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Petitioner: National Accountability Bureau VS Respondent: Sheikh Muhammad Afzal Honorable Justice Muhammad Tariq Nadeem Jahanzeb Khan Bhrwana , Barrister Momin Malik, Muhammad Umar Qureshi, Barrister Maryam Hayat and Rana Zain Tahir
CITATION: 2026 PCrLJ 1405 CASE: 2026L3050 TITLE: National Accountability Bureau VS Sheikh Muhammad Afzal Honorable Justice Muhammad Tariq Nadeem Jahanzeb Khan Bhrwana , Barrister Momin Malik, Muhammad Umar Qureshi, Barrister Maryam Hayat and Rana Zain Tahir COURT: LAHORE-HIGH-COURT-LAHORE YEAR: 2026 JOURNAL: PCrLJ ============================================================
305 2026 P Cr. L J 1405 [Lahore] Before Muhammad Tariq Nadeem and Muhammad Jawad Zafar, JJ National Accountability Bureau ---Petitioner Versus Sheikh Muhammad Afzal
and others---Respondents Writ Petition No. 3022 of 2025, decided on 23rd June, 2025. (a) National Accountability Ordinance (XVIII of 1999)--- ----Ss. 31-B, 31-D & 31-DD---Proceedings before NAB---Reference concerning fraud by entities and their sponsors---Prior approval of Governor, State Bank of Pakistan---Mandatory requirement---National Accountability Bureau cannot file or proceed with a reference concerning allegations of fraud by various entities and their sponsors without the approval of the Governor, State Bank of Pakistan, and compliance with the procedural safeguards prescribed by Ss.31-B, 31-D & 31-DD of the National Accountability Ordinance, 1999. The State v. Abdul Qayyum 2011 PCr.LJ 252 and Rafiq Haji Usman v. Chairman NAB and another 2015 SCMR 1575 rel. (b) National Accountability Ordinance (XVIII of 1999)--- ----Ss. 5(u) & 31-D---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S. 2(d)---Contract Act (IX of 1872), Ss. 17 & 18---Loan and fraudulent loan---Distinction---For purposes of S.31-D of the National Accountability Ordinance, 1999, no distinction exists between a loan and a fraudulent loan. Abid Amin and 2 others v. National Accountability Bureau PLD 2023 SC 252 rel. (c) National Accountability Ordinance (XVIII of 1999)--- ----Ss. 18 & 32---Proceedings under National Accountability Ordinance, 1999---Civil obligations---Enforcement through criminal proceedings---Impermissibility---Proceedings under the National Accountability Ordinance, 1999 cannot be used to enforce performance of a civil obligation where no charge has been framed, no evidence has been brought on record and no property has been identified as having been created or acquired by the accused persons from money obtained through corruption or corrupt practices. (d) National Accountability Ordinance (XVIII of 1999)--- ----Ss. 9, 18 & 31-B---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), Ss. 4 & 20(1)(b) & (2)---Civil Procedure Code (V of 1908), O. I, R. 10---Criminal Procedure Code (V of 1898), S. 561-A---Constitution of Pakistan, Art. 199---Constitutional petition---National Accountability Bureau reference concerning recovery of defaulted finance---Withdrawal of reference---Refusal by Accountability Court to approve withdrawal--- Complainant / bank seeking impleadment as necessary party---Application under S. 561-A, Cr.P.C.---Maintainability---Locus standi---Reference filed against the accused persons pertained to recovery of defaulted loans---National Accountability Bureau sought withdrawal of the reference, but the Accountability Court declined to approve the withdrawal---Complainant / bank sought impleadment as a necessary party in the constitutional petition filed by NAB against the order of the Accountability Court---Held: Allegations contained in the reference were triable by the Banking Court under Ss. 20(1)(b) & (2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001---Finance facility involved in the reference amounted to Rs.8.04 billion, of which Rs.6.025 billion had already been repaid to the bank---Moreover, 112 properties of the accused / customer stood pledged with the complainant / bank, which could institute a recovery suit against the defaulters---By virtue of S. 4 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, its provisions had effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force---Provisions of the Civil Procedure Code, 1908 were applicable to a petition under Art.199 of the Constitution, however, the complainant / bank had filed an application under S. 561-A, Cr.P.C., which was neither competent nor maintainable---Although proceedings of one kind could be converted into proceedings of another kind, the complainant / bank had not sought conversion of its application under S. 561-A, Cr.P.C. into an application under O.I, R.10, C.P.C.---Complainant / bank was neither an aggrieved person nor possessed locus standi to be impleaded as a party in the criminal proceedings constituted by the NAB reference---Division Bench of the High Court set aside the order of the Accountability Court and approved withdrawal of the reference---Constitutional petition was allowed, in circumstances. Mir Hassan v. Tariq Saeed and 2 others PLD 1977 SC 451; Abdur Rahim and 14 others v. The State and another 1981 SCMR 294; Saad Shibli v.The State and another and State v. Puttan and others PLD SC 617; Sheo Nandan Paswan v. State of Bihar and others AIR 1987 SC 877; Ch. Muhammad Yaqoob and others v. The State and others 1992 SCMR 1983; Akhtar Mahmood, Advocate and another v. The State 1996 SCMR 1342; Ansar Mehmood v. Abdul Khaliq and others 2011 SCMR 713; Sister Mina Lalita Baruwa v.State of Orissa and others AIR 2014 SC 782; Messrs Wak Limited Multan Road, Lahore v. Collector Central Excise and Sale Tax Lahore (Now Commissioner Inland Revenue, LTU, Lahore) and others 2018 SCMR 1474; Qaiser and another v. The State 2022 SCMR 1641; Mst. Samrana Nawaz and others v. MCB Bank Ltd. and others PLD 2021 SC 581; All Pakistan Newspapers Society and others v. Federation of Pakistan and others PLD 2004 SC 600; Multiline Associates v. Ardeshir Cowasjee and 2 others PLD 1995 SC 423; Ardeshir Cowsajee and 10 others v. Karachi Building Control Authority (KMC) Karachi and 4 others 1999 SCMR 2883; Khan Asfandyar Wali and others v. Federation of Pakistan through Cabinet Division, Islamabad and others PLD 2001 SC 607; Bank of Punjab through Group Head of its Special Projects v. Accountability Court No.1, Lahore and 2 others PLD 2014 Lah. 92; Muhammad Nadeem Arif and others v. Inspector General of Police, Punjab Lahore and others 2011 SCMR 408; Shahid Orakazi and another v. Pakistan through Secretary Law, Ministry of Law Islamabad and another PLD 2011 SC 365; Ch. Nisar Ali Khan v. Federation of Pakistan and others PLD 2013 SC 568; Indian Administrative Service (SSC) Association U.P. and others v. Union of India and others 1993 Supp(1) SC cases 730; Capt. (Retd.) Nayyar Islam v. Judge Accountability Court No. III and others 2012 SCMR 669; Naseem Abdul Sattar and 6 others v. Federation of Pakistan and 4 others PLD 2013 Sindh 357; Syed Mushahid Shah and others v. Federal Investment Agency and others 2017 SCMR 1218; Abid Amin and 2 others v. National Accountability Bureau and others PLD 2023 SC 252; Mian Ayaz Anwar and others v. State Bank of Pakistan and others 2019 CLD 375; Capt. (Retd.) Nayyar Islam v. Judge, Accountability Court No. III and others 2012 SCMR 669; Salman Asharaf v. Additional District Judge, Lahore and others 2023 SCMR 1292; Kalb-e-Ali and 2 others v. Chairman, National Accountability Bureau and 4 others 2011 PCr.LJ 565; Khan Asfandyar Wali and others v. Federation of Pakistan through Cabinet Division Islamabad and others PLD 2011 SC 607; Muhammad Yaqoob v. Mohsin Ali and others 1999 CLC 1173; Rafiq Haji Usman v. Chairman NAB and others 2015 SCMR 1575; and Mian Ayaz Anwar and others v. State Bank of Pakistan and others PLD 2019 Lah. 310 rel. Jahanzeb Khan Bhrwana, APG, NAB assisted by Mst. Fatima Shahid, Special Prosecutor, Fareed-ul-Hassan, DPGA NAB and Rai Waqas Ahmad, Assistant Director/I.O. NAB for Petitioners. Kh. Haris Ahmad for Applicant (in C.M. No. 04 of 2025). Barrister Momin Malik, Muhammad Umar Qureshi, Barrister Maryam Hayat and Rana Zain Tahir for Respondent No. 2. Javed Arshad for Respondent No. 4. Salman Aslam Butt, Shoaib Rashid and Hameed Bux for Respondent No. 10. Mian Muhammad Kashif, Imran Iqbal and Ameer Hamza Dogar for Respondent No. 18. Dates of hearing: 22nd, 26th May, 2nd, 12th, 16th, 17th, 18th, 19th and 23rd June, 2025. Judgment Muhammad Tariq Nadeem, J .--- Cursory facts of the case are that NAB filed a Reference No. 62/2008 ( "the Reference" ) titled as "The State v. Sh. Muhammad Afzal, etc." under section 18 (g) read with section 24 (b) with the allegations pertaining to the provisions of section 9(a)(i)(iii)(vi)(ix) and (xii) punishable under section 10(a) and serial No. 05 of the Schedule of the National Accountability Ordinance, 1999 (the "NAO, 1999") which is pending adjudication before the Accountability Court No. X, Lahore. NAB through Deputy PGA, NAB Lahore filed application under section 31-B(2) of NAO, 1999 for withdrawal of prosecution on behalf of Chairman NAB, which was dismissed by the learned trial court vide order dated 18.11.2024. NAB through Deputy PGA, NAB Lahore challenged the above mentioned order dated 18.11.2024 through titled writ petition. During the pendency of above titled writ petition Bank of Punjab filed an application under section 561-A, Cr.P.C. for impleadment as respondent through C.M. No. 04 of 2025 in Writ Petition No. 3022 of 2025. 2. It is, inter alia , contended by learned counsel for the applicant/bank of Punjab that BOP is an aggrieved party in this case, although it is not necessary party but at the same time is a proper party; that while filing writ petition applicant/Bank has not been impleaded as respondent therein; that applicant /BOP is the complainant in the aforementioned reference and as such a victim of the acts of corruption and corrupt practices for which the accused stand charged in the above mentioned reference; that as per provisions of section 10 of the NAO, 1999 any assets and/or pecuniary resources which are found to have been acquired by the accused by money obtained through corruption and corrupt practice are to be forfeited and concerned bank or financial institution (BOP in the instant case) as the case may be would be entitled to receive the same; additionally submitted that recent events have transpired during the trial proceedings that NAB now openly favoring the accused in the afore said reference and continuously making efforts to secure their acquittal and return of proprieties seized from them which is evident from the facts and circumstances of the case; that Chairman NAB has not made any consultation with the Prosecutor General, NAB and simply relied upon the recommendation of high level committee of the NAD which is nullity in the eye of law; that NAB had been strongly contested all the applications filed by the accused for dismissal of reference or for acquittal of accused under section 265-K, Cr.P.C. that 81 witnesses had been recorded in this case and remaining evidence has been closed by the NAB being in connived with the accused; that the case in hand do not pertain to loan rather under the garb of restructing or rescheduling of loan, in fact fraud had been committed, in this way, this case do not fall within the domain of Financial Institutions (Recovery of Finance) Ordinance, 2001; moreover the charge against the accused has been framed with the allegation that fraud was committed by the accused under the garb of loan. Learned counsel for the applicant has placed reliance upon the case laws reported as "Mir Hassan v. Tariq Saeed and 2 others" (PLD 1977 SC 451), "Abdur Rahim and 14 others v. The State and another" (1981 SCMR 294), "Saad Shibli v. The State and another v. Puttan and Others (PLD 1981 Supreme Court 617), "Sheo Nandan Paswan v. State of Bihar and others" (AIR 1987 SC 877) "Ch. Muhammad Yaqoob and others v. The State and others" (1992 SCMR 1983), "Akhtar Mahmood, Advocate and another v. The State" (1996 SCMR 1342), "Ansar Mehmood v. Abdul Khaliq and another" (2011 SCMR 713), "Sister Mina Lalita Barinva v. State of Orissa and others" (AIR 2014 Supreme Court 782), "Messrs Wak Limited Multan Road, Lahore v. Collector Central Excise and Sale Tax Lahore (Now Commissioner Inland Revenue, LTU, Lahore) and others" (2018 SCMR 1474), "Qaiser and another v. The State" (2022 SCMR 1641), "Mst. Samrana Nawaz and others v. M.C.B Bank Ltd. And others" (PLD 2021 Supreme Court 581), All Pakistan Newspapers Society and others v. Federation of Pakistan and others" (PLD 2004 SC 600), "Multiline Associates v. Ardeshir Cowasjee and 2 others" (PLD 1995 SC 423), "Ardeshir Cowasjee and 10 others v. Karachi Building Control Authority (KMC) Karachi and 4 others" (1999 SCMR 2883), "Khan Asfandyar Wali and others v. Federation of Pakistan through Cabinet Division, Islamabad and others" (PLD 2001 SC 607), "Bank of Punjab through Group Head of its Special Projects v. Accountability Court No. 1, Lahore and 2 others" (PLD 2014 Lahore 92), "Muhammad Nadeem Arif and others v. Inspector General of Police, Punjab Lahore and others" (2011 SCMR 408), "Shahid Orakazi and another v. Pakistan through Secretary Law, Ministry of Law Islamabad and another" (PLD 2011 SC 365), "Ch. Nisar Ali Khan v. Federation of Pakistan and others" (PLD 2013 SC 568), "Indian Administrative Service (S.C.S) Association U.P. and others v. Union of India and others" (1993 Supp(1) SC cases 730) . 3. The learned Additional Prosecutor General NAB has contended that in terms of section 31(B)(2) of NAO, 1999 Chairman NAB is fully competent to recommend for withdrawal of reference. Moreover, a high level committee was also constituted in this respect and after the consultation with the Prosecutor General, Chairman NAB recommended for withdrawal. Further argued that Bank of Punjab is not the complainant in this reference and the proceedings were initiated on the basis of a news clipping. The Bank of Punjab is neither aggrieved party nor necessary or proper party. The proceedings in hand are criminal nature, in this way, Bank of Punjab cannot be impleaded as party in this case. According to law only Chairman NAB, Prosecutor General and accused are relevant with respect to proceedings of reference. To embellish his arguments, he has placed reliance upon the following case laws titled as "Capt. (Retd) Nayyar Islam v. Judge Accountability Court No. III and others" (2012 SCMR 669) and "Naseem Abdul Sattar and 6 others v. Federation of Pakistan and 4 others" (PLD 2013 Sindh 357) that provisions of section 20 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 are applicable and taking it appropriate after appraisal of the facts and circumstances of the case as well as taken into the context the amendment in the National Accountability Ordinance, 1999 having retrospective application that the matter has culminated whereas Reference No. 62/2008 is required to be withdrawn for want of jurisdiction. The matter is legal in nature and is one of the factors in the writ petition before this Court, for the reason, Bank of Punjab has no locus standi to intervene in the proceedings but also neither a necessary or proper party to be impleaded in the
Lis . 4. Learned counsel for the respondent No. 2 while adopting the arguments of learned Additional Prosecutor for NAB further submitted that withdrawal of reference under section 31(B)(2) of NAO, 1999 is in compliance and as per direction of the august Supreme Court of Pakistan in Civil Petitions Nos. 1377 and 1378 of 2015 in the case wherein learned Prosecutor General stated that inquiries in these matters were initiated in 2013 and according to his opinion, these should be withdrawn. The Reference will be withdrawn by the NAB without delay. The same order has been upheld in the subsequent review petition filed by NAB bearing C.R.P. No. 549/2015 vide order dated 15.03.2016 in which Bank of Punjab was also a party and duly represented. Similarly, in case titled as "Bank of Punjab and others v. Sheikh Muhammad Afzal, etc."
in CPs Nos. 20, 27, 39 and 45 of 2009
vide order dated 01.06.2017 the august Supreme Court of Pakistan disposed of all matters concerning Bank of Punjab, Sheikh Muhammad Afzal (respondent No. 2) with the observations that on account of subsequent developments we find that the present matters have seemingly been rendered infructuous. Perhaps for this reason no one is present on behalf of Bank of Punjab to pursue the matter, therefore, all the mattes are disposed of on both counts. However, if these matters have any live issue, Bank of Punjab may move an application for resurrection thereof within a period of six weeks. In this way, it is clear that Reference is supposed to be withdrawn by the NAB. The above mentioned orders are binding within the meaning of Article 189 of the Constitution of Islamic Republic of Pakistan, 1973 and the impugned order dated 18.11.2024 passed by the leamed Accountability Court No. X is illegal, unlawful, void ab-initio and liable to be set aside. He further relied upon the dictum laid in cases titled as "Syed Mushahid Shah and others v. Federal Investment Agency and others" (2017 SCMR 1218), "Abid Amin and 2 others v. National Accountability Bureau and others" (PLD 2023 SC 252). Moreover, forum for the redressal of grievance between Financial Institutions and Customers even in cases of fraud, willful default, etc. is the Banking Court and by virtue of section 20(7) of FIO, 2001. Even otherwise, under section 4 of FIO, 2001 and the case of Syed Mushahid Shah ibid FIO, 2001 shall have overriding effect over NAO, 1999 in such matters. He further argued that above mentioned view and the ouster jurisdiction of NAB has been upheld by a Full Bench of this Court in case titled as "Mian Ayaz Anwar and others v. State Bank of Pakistan and others" (2019 CLD 375), Lastly submitted that under sections 31(D) and 31(DD) of NAO, 1999 there is no approval or reference of the Governor State Bank of Pakistan to institute the proceedings and hence the entire proceedings are void ab-initio. 5. Learned counsel for respondent No. 4 also renders his arguments almost on the same lines as argued by learned counsel for respondent No. 2. 6. Learned counsel for respondent No 10 vociferously argued that in an identical matter Khurram Iftikhar/respondent No. 10 approached this Court through Writ Petition No. 23231 of 2015 and proceedings initiated by NAB against him as well as his co-accused were quashed/set aside vide order dated 07.12.2018 in the light of detailed judgment of even date rendered in Writ Petition No. 14172/2012 which was also approved for reporting. The decision of the case is "Mian Ayaz Anwar and others v. State Bank of Pakistan and others" (PLD 2019 Lah. 310). He further argued that the above mentioned order was challenged before the august Supreme Court of Pakistan through CPLA No. 1390/2019 wherein Bank of Punjab was also respondent. The above mentioned CPLA was withdrawn through C.M. No. 7531 of 2023 on 28.11.2023. He further stated that Bank of Punjab has not challenged the order passed in the above mentioned writ petition by a Full Bench of this Court, in this way, matter attained finality. The case in hand is almost same. He also laid much emphasis on the point that athough in case titled as "Bank of Punjab through Group Head of its Special Projects v. Accountability Court No. 1, Lahore and 2 others" (PLD 2014 Lahore 92), it has been held that Bank of Punjab is an aggrieved party but case titled as "Capt. (Retd.) Nayyar Islam v. Judge, Accountability Court No. III and others" (2012 SCMR 669) which has binding force, was not taken into account and even discussed by High Court, in this way, Article 189 of the Constitution of Islamic Republic of Pakistan, 1973 will prevail and judgment of the Supreme Court of Pakistan will be followed. With respect to case titled as "Bank of Punjab through Group Head of its Special Projects v. Accountability Court No. 1, Lahore and 2 others" (PLD 2014 Lahore 92) the principle of sub silencio is also fully attracted. 7. Learned counsel for respondent No. 18 has argued that writ petition in hand has arisen from the proceedings in criminal statute, NAO. In the prosecution of cases under NAO a complainant, victim or aggrieved person does not figure. He has placed reliance upon the case laws titled as "The State v. Abdul Qayyum" (2011 PCr.LJ 252). Moreover, Court have no power to add party to criminal proceedings, even otherwise, complainant has no right of appeal in terms of section 32 of NAO, 1999. He further argued that proceedings of NAB cannot be used for the performance of civil obligation. A reference in this respect has been made upon the case laws titled as "Rafiq Haji Usman v. Chairman NAB and another" (2015 SCMR 1575), "Salman Asharaf v. Additional District Judge, Lahore, etc." (2023 SCMR 1292) that section 31 (DD) has been inserted by subsequent amendment, full effect has to be given to this provision, because obviously legislature wanted to provide new right and obligations and to bring a change in existing legal position by making this amendment. Earlier judgments under section 31-D cannot be read so as to eclipse the operation and effect of section 31-DD. He also laid much stress upon the fact that approval of loan was granted by Board of Directors and not only Khurram Iftikhar, he only has been made as an accused meaning thereby the approval was legal. Lastly submitted that Chairman NAB is fully competent to withdraw the reference, if having regard to the totality of facts, circumstances and evidence, he is of the view that reference is unjustified. 8. We have heard arguments of learned counsel for the parties at length and perused the record minutely with their able assistance. 9. The moot point for determination before this Court is that as to whether Chairman NAB is competent to recommend for withdrawal of reference after framing of charge and recording of some evidence, similarly, whether Bank of Punjab can be impleaded as a necessary and proper party as prayed for by the Bank of Punjab through C.M. No. 04 of 2025? We have noticed that reference in question and withdrawal whereof is being sought by the National Accountability Bureau ("NAB") which was filed without approval of Governor State Bank of Pakistan and pertains to allegations of fraud having been committed by various entities and its sponsors, same cannot be proceeded with nor can be filed being in violation of procedural safeguards provided in National Accountability Ordinance, 1999 (the "Ordinance"). Section 31 (B), Section 31(D) and section 31(DD) are hereby reproduced as infra for the purposes of facilitation:-. 31B. Withdrawal and termination of pending proceedings. - (1) Prior to filing of a reference, the Chairman, NAB in consultation with the Prosecutor General, having regard to the totality of facts, circumstances and evidence, may partly, wholly, conditionally or unconditionally withdraw or terminate any proceedings under this Ordinance, if such proceedings are unjustified. (2) After the filing of a reference, if the Chairman, NAB in consultation with the Prosecutor General, having regard to the totality of facts, circumstances and evidence is of the view that the reference is Partly or wholly unjustified, he may recommend to the Court for approval where the matter is pending that the reference may partly or wholly be withdrawn or terminated and upon such withdrawal or termination (i) if it is made before a charge has been framed, the accused shall be discharged in respect of such offence or offences; and (ii) if it is made after a charge has been framed, he shall be acquitted in respect of such offence or offences. 31D. 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 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 6[conducted] without reference from the Governor, State Bank of Pakistan. 31DD. Approval of the State Bank of Pakistan. -Notwithstanding anything contained in this Ordinance or any other low for the time being in force, no Inquiry, Investigation or proceedings in respect of a decision of a Board 8[or credit committee] of a Bank or financial institution, shall be initiated without the prior approval of the Governor, State Bank of Pakistan. Section 31(DD) has been introduced through the amendment in the year 2022 by way of Act XI of 2022, loan facilities were granted to various entities to "Haris Steel Group" from the year 2003-2004.…
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