Al Wakeelo
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Petitioner: MUZAMMIL NIAZI and others VS Respondent: THE STATE
Court Name: Sindh High Court Judge(s): Rehmat Hussain Jaffery, Sarmad Jalal Osmany, Shabbir Ahmed Title: MUZAMMIL NIAZI and others vs THE STATE Case No.: Criminal Bail Applications Nos.118 and 212 of 2003 Date of Judgment:2003-07-09 Reported As: PLD 2003 Karachi 526 Result: Reference answered
Judgment ORDER SARMAD JALAL OSMANY, J.--As both these Bail Applications arise out of the same reference, we propose to dispose them of through this common order. 1. The facts giving rise to the filing of the Reference viz. No,29 of 2002, are that applicant/accused Javed Burki was the Chairman of the Board of Directors of Pakistan Automobile Corporation (Pvt.) Ltd. (PACO) at the relevant time whereas applicant/accused Muzammil Niazi was appointed the Managing Director of Trailer Development Corporation of Pakistan (Pvt.) Ltd. (TDC). As both these Companies were State-owned companies, the applicants were thus public servants. That from 1987 to 1991, PACO and Pakistan Motor Car Company (PMC) (a unit of PACO), spent huge amounts on research and development of a Truck for Pakistan Army while utilizing the facilities of TDC. After the finalization and approval this was named as "Yasoob Truck". 2. Based on the foregoing facts and circumstances the reference against the applicants enumerates the following allegations:-- (a) That in violation of the Prime Minister's Directive dated 30-5-1991 whereby production of the vehicle was to be undertaken by utilizing the existing manufacturing facilities of PACO and the Pakistan Army, the accused in gross violation thereof and with criminal intent sponsored the formation of a company in the private sector viz: Trans Mobile Ltd. (TML) to undertake this project which was envisaged through a Joint Venture Agreement between PMC and Management Partners (Pvt.) Ltd. (MPL) a company formed by applicant Muzammil Niazi alongwith some other ex- employees of PACO (Para. 5 of the Reference). (b) That although TDC had manufactured the proto type of the vehicles and also had enough capacity/expertise to undertake the production of the same, its premises were rented out to TML
---
## Page 2
which resulted in the forcible closure of TDC. Even the agreed rent was not paid to TDC which was thereupon compelled to file Suit No,983 of 1998 against TML before this Court for recovery etc. (para.7 of the Reference). (c) That the Joint Venture Agreement between PMC (a unit fully owned by the Government of Pakistan through PACO) and MPL is heavily biased in favour of MPL which was formed by accused No,2 and his associates which is clear evidence of the favouritism extended to accused No,2 by accused No,1 at the expense of the Government of Pakistan, (para.8 of the Reference). (d) That the accused No,1 posted accused No,2 only for four days to PACO from his assignment in TDC as M.D. So that the latter could benefit from the voluntary retirement scheme in PACO which was unavailable to him in TDC. This is yet again a favour given by accused No,1 to accused No,2 at the expense of the exchequer. So also while accused No,2 was still M.D. Of TDC he had become the M.D. Of TML which he could not do. Similarly, the accused No,1 was at one and the same time Chairman of PACO and of TML. (para.9 of the Reference). (e) That the accused No,2 being the MD of TML deceitfully obtained the approval of the Board of this Company for grant of excessive salaries and perquisites for himself and his hand-picked executives thus misusing public funds. (para.12 of the Reference). (f) That in the 16th Board of Directors meeting of PMC held on 13-5-1994 it was decided to terminate the Joint Venture Agreement between PMC and MPL which was duly recorded in the minutes and so also to probe into the causes of the costs over run of the project. However, contrary to this decision, the accused No,1 wilfully failed to exercise his authority in order to implement the same enabling accused No,2 to continue as the Managing Director TML thus resulting in huge losses to the exchequer which amounted to criminal misuse of authority (paras. 13 and 15). (g) That in 1996 the accused No,1 arranged a visit by Mr.Kamal Azfar the then Governor of Sindh to TML in order to manoeuvre a financial package of Rs,450 millions from public funds to TML when admittedly the Provincial Government had no concern at all with the project as it was controlled and supervised by the Federal Government. Further the applicant No,1 also got a study conducted through Mr.Shahab Azfar of Messrs Management Services Ltd. To recommend further injection of funds into TML by PACO despite huge losses which was paid for by PACO from its own funds. Applicant No,1 misrepresented that the study had been conducted by the Governor of Sindh and hence, the latter's name was misused in order to elicit support for the induction of Rs,450 Millions into the project which was already incurring heavy losses. (Paras. 16 and 17 of the Reference). (h) That in a high level Meeting of the Ministry of Industries and Production held on 26-5-1996 the accused No,1 manoeuvred to obtain the consent of the participants to provide Rs,450 Millions to TML through the sale of PACO shares without apprising them of the inherent flaws in assisting a company which was already running into huge losses. Further the accused No,1 did not follow the conditionalities approved at this meeting for the purpose of releasing the financial assistance to TML viz. Resolution of outstanding contractual issues. Finally the accused No,2 being the MD of TML did not utilize the financial support provided by accused No,1 in the manner prescribed by PACO but spent it at his own sweet will without obtaining approvals etc. (paras. No,19, 20 and 21 of the Reference). (i) That both the accused incurred a number of unauthorized expenses/investments for example an amount Rs,2 Millions was invested by accused No,2 as MD of TML in Arabian Sea Country Club of which the accused No,1 was the Chairman; accused No,2 extended various monetary favours from the funds of TML to different individuals and organizations and also incurred a number of unauthorized expenses viz. Payment of Credit Card Bills and purchase of Golf Sets etc. Which had no nexus with the objects of the company and hence these were made with the obvious intent to draw personal benefits for himself and his associates; finally the accused No,2 obtained a palatial
---
## Page 3
house in Karachi at an exorbitant rent viz. Yasoob House which was used for the residence of accused No,1. (Paras. No,23, 24 and 25 of the Reference). The cumulative losses caused to the exchequer as a consequence of the aforesaid criminal acts of the applicants has been estimated to be in the amount of Rs,1,765,085,422.00. It has therefore been alleged in the Reference that applicant Javed Burki being a public servant dishonestly and fraudulently misappropriated and converted for his own use and for the use of applicant Muzammil Niazi, Government property which was entrusted to him and was under his control. Secondly, that applicant Javed Burki misused his authority so as to gain benefit or favour for himself and for applicant Muzammil Niazi and also wilfully failed to exercise his authority in order to prevent an undue benefit and favour for himself and for applicant Muzammil Niazi. Thus the applicants have been alleged to have committed offences under sections 9 (a)(iii)(iv) and (vi) of the NAB Ordinance viz that of corruption and corrupt practices punishable under section 10 thereof. 3. In support of Bail Application No,212 of 2003 entitled Javed Burki v. The State Mr.Abdul Hafeez Lakho appearing for the applicant has submitted the following. 4. Learned counsel has firstly submitted that the project of manufacturing the Yasoob Truck was tailor made for the Army as is evident from the presentation made to the Chief of Army Staff on 9- 9-1989 in which the same was approved and the green signal given for going ahead with it. Thereafter the Prime Minister of Pakistan issued a directive dated 10-5-1991 endorsing the project whereby it was ordered that, inter alia, all the Yasoob vehicles should fulfil the demand of the Armed Forces within the next 5-7 years, promotion to be made in the civilian market and funds to be made available from the appropriate sources. Thereafter at a meeting held on 28-7-1991 in the Chief of Army Staff's Conference Room it was decided that the project should be a joint venture having a private and professional management and that the Army would purchase at least 3000 vehicles in order to make it viable. Thereafter an agreement was entered into between the Army through DGMP and applicant No,1 as Chairman of PACO for the supply of 3000 vehicles which is dated 19-5-1992. Hence in order to implement the project on 10-3-1992 a Joint Venture Agreement was entered between Pakistan Motor Car Co. (Pvt.) Ltd. (PMC) a wholly owned unit of PACO and Management Partners (Pvt.) Ltd. (MPL) which had been formed by the ex-employees of PACO/Trailer Development Corporation which stipulated the establishment of a company namely Transmobile Ltd. (TML) for manufacturing Yasoob Trucks. Per learned counsel, all the foregoing events had the blessings of the Army, the Ministry of Production and Finance. Secondly, all the actions/decisions in order to implement the project were taken by the Board of Directors of PACO/TML and hence individual responsibility as far as the applicants are concerned vis-a-vis the allegations contained in the Reference cannot be foisted upon them. Learned counsel has emphazied that right from the very beginning things were done in a transparent manner which would be borne out from the record in the sense that all concerned knew exactly what was going on as far as the project is concerned. Per learned counsel the reason why TML suffered huge losses was due to the non-fulfilment of contractual obligations by the Army as only orders were placed for about 600 vehicles as against the agreed quantity of 3000. Even otherwise, various amendments were made to these orders whereby the Army changed the specifications etc: of the vehicles due to which the Company suffered further losses. Per learned counsel the Company had no option but to fulfil the desires of the Army since primarily the vehicles were made for the Army although some civilian applications were conceived. 5. As regards the allegations made in the Reference itself learned counsel has submitted that in principle these are mala fide in nature as they are directed against the individuals whereas admittedly all the decisions were taken by the Board of Directors of either TML or PACO. Secondly, per learned counsel the entire evidence in the matter is documentary and the case is being evaluated after the event viz. 9 years down the line on hindsight and hence it is very easily to
---
## Page 4
create a criminal case ex post facto. Learned counsel has laid great stress upon this aspect of the matter and has submitted that events should be examined at the time when they unfolded in order to correctly evaluate them and establish criminal liability if any. Thirdly, learned counsel has submitted that per the police statements of the P.Ws. Which are available in the investigation report, these relate to the factual aspects of the matter and hence cannot be accepted as prima facie evidence so as to connect the accused to the crimes in question. 6. As regards the allegations against the applicant viz formation of TML through a Joint Venture Agreement between Pakistan Motor Car Company (PMC) and Management Partners (Pvt.) Ltd. (MPL) in violation of Prime Minister directive dated 30-5-1991 and the hijacking of the project by the applicants through TML at the cost of TDC & PACO which had contributed immensely towards the same, learned counsel has firstly submitted that this was approved by the Board of PACO and secondly it was in accordance with the decision taken at the Chief of Army Staff's meeting held on 28-7-1991. Whereby the project was envisaged in the private sector so as to ensure maximum efficiency etc. Without intermeddling by Government functionaries. Further as regards the hijacking of the project at the cost of the TDC and PACO, per learned counsel it is a matter of record that TDC did not have either the facilities or the expertise to undertake the project which entailed massive infrastructure plus precise engineering skills etc. In this respect learned counsel has referred to the police statement of P.W. Abdul Rauf who gives the background and creation of TML and how it functioned thereafter. 7. As regards the allegations in the Reference vis-a-vis applicant Muzammil Niazi viz. That he was posted for only 4 days to PACO from his assignment as MD TDC just to enable him to get benefits of the Golden Handshake Scheme in PACO, learned counsel has submitted that as this was available to all concerned, no mens rea can be attached to the same at least not at this stage without a deeper probe into the matter which can only be done by the trial Court. Next as regards the allegation vis-a-vis obtaining the funds for the project through Mr. Kamal Azfar then Governor of Sindh learned counsel has submitted firstly that these are in the nature of recommendations only which the Governor made to the Federal Government as the project was situated at Karachi in the Province of Sindh. Secondly regarding the allegation of manoeuvring the consent of the Federal Ministry of Industries to provide Rs,450 Millions through sale of PACO shares, learned counsel has submitted that this had the blessing of PACO's Board of Directors and the decision was taken in order to save the Company which had run into huge losses solely due to the Army's non-fulfilment of its contractual obligations. 8. Finally with regard to donations to various clubs/institutions by applicant Javed Burki learned counsel has submitted that most companies including State-owned companies like PIA and PSO do give donations to support various sports viz. Hockey, Cricket and Squash hence there was nothing unusual in PACO sponsoring some Golf Tournaments etc. In any event per learned counsel, there was no mens rea at all involved in giving such donations as neither were these for the benefit to applicant Javed Burki and nor were these given for any ulterior purpose or motive but purely to support the game of Golf/Polo etc. 9. Finally with regard to incurring of exorbitant expenses which were billed to TML, learned counsel has submitted that these were legitimate expenses and even otherwise these could not be evaluated without a deeper probe. 10. Hence for the all the foregoing reasons learned counsel has submitted that at the most the allegations against applicant Javed Burki could be a case of mismanagement whereas in actual fact the Company/project suffered losses due to no fault of the said applicant. Learned counsel therefore prayed that applicant Javed Burki be enlarged on bail. 11. Mrs. Ismat Mehdi appearing for applicant Muzammil Niazi in Criminal Bail Application No,118 of 2003 has firstly submitted that as regards the formation of TML, the record would show that this
---
## Page 5
was as a result of the cooperation between the Army and PACO per the meeting of 9-9-1989 held on the Conference Room of the Chief of Army Staff. In this connections she has referred to a number of documents filed alongwith the bail application including minutes of the said meeting, letter dated 28-3-1991 from applicant Javed Burki to the Secretary, Defence Production Division regarding the orginization and finding of the Yasoob Project, minutes of Chief of Army Staff's conference dated 28-7-1991 whereby the proposal was first floated regarding the Joint Venture between the Army and PACO and the need for private and for professional management, letter dated 7-10-1991 from applicant Javed Burki to the Secretary, Ministry of Production regarding formation of TML wherein a full disclosure was made minutes of PMC's Board meeting where again the formation of TML was thoroughly discussed and approved as well as the Joint Venture Agreement between TML and PMC which was largely attended viz. By applicant Javed Burki and representatives from PACO Secretary, Ministry of Production and senior officers of the Pakistan Army. Learned counsel also referred to the other documents which have been alongwith the bail application viz. Agreement between PACO and Army which envisages the incorporation of TML and finally she has referred to a chart showing PACO's investment in other private sector entities. Hence per learned counsel it is quite clear from the record as it stands at present that TML was incorporated with the blessing of the Army, the Ministry of Production and all other concerned including PACO. Consequently it cannot be said that TML was conceived clandestinely or with criminal intent for the purpose of taking control of Government monies with a view to applying them at the whims of the applicant as well as for misappropriation of the same for the applicant's own use. 12. As regards the allegation of forcible closure of TDC, learned counsel has submitted that in 1987 as per the report of Mr.Kanwer Idrees (the then Chairman of PACO) on the re-virtualization of TDC, its accumulated losses were in the range of Rs,43.7 .Million, and it was envisaged that with the appointment of applicant Muzammil Niazi as MD of TDC and certain other remedial measures, the Company could be turned around. Hence, Muzammil Niazi was so appointed on 27-9-1987. Thereafter applicant Javed Burki had vide letter dated 26-6-1991 proposed to the Ministry of Production, that in order to implement the Prime Minister's directive on the Yasoob Project certain steps needed to be taken which included the construction of a modern manufacturing facility at Port Bin_ Qasim Industrial Area, Karachi as well as reorganization of TMC as a Joint Venture between PACO, Professional Management Group and DFI. As per the annexure to the said letter reasons have been given as to why the PACO franchises currently assigned to TDC are being transferred to PMC viz. Since TDC was to be privatized and in this respect royalty was paid to TDC per the financial statements of TML. Thereafter per learned counsel it was decided that since the facilities of TDC's were inadequate a new factory site needed to be built for the Yasoob Project which was done. Finally learned counsel has submitted that per the MOU between TML and TDC the premises of TDC were rented out to TML. As regards the unpaid rents by TML, learned counsel has submitted that in turn TML also has a claim against TDC for which purpose Suit No,589 of 1998 has been filed by TML in this Court. Hence learned counsel has submitted that these are inter company disputes/claims and would be eventually decided by this Court. Consequently no criminal intent or liability can be affixed on individuals for these corporate matters. 13. Next learned counsel has referred to the allegation regarding receipt of golden handshake amount by applicant Muzammil Niazi and has submitted that there is nothing unlawful about it as others have also received the same. 14. As regards the allegation with respect to excessive salaries and perks enjoyed by Muzammil Niazi and his associates in TML, learned counsel has submitted that these were in the line with the remuneration received by senior executives in the private sector and had been sanctioned by TML in various Board meetings. Learned counsel -has in this respect also referred to the Comparative
---
## Page 6
Chart of the Pay Packages enjoyed by TML executive and others in the private sector which would show that the latter were very reasonable. She has further submitted that when Muzammil Niazi joined TDC from Al Futtain Group his pay package was much higher. 15. As regards the allegation vis-a-vis unauthorized payment and contributions to clubs etc. Learned counsel has adopted the arguments of Mr.Abdul Hafiz Lakho. 16. In view of the foregoing facts and circumstances, learned counsel has prayed that bail be granted to Muzammil Niazi particularly as the entire case of the prosecution is based on documentation alone and the investigation has now been completed. 17. In reply Mr.Khalid Siddiqui learned Special Prosecutor, NAB has firstly submitted that a brief recapitulation of the events would abundantly establish at this stage the criminal intent of the applicants. In this regard he has firstly submitted that the incorporation of MPL on 27-12-1991 by Muzammil Niazi and his associates was ipso facto unlawful since at that time the latter was a Government servant and he could not enter into any business transaction or own shares of private companies per the Government Servants Conduct Rules, 1967. Thereafter the signing of the Joint Venture Agreement between PMC and MPL and the floating of TML was in itself mala fide as the Joint Venture was heavily in favour of MPL since PMC was to provide the funds and MPL was to manage it. Then on 26-3-1992 TML was incorporated and within one week the elections were held whereby Javed Burki was elected as Chairman and Muzammil Niazi as MD. Again this was unlawful since being Government employees they could not at the same become the employees of private companies and in this respect no permission was taken from the Government. Then on 19-54992 the agreement for the sale of Yasoob Trucks was signed between the Ministry of Defence and PACO and Rs,1.143 Billion was given as an advance for this purpose. The said agreement envisaged the assignment of the same to TML which was done on 15-6-1992 and on the very same date the premises of TDC was rented out to TML. All these events per learned counsel would show that the applicants in a pre-planned manner had conspired together to usurp Government funds in order to put them to their own use. Thereafter on October 15, 1992 Muzammil Niazi was posted to PACO where he obtained a golden handshake and four days later he resigned on 18-10-1992. This per learned counsel is a glaring example of the favouritism shown by Javed Burki to the latter. Again on 15-10-1992 MOU was signed between TDC and TML regarding renting out of TDC premises. As per the Board meeting of TDC held on 31-12-1992 an opinion was expressed that this was an unfair transaction and a recommendation was made for revision thereof but this was never done. Besides the advance from the Army, TML also obtained loans from Banks and other DFIs on the basis that it was a PACO Company which in itself was mala fide. Per learned counsel the investment of MPL (owned by Muzammil Niazi and his associates) in TML was only Rs,9.7 millions whereas much more was withdrawn from the Company in the shape of perks and privileges alongwith wasteful expenditure which had nothing to do with the Company's objectives at all. Per learned counsel due to these and other reasons the Company could not fulfil the orders placed by the Army and hence fresh funds were injected by Javed Burki through sale of PACO shares which in itself was unlawful as proper disclosure was not made to the Government regarding the affairs of TML which was running into huge losses. 18. Next learned counsel has submitted that public monies were squandered by the applicants in a heartless manner which is evident from the fact that the salary package of TML executives was highly excessive compared to that in. The Government Sector. In this connection learned counsel has further pointed out that "Yasoob House" was taken on rent for the residence of the Chairman of TML viz. Javed Burki at an exorbitant rent of Rs,63,000 per month where this applicant resided for over two years. On the other hand, his rent entitlement as a Government servant was only Rs,13,600. Further TML invested Rs,2 million as equity participation in the Arabian Sea Golf and country club located at Karachi and spent an amount of Rs,25 lacs on the Yasoob Golf Tournaments. So also an
---
## Page 7
amount of Rs,25 lacs was given to Pakistan Squash Federation and Rs,2,30,000 to the Rawalpindi Golf Club. Further the Company sponsored a number of Polo Tournaments etc. This per learned counsel was in violation of Government directives in this regard viz. Donation and contributions by autonomous bodies cannot be made unless they directly promote their business and the authority to make the donations exists in their statutes or these are authorized by the Ministry of Finance (per handbook on Autonomous Bodies). Learned counsel has also submitted that the applicants incurred a number of expenditures on corporate credit cards issued to them by TML viz. On clothing, golf sets etc. So also two employees were hired from USA viz. Mr.Shakeel Rizvi and Mr.Anwar Ahmed, and TML paid for their relocation to Karachi along with their families, which was unprecedented in a public sector organization, and hence a rampant misuse of funds. 19. Hence for all the foregoing…
Read the unabridged text and precedent citation network on Al Wakeelo Legal Research Platform.