairman NAB to the Accountability Court, which charged MAS under section 9 (a) (viii) read with item No, 1 (a) of the 'Schedule of Offences' of the NAB Ordinance. The particulars of the abovementioned cases are as under: Mohib Tetiles Mills LimitedMohib Fabrics LimitedMohib Exports Limited Complainant Pakistan Industrial Leasing Corporation LimitedAllied Bank Limited Askari Commercial Bank Limited. Complaint date 11.12.1999 13.12.1999 7.12.1999 Reference Date No.10 of 2000 14 February 2000No.10 of 2000 12 April 2000No.10 of 2000 12 April 2000 Accountability Court judgment date7 July, 2001 17 June, 2002 4 August 2001 Cr. Appeal filed by MAS before the High CourtNo.1092 of 2001 No.1075 of 2001 No.29 of 2002 Cr. Appeal filed by MAS before Supreme CourtNo.277 of 2006 No.278 of 2006 No.279 of 2006 Cr. Appeal filed by NAB beforeNo.275 of 2006 No.276 of 2006 No.274 of 2006th th th th th th
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Supreme Court Cr. Petition filed by Mohib Farbrics Limited before Supreme Court No.78-L of 2004 Cr. Petition filed by Mohib Exports Limited before Supreme Court No.79-L of 2004 5. Mr. Aitzaz Ahsan, the learned senior counsel representing MAS and the two companies, stated that MAS was arrested on 16' November 1999, the very date the Ordinance was promulgated, without prior determination of the purported liability of the Companies. He submitted that MAS was not at the helm of the affairs of the Companies for some time as he was busy with the treatment of his wife as she was suffering from cancer, from which she could not recover and passed away in April 1996, before the filing of the References by the Chairman NAB. He 'stated that the courts below did not appreciate that on the dates the purported crimes of wilful default were committed, or even on the dates that the complaints were submitted, the phrase wilful default had not been statutorily defined, which was defined by the National Accountability Bureau (Amendment) Ordinance, 2000 ("Ordinance IV of 2000"), by inserting a new clause (r) to section 5 of the NAB Ordinance, which had the effect of virtually equating wilful default with a simple default. The three complaints, on the basis whereof the References were filed by the Chairman NAB, predated the insertion of the said clause (r) which was done on 3 February 2000, therefore, the learned counsel contended, wilful default as it was subsequently defined would not be relevant to determine the guilt of MAS and instead wilful default was to be given its ordinary meaning. He further stated that it was also not the case of the prosecution that any loan or financial facility provided by the financial institutions was diverted by MAS for his or any other person's personal benefit or use or that it had not been utilized by the Companies. According to the learned counsel, it is a fairly common aspect of business that companies default in the repayment of loans for factors completely beyond the management's control, consequently, against such defaulters civil cases may be instituted for the recovery of outstanding amounts or such companies may be wound-up or liquidated, but this did not mean that the management was guilty of any crime. Reliance was also placed upon the following cases: Waqar Azim v State (2002 YLR 1811), Munir Ahmed v State (2004 PCr.LJ 2012, the orders of this court whereby the judgments in these two cases were upheld, Khan Asfandyar Wali v Federation of Pakistan (PLD 2001 Supreme Court 607), Ismail Dossa v Monopoly Control Authority (PLD 1984 Karachi 315) and Federation of Pakistan v Hasham Ali Shah (PLD 1954 Lahore 769). 6. On the other hand, Mr. Muhammad Akbar Tarrar, the learned Additional Prosecutor General NAB, stated that the crime of wilful default was fully established and MAS was rightly convicted and sentenced by the Accountability Court. Whose conviction was upheld by the High Court, and the facts of the cases did not justify reduction in his sentences. He sought restoration of the sentences imposed by the Accountability Court which, according to him, were reduced on the basis of no recognized legal principle. Rebutting Mr. Aitzaz Ahsan contention with regard to the offence of wilful default, the learned Additional Prosecutor General said that, the definition of wilful default was changed through Ordinance No, IV of 2000 whereby clause (r) was added to section 5 of the NAB Ordinance; the amendment defined wilful default and the facts of these cases came within the four corners of the said definition. He further stated that in the case of Asfandyar Wali (above) this Court had upheld the retrospective operation of the NAB Ordinance. He next contended that, if the determination by the financial institutions of the outstanding liabilities of the Companies was not correct there was nothing preventing MAS from submitting his own version thereof, but he did not
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do so, therefore, the contention of Mr. Aitzaz Ahsan, that there was no prior determination of liabilities of the Companies, is of no significance. It was lastly stated that the offence of wilful default is one of strict liability and does not require any element of mens rea and to constitute such offence it is sufficient that the outstanding amount was not paid as per the agreements between the parties. 7. We have heard the learned counsel in court at considerable length and with their assistance have also gone through the relevant record. An opportunity was also provided to both sides to augment their submissions by submitting written arguments within a period of a week. ' Mr. Aitzaz Ahsan submitted 'Synopsis of Arguments belatedly on 26th April 2016. 8. The question that requires determination is whether the criminality of the offence is to be determined on the basis of the phrase wilful default contained in the (original) NAB Ordinance or as the term was subsequently defined pursuant to the insertion of clause (r) in section 5 of the NAB Ordinance. If criminality is to be determined on the basis of the offence of wilful default before the said amendment was made then the elements of both wilful and default, which constitute the offence, have to be present and it must be established that in addition to a default there was also wilful intent. A simple or mere default on its own would not constitute the offence. If, on the other hand, criminality is to be considered in the light of the post amendment scenario then the burden of the prosecution has been considerably lessened as the wilful aspect of the crime has been diluted, if not altogether eliminated. 9. MAS was charged under section 9 (a) (viii) read with item No,1(a) of the Schedule of Offences to the NAB Ordinance. Initially there was no clause (viii) to section 9 (a) of the NAB Ordinance, which, along with clause (r) to section 5, were inserted on 3th February 2000 by Ordinance IV of 2000. MAS was convicted under the said provisions, we therefore need to examine as they originally stood in the NAB Ordinance and how they were changed subsequently. The said provisions in the original NAB Ordinance and the changes made thereto are reproduced hereunder: The original text of the NAB Ordinance: "9 (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 practice." Addition made on 3"1 February 2000 by Ordinance IV of 2000: "(viii) if he commits an offence of wilful default:" The original text of the NAB Ordinance: "Schedule of Offences" 1. "Corruption and Corrupt Practices" "(a) wilful default in repayment of outstanding dues to a Bank or a financial Institution shall be an offence or deemed to be an offence of corruption and / or corrupt practices." Addition made on 3rd February 2000 by Ordinance IV of 2000: "Section 5 (r): "wilful default": a person is said to commit an offence of willful default under this Ordinance if he does not pay or return or repay the amount to any bank, financial institution, cooperative society, or a Government department or a statutory body or an authority established or controlled by a Government on the date that it became due according to the laws, rules, regulations, instructions, issued or notified by a bank, including the State Bank of Pakistan, financial institution, cooperatives society, Government Department. Statutory body or an authority established or controlled by a Government, as the case may be, and a period of thirty days has expired thereafter: Provided that it is not wilful default under this Ordinance if the accused 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 or a Government department or a statutory body or an authority established or controlled by Government."
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In addition to the aforesaid proviso ("the first proviso") two further provisos ("the second proviso" and the third proviso" respectively) were added to section 5 (r) of the NAB Ordinance by the National Accountability Bureau (Amendment) Ordinance. 2001 ("Ordinance XXXV of 2001") promulgated on 10th August 2001, which are reproduced hereunder: "Provided further that in the case of default concerning a bank or a financial institution a seven days notice has also been given to the defaulter by the Governor, State Bank of Pakistan: Provided further that 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. " 10. The complaints against MAS were submitted before any of the aforesaid amendments had been made and the amendments brought about by Ordinance XXXV of 2001 were made after the References were filed by the Chairman NAB before the Accountability Court. Therefore, whether the amendments were given retrospective effect would be relevant to determine the question of liability in these cases. It is also to be noted that the third proviso (inserted by Ordinance XXXV of 2001), itself, states that the requirement of serving notices would not apply to pending cases. However, Ordinance IV of 2000 did not state that the amendments brought about by it to the NAB Ordinance would have retrospective application. 11. In Asfandyar Wali's case, this Court had issued certain directions, including the requirement of obtaining a report from the Governor, State Bank of Pakistan with regard to whether or not the matter was one of willful default. Consequent to the said directions, the NAB Ordinance was amended. On 5th July 2000 by the National Accountability Bureau (Second Amendment) Ordinance, 2000 ("Ordinance XXIV of 2000") and section 31D was incorporated into the NAB Ordinance, which provided that a report from the Governor of the State Bank of Pakistan had to be obtained before any inquiry or proceeding could be initiated or conducted by the NAB or any other action taken under the NAB Ordinance. However, in these cases no report was received from the Governor of the State Bank of Pakistan because the said amendment was inserted in the NAB Ordinance after the References had already been filed by the Chairman NAB, and, as the said provision stated, its operation was not retrospective. The said section 31 D of the Ordinance is reproduced hereunder: "31D. 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 rescheduled loans shall be initiated or conducted by the National Accountability Bureau against any person, company or financial institution without reference from 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." The requirement to obtain a report from the Governor of the State Bank acted as a safeguard against the misuse by financial institutions of the NAB Ordinance to seek recovery of their outstanding amounts and also acted as a check on overzealous officers of the NAB. However, the benefit of this important safeguard was not available to MAS as the effect of this provision was not made retrospective. 12. The offence of 'willful default' was defined, for the first time, on 3rd February 2000 by Ordinance IV of 2000 which inserted clause (r) in section 5 of the NAB Ordinance. Mr. Tarrar urged, that applying the ratio of Asfandyar Wali (above), section 5 (r) has to be given retrospective effect, from the date of the promulgation of the NAB Ordinance itself. Mr. Ahsan also relies upon the same judgment but for the purpose of determining as to what constitutes willful default. The judgment in Asfandyar Wali's case considered the constitutionality of the NAB Ordinance and particularly
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whether it offended Article 12 of the Constitution of the Islamic Republic of Pakistan ("the Constitution"), which provides protection against retrospective punishment. It also considered the definition of the words willful and default, including the phrase willful default, as interpreted in local and foreign cases and as defined in legal dictionaries, however, there was no determination with regard to the offence of willful default wherein complaints were submitted and/or the proceedings commenced before the insertion of clause (r) in section 5 of the NAB Ordinance. Article 10 of the Constitution provides that, "No law shall authorize the punishment of a person - (a) for an act or omission that was not punishable by law at the time of the act or omission". There is no reason for us to limit the ambit of this fundamental right and / or to extend the ratio, of the judgment in the case of Asfandyar Wali by giving the phrase willful default, as it came to be subsequently defined, retrospective effect from the date that the NAB Ordinance was promulgated. The phrase willful default was statutorily defined on 3"I February 2000. Therefore, it is from this date that it is to be given effect as per the definition; and, even more so when, neither the said provision nor the Ordinance IV of 2000, through which it was inserted, had stipulated that it will be applied retrospectively. 13. That having determined that in these cases the phrase willful default is to be given its ordinary meaning (and not how it came to be subsequently defined by clause (r) to section 5 of the NAB Ordinance) it has to be considered whether MAS had committed the offence of willful default. However, before we proceed to do so, we need to understand what the phrase willful default means. In the case of Waqar Azim v. State (2002 YLR 1811), a Division Bench of the Lahore High Court considered the phrase willful default and held (paragraph 17 at page 1832) that it required a deliberate and calculated refusal to pay, as under: "Mere non-payment or default cannot be equated with willful default so as to bring it within the ambit of section 5(r) of the Ordinance. As discussed above, the Company was genuinely formed with an ambitious plan to produce High Tech Printed Circuit Boards and it was reasonably hoped that the Company would go into production in the month of April, 1990. However, their ambitious plan was frustrated due to the failure of the bank to provide finance for two L.Cs., for release of the imported raw- material. The appellants' learned counsel has rightly urged that the prosecution must provide mens rea on the part of the accused before making them penalty liable for the offence of willful default. The offence of willful default denotes deliberate and calculated refusal to pay the loan amount. If a person is unable to return or pay the amount due to circumstances beyond his control or the failure of the Bank or financial institution to fulfill its contractual liability in the matter of providing financial facility to the accused, then he may be held liable for default alone not amounting to the offence of "willful default" as defined under section 5 (r) of the Ordinance." An Appeal against the above mentioned judgment was preferred by the State (Criminal Appeal No, 44 of 2004) which was dismissed (on 14th January 2015 by a common judgment), wherein this Court held, that: "As regards the respondents in Criminal Appeal No, 44 of 2004 the said respondents were the Directors of the relevant company which had obtained a financial facility and through an elaborate discussion the High Court had reached a conclusion that the prosecution had failed to establish that the said respondents had formed an intention at the very beginning of the transaction not to return the amount obtained through the financial facility inasmuch as after obtaining the said amount they had constructed a building and had imported some machinery and had also installed the same. According to the High Colin in the absence of initial dishonest intent the charge against the said respondents could not stick. We have applied our independent minds to the facts and circumstances of the case and have found that the conclusions reached by the High Court vis-a-vis the respondents in Criminal Appeals Nos. 43 and 44 of 2004 were neither
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arbitrary nor whimsical and the same did not suffer from any perversity warranting interference in the matter of acquittal of the said respondents. The said appeals are, therefore, dismissed." In the case of Munir Ahmed v. State (2004 PCr.LJ 2012) a Division Bench of the High Court of Sindh at Karachi held (at page 2020) that the amount outstanding has to be ascertained before seeking its recovery, as under: "Thus, the accounts were not settled between the parties from the year 1994 even before the promulgation of Ordinance, 1999. When the dues are not determined as per law, rules and regulations, then the question of recovery of such dues does not arise. Hence the case would not be covered within the definition of wilful default.- A petition for leave to appeal was filed against the above mentioned judgment, but the judgment of the High Court was upheld in Criminal Petition No, 527 of 2003 by this Court vide judgment dated 16th June 2009. In the case of Ismail Dossa v Monopoly Control Authority (above), Saleem Akhtar J, when he was a Judge of the Sindh High Court, considered the significance of the word 'willful' when it preceded the word 'default' as appearing in the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance of 1970, and held (at pages 332-333) that it had to constitute a wrongful or intentional failure, as under: " There is a sharp difference in the meaning of the word "default" and "willful default" or "willful failure". There can be no cavil with the meaning of "default" as stated by the learned Authority, but will this meaning apply to "willful default" or "willful failure". The fact that the word "failure" has been qualified by the word "willful" indicates that the 'failure' or 'default' should be wrongful or intentional. 'Willful failure' as it is apparent, will occur when a party has purposely failed to comply with the provisions or intentionally avoided to comply, knowing full well that he is duty-bound to do so. In such cases the party knows that he has to do a certain act but intentionally persists to follow a different course. If the failure is without any intention it will be a "default" or "failure" simpliciter, but if it is intentional it will amount to "willful default" or "willful failure". In this regard reference can be made to Horabin v. British Overseas Airways Corporation ((1952) 2 AER 1016), where the meaning of "willful misconduct" has been explained in the following manner: "Willful misconduct is misconduct to which the will is a party, and it is wholly different in kind from mere negligence or carelessness, however, gross that negligence or carelessness may be. The will must be a party to the misconduct, and not merely a party, to the conduct of which complaint is made. As an example if the Pilot of an Aircraft knowingly does some thing which subsequently a Jury find amounted to misconduct, that fact alone does not show that he was guilty of wilful misconduct. To establish willful misconduct on the part of this imaginary Pilot, it must be shown not only that he knowing (and in that sense willfully) did the wrongful act, but also that, when he did it, he was aware that he was committing misconduct." Barry, J., has illustrated it in the following words: "The same act may amount on one occasion to mere negligence, and on another to wilful misconduct. Two men driving motor cars may both pass traffic right after they have changed from yellow to red. In both cases there are the same act, a same traffic light, the cross-road, and the same motor-car. In the…
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