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Petitioner: Saad Sumair VS Respondent: National Accountability Bureau (NAB) through its JUDGMENT
Court Name: Islamabad High Court Judge(s): Mohsin Akhtar Kayani, Babar Sattar Title:Saad Sumair vs National Accountability Bureau (NAB) through its
JUDGMENT
Reported As: 2021 [M] CLR 1582, KLR 2022 Crimimal Cases 1, PLD 2022 Islamabad 371 Result: Allowed Judgment JUDGMENT BABAR SATTAR, J.--- Through this petition the petitioner Saad Sumair son of Muhammad Abu Baker seeks pre- arrest bail in proceedings which are pending before the National Accountability Bureau ("NAB"). At the time of filing of this petition a call-up notice dated 01.02.2021 had been served on the petitioner which in relevant kart states the following:-- "Whereas, during the course of inquiry/investigation, it has been revealed that you being benami Director of M/s Paramount Builders & Developers (Pvt) Limited obtained fraudulent finance facility of Rs.300 Million from Sindh Bank Limited which was misappropriated and is still outstanding. In this regard, you submitted application for Plea Bargain in this subject case and were required to submit Plea Bargain Affidavit to this office for processing of your PB application. However , despite lapse of considerable time, the same has not been submitted by you as yet. 2. The petitioner was admitted to ad-interim bail by order dated 23.02.2021. During the pendency of the petition warrant of arrest was issued by the Chairman, NAB dated 09.04.2021 along with grounds for arrest. The basic allegation against the petitioner is that he committed the offence of corruption and corrupt practices falling under section 9(a)(iv) and (xii) of the National Accountability Bureau Ordinance, 1999 ("NAB Ordinance") in his capacity as an employee and associate of accused Muhammad Younis Kudwai on whose behalf he has been acting as "dummy" CEO/Director of M/s Paramount Builders and Developers (Pvt.) Limited ("Paramount Builders") , which is a benami company of Omni Group. The grounds for arrest stated that shares of Paramount Builders were transferred in the name of the petitioner on 10.11.20216 in order to obtain a fraud ulent finance facility from Sindh Bank Limited. That the petitioner became a signatory to the bank account of the Paramount Builders and signed cheques for withdrawal of proceeds of finance facility from the account of Paramount Builders for payment to Abdul Jabbar , Nadeem Ahmed, Marshal Home Builders, Abid Enterprises, Shabbir Associates and Man Power . That by
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misappropriating Rs.300 million of finance facility the petitioner caused a huge loss to the Sindh Bank and committed the corruption and corrupt practices as defined under section 9(a)(iv) & (xii) of the NAB Ordinance. That the petitioner possessed crime proceeds and subsequently transferred such proceeds in various other accounts and consequently renders him liable to money laundering under section 3 (a)(b)(c)&(d) of the Anti-Money Laundering Act, 2010. Additional grounds, of arrest have been stated as follows:-- a. Evidence collected so far , directly connects you with the commission of offence. b. That there is likelihood of destruction/ disappearance of relevant evidence/record at your end. c. That incriminating evidence/material related to transfer of company in your name, obtaining fraudulent finance facility and its utilization cannot be collected without your arrest. d. That there exists apprehension of your strong abscondence. 3. Learned counsel for the petitioner stated that the petitioner owns 50% shares of Paramount Builders and is one of the directors and has ,no criminal record. That the petitioner was included in the investigation as an accused in respect of grant of illegal finance facility by Sindh Bank Limited ("Sindh Bank"), during which he was illegally confined without being presented before a court and was coerced into signing Plea Bargain Form in 2019. Subsequently Reference No 2 of 2019 was filed in respect of fake bank accounts, which is pending adjudication before the learned Accountability Court. The learned counsel for the petitioner submitted that Paramount Builders had obtained a loan amounting to Rs300 million from Sindh Bank for a period of five years, extendable for further period of two years ("Finance Facility"). The company owned valuable properties in Lahore described as Land No 86-C, Mock C, Model Town, Lahore measuring 2 kanals and 19 marlas and Land No. 97-C, Block C, Model Town, Lahore measuring 5 kanal 19 marlas ("Properties"), which were mortgaged by the Sindh Bank Limited and the Finance Facility issued was therefore a fully secured mortgage-backed facility . He submitted that the Paramount Builders after paying mark up in the amount of 57.742 million defaulted on its payments and the bank filed a recovery suit No. 49909/2019 under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 ("Financial Institutions Ordinance") for recovery of Rs.331.9 million before the learned Lahore High Court. In response to such recovery suit the Paramount Builders filed an application for leave to defend on 16.10.2019 which is still pending. He further stated that a reference under section 22(5) of the Benam i Transactions (Prohibition) Act, 2017 ("Benami Act") was filed against 'Paramount Builders alleging that the company was holding the Properties have been mortgaged by Sindh Bank as benami properties on behalf of Younis Kudwai, Aslam Masood, Minahil Majeed, M/s Rubicon Private Limited, Princeton Builders & Developers and M/s Parathenon Private Limited. And after applying provisions of the Benami Act retrospectively to the purchase of Properties by Paramount Builders from Summit Bank on 13.12.2012, the Adjudicating Authority Bench-II Lahore declared the Properties as being held benami. The learned counsel for the petitioner stated that Paramount Builders had filed an appeal against such order under section 44 of the Benami Act, and by operation of law the impugned order stood suspended. He submitted that it was in this background that the impugned call-up notice was issued to the petitioner on 01.02.2021. He submitted that NAB had passed a freezing order under section 12 of the NAB Ordinance against the Properties and such freezing order was confirmed by the learned Accountability Court No.1 while adjudicating reference No. 2 of 2019 on 06.04.2021. He further submitted that the Sindh Bank ' by letter dated 24.05.2019 had written to Chairman, NAB seeking permission for sale of Properties for settlement' of the Finance Facility . That on 07.05.2021 Paramount Builders submitted a settlement proposal for DebtProperty Swap under the Regulations of the State Bank of Pakistan for Debt-Property Swap. In response to such proposal Sindh Bank responded to Paramount Builders on 19.05.2021 stating that the NAB by letter dated 10.03.2021 had issued freezing order dated 05.03.2021 in respect of the Properties and had also taken the original property document in its custody . Through the said letter Sindh Bank communicated its agreement, in principle, to the Debt Property . Swap subject to State Bank of Pakistan rules and regulations and the NAB freezing order . He submitted that prior to the issuance of the Finance Facility the Sindh Bank had sought evaluation reports and assessed market value of said properties which had come out to be Rs.400 million. He stated that the Sindh Bank once again sought, the property value in 2019 and according to one evaluation report the value of the Properties was approximately Rs.421 million and according to another evaluation report, the value was Rs.449 million. The learned counsel for the petitioner submitted that it
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was in view of the current market value as well as forced sale value of the Properties, which was significantly higher than the total outstanding amount under the Finance Facility , that Sindh Bank had granted an approval' in principle on 18.05.2021 to accept the Debt-Property Swap proposed by Paramount Builders. That but for the freeze order passed by NAB in relation to Properties and confirmed by the learned Accountability Court, the mortgage- backed Finance Facility was fully secured and could be settled immediately 'through Debt-Property Swap between Sindh Bank and Paramount Builders as both parties were ready and willing to proceed with such swap. His contention was that the question of any loss to the public exchequer simply did not arise as the value of the security in lieu of outstanding Finance Facility far exceeded the outstanding amount under such Finance Facility and in the absence of NAB's freezing order the Properties could be swapped and handed over to the bank to settle the Finance Facility . He contended that the prospect of purported loss to Sindh Bank and the public exchequer had been manufactured by the actions of NAB that had slapped a freeze order upon the Property . He submitted that call-up notice and warrant of arrest had been issued in breach of section 31D of the NAB Ordinance which mandates that no inquiry , investigation or proceedings in respect of imprudent loans, defaulted loans or rescheduled loans can be initiated or conducted by NAB against any person, company or financial institution without reference from the Governor , State Bank of Pakistan. He further submitted that President of Sindh Bank who is also an accused in the NAB investigation against the issuance of finance facilities by, Sindh Bank had already been granted bail by this Court in W.P No. 4166/2019 wherein it had been held that compliance with requirements of section 31D of the NAB Ordinance was mandatory . He also submitted that the entire series of actions against the petitioner in the instant matter had mala fide writ large over it He contended that the petitioner is alleged to have connived with Abdul Jabbar in relation to the offence in question, who has been behind bars since 2018 and yet NAB has not investigated him for purposes of investigation in relation to which it seeks to arrest the present petitioner . The learned counsel for the petitioner submitted that in view of the language of call-up notice which was issued to procure a plea-bargain affidavit from the petitioner and subsequently the issuance of warrants of arrest upon the petitioner's failure to indulge in plea-bargain reflects that the sole purpose of exercise of powers of arrest is to coerce the petitioner into admitting wrong doing and turning into an approver against other accused in the fake accounts case. He contended that such use of powers of arrest by the Chairman NAB under section 18(e) and 24(a) of the NAB Ordinance was tantamount to colorable exercise of authority which was liable to be judicially reviewed. 4. Learned Deputy Prosecutor General NAB responding to legal objections contended that section 311) of the NAB Ordinance was not applicable to the present case as it involved grant of a fraudulent finance facility with the connivance of officials of Sindh Bank for a fraudulent purpose, Ile submitted that Finance Facility had been afforded to Paramount Builders to undertake construction projects in Lahore but that proceeds from the Finance Facility had been distributed by the petitioner to third-party beneficiaries. He contended that the charge against the petitioner was that he was benamidar and was holding shares in the Paramount Builders for the benefit of Younis Kudwai and had secured the Finance Facility by mortgaging the Property belonging to the company to funnel money from Sindh Bank to third party beneficiaries identified by Younis Kudwai and his associates. He submitted that the agreement- between Paramount Builders and Sindh Bank in relation to Debt-Property Swap proposal had no value as the allegations against officials of the Sindh Bank and the petitioner were that they had all connived in grant of the Finance Facility . He further contended that the Property was acquired by Paramou nt Builders and its directors in a benami transaction as had been established by the order passed by the Adjudicating Authority Benami Zone 2, Lahore under the Benami Act. He contended that establishment of Paramount Builders; and repeated transfers of its shares to benamidars was part of a larger financial scam to layer proceeds of finance facilities and conceal the real beneficiaries of finance facilities afforded by Sindh Bank to benami companies such as Paramount Builders. He further contended that pending proce edings under the Financial Institutions Ordinance as well as under the Benami Act did not bar exercise of authority by Chairman NAB under the NAB Ordinance to order the investigation in which warrants of arrest had been issued against the petitioner . He also drew the attention of the Court to the principles that govern the grant of pre-arrest bail to and relied on Hidayat Ullah Khan Vs. The Crown (PLD 1949 SC Lahore 21), Manzoor and 4 others. Vs. The State (PLD 1972 SC 81), Murad Khan Vs. Fazal-e-' Subhan
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and another (PLD 1983 SC 82), and Rana Muhammad Arshad Vs. Muhammad Rafiq and another (PLD 2009 SC 427). He concluded his arguments by stating that warrant of arrest had been duly issued and there existed sufficient evidence on record connecting the petitioner to an offence under section 9(iv) and 9(xii) of NAB Ordinance and that the petitioner was required to for purposes of investigation. 5. This Court by order dated 07.06.2021 has summoned an official of the Sindh Bank to clarify whether or not Sindh Bank had agreed to the Debt-Property Swap with Paramount Builders. Mr. Farha n Ashraf Khan, Group Business Head North, Sindh Bank appeared and acknowledged that an agreement in principle to undertake Debt-Property Swap to settle the outstanding amount under the Finance Facility had been reached and the agreement would be signed once the freezing order against the Property was lifted. 6. The learned counsel for the petitioner stated in rebuttal that there was nothing on record to establish that shares of Paramount Builders had been transferred to the petitioner without consideration and further that no question of connivance between Sindh Bank and Paramount Builders ever arose in the instant case as the security against which the Finance Facility was issued far exceeded the total value of the Finance Facility . Given that no question of loss to Sindh Bank was conceivable in view of the value of the mortgaged Proper ties, the question of any loss to public exchequer did not arise. He further submitted that the petitioner was not a public office holder but the share holder and director of a private company and as there was no question of loss to the public exchequer in relation to Finance Facility , NAB had no jurisdiction in the matter . He further submitted that proceeds from the Finance Facility had been used for legitimate purposes including, inter alia, to repay outstanding loans made by share holders and directors of the company for purposes of procuring the Properties from Summit Bank in 2013 and such repayment of loan was a declared purpose for obtaining the Finance Facility . He argued that as the Properties had been acquired by Paramount Builders from Summit Bank through a written sale agreement and the Properties remained in the name of Paramount Builders and was mortgaged by Sindh Bank to secure a Finance Facility issued by. Sindh Bank to Paramount Builders, the question of the Properties being benami could not arise. He further contended that as the entire investigation revolved around acquisition of Finance Facility by Paramount Builders from Sindh Bank and use of proceeds of such Finance Facility alone, the allegation that payments made from the amount received from the bank under such Finance Facility amounted to money laundering was ludicrous. 7. We have heard the learned counsel for the parties and perused the record with their assistance. 8. We are at a loss to fully comprehend the offense being imputed to the petitioner by NAB. Paramount Builders purchased the Property from Summit Bank on 13.12.2012 for a consideration of Rs. 190 million as stated in the agreement to sell. At the relevant time no shares were owned by the petitioner and he was also not a director of the company . He acquired shares in the company and was then appointed as a director of Paramount Builders on 10.11.2016. After the petitioner's appointment as director , Paramount Builders applied to Sindh Bank for grant of the Finance Facility in the amount of Rs. 300 million on 14.11.2016. At that time of such application the title of the Properties was already in the name of Paramount Builders. NAB has placed no share transfer deeds on record to establish whether or not any consideration was paid by the petitioner for acquisition of shares of Paramount Builders. There is also no material on record to establish that the Finance Facility was acquired in a fraudulent manner . Such allegation makes little sense in view of the fact that Sindh Bank was issuing the Finance Facility backed by the mortgage of valuable real estate, the value of which according to evaluation reports solicited by Sindh Bank at the time of approval of the Finance Facility was approximately Rs.400 million. Given that the loan facility was fully secured against Property that provided the bank with a cushion in a range of approximately Rs.100 million over and above the maximum value of the Finance Facility , the allegation that such facility was procured through fraud does not sound appealing . There is also nothing on record to establish that proceeds from the Finance Facility were disbursed to Younis Kudwai or other individuals on the instruction of Younis Kudwai or that Younis Kudwai is otherwise the real beneficiary of the Finance Facility or that proceeds from the loan were not used to settle the liabilities of Paramount Builders or for purposes unrelated to the business of the company . Given that the present value of the Property -- both market and forced sale value -- excee ds the total outstanding amount under the Finance Facility , the question of loss to Sindh Bank or the public exche quer does not arise. Had it not been for the present investigation being conducted by NAB into the affairs of Paramount Builders and the freeze
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order in relation to the Properties, Sindh Bank and Paramount Builders could easily enter into the Debt-Property Swap that they have principally agreed to, and settle the Finance Facility . Such agreement would obviate the possibility of any loss being caused to the public exchequer . 9. The argument on NAB's behalf that the Properties have been declared as benami under the 13enami Act and consequently a loss to public exchequer due to Paramount Builders' default unde r the Finance Facility is also not convincing. The Benami Act has its own scheme and prescribes penalties for those who breach provisions of such statute as well as remedies against an order passed by an adjudicating authority under the Benami Act: It is true that an order in relation to Properties has been passed by an adjudicating authority . But such order remains suspended by virtue of the appeal tiled by Paramount Builders against such order under section 44 of the Benami Act. Till such time a judgment that the Properties are held benami and liable to be confiscated under provisions of the Benami Act attains finality , no criminal proceedings can be conceived under the NAB Ordinance based on the presumption that the Properties might eventually be declared the product of a benami transaction, and that once such declaration attains finality the I mance Facility issued by Sindh Bank would become an unsecure Idol it\ and a failure of Parainount Builders to settle it would then cause Liss to the public exchequer . It would also remain to be determined whether NAB can charge a person for holding benami assets when bulding of benami assets has been defined as an offence under the Benami Act. which is a special law later in time to the NAB Ordinance acid contains section 56 which gives such law overriding effect over all other law s for the time being in force, including the NAB Ordinance. Based on the, record produced in relation to the investigation, in which AB seeks to arrest, the petitioner and in view of the arguments of the, learned Deputy Prosecutor General, it seems that NAB has come to the conclusion that the petitioner has some role in the jigsaw puzzle of fake accounts that the NAB is endeavoring to solve., except that the present ins estigation has been ordered without a clear idea as to what the wrong doing might be that the petitioner may be liable for in relation to the fake accounts cases being investigated by NAB. NAB has failed to make out a case as to what the exact offence is that the petitioner is liable for. There is no incriminating material on record establishing either that petitioner is a benamidar or that he has played a role in procuring a Finance Facility from Sindh Bank fraudulently or that there is real likelihood that such Finance Facility will remain outstanding and cause a loss to the public exchequer in view of the present value of the property , which far exceeds the amount outstanding under the Finance Facility . 10. Let us now consider case law on grant of bail in relation to NAB Ordinance as laid down by superior courts. 11. The seminal judgment for purposes of the law on pre arrest bail is Hidayat Ullah Khan Vs. The Crown (PLD 1949 Lahore 21). A full bench of the learned Lahore High Court had interpreted provisions of the Code of Criminal Procedure, 1898 to hold that= "As I have pointed out above, the High Court has power to "direct that any person be admitted to bail", and giving these words their full weight, I see no escape from the conclusion that the power extends not only to the grant of bail to persons who are in the custody of the High Court or of an inferior Court or a police officer , but also includes a power to give directions that should be admitted to bail who are not in custody . As I have pointed out above in examining the provisions of sections 496, 497 and 498, the powers given to the High Court by the last-mentioned section and by subsection (5) of section 497 includes a power to control the direct ion of police officers and Courts of first instance as regards all the matte rs entrusted to them, with one possible exception, namely , as regards enhancement of the bail demanded." The authority of the High Court to "direct that any person be admitted to bail" was thus founded in statute and not imagined by the learned Lahore High Court as an equitable remedy . The relevant considerations guiding the exercise of such authority were explained as follows:-- "... in a proper case, the High Court has power under section 498, Criminal Procedure Code, to make an order that a person who is suspected of an offence for which he may be arrested by a police officer or a Court, shall be admitted to bail. The exercise of this power should, however , be confined to cases in which, not only is good prima facie ground made out for the grant of bail in respect of the offence alleged, but also, it should be shown that if the petitioner were to be arrested and refused bail, such an order would, in all probability , be made not from motives of
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furthering the ends of justice in relation. to the case, but from some ulterior motive , and with the object of injuring the petitioner , or that the petitioner would in such an eventuality suffer irreparable harm." 12. Hidayat Ullah Khan was laid down at a time when the coun try had just been liberated from the shackles of colonial rule. The drafting of a new Constitution was underway and the newly founded Sate was still being administered under The Government, of India Act, 1935, which was more of a procedural law that did not delineate the substantive or fundamental rights of the citizens. Obviously it had been drafted by the British to administer colonial India and not to regulate the relationship between an autonomous and independent people and a state administered by their elected representatives. It was later when the fundamental rights of citizens were guaranteed by the Constitution that the Supreme Court underscored that protection of such rights was a paramount consideration for exercise of High Court's power to grant pre-arrest bail. 13. Hidayat Ullah Khan which remains good law, was reiterated by the august Supreme Court in Murad Khan Vs. Fazal-e-Subhan and another (PLD 1983 SC 82), which emphasized that the driving consideration for a High Court in ordering pre-arrest bail is the right of a citizen to liberty and his reputation. It held that:---. "The Court should seriously apply its mind before passing the order of pre-arrest bail. I must, however , make it clear that Courts are the guardians of liberty , of citizens. The abuse of power by the police to rope in innocent persons in order to humiliate them and to cause irreparable loss to their reputation should…
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