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Petitioner: HAKIM ALI ZARDARI VS Respondent: THE STATE and another
Court Name: Sindh High Court Judge(s): Muhammad Roshan Essani, Muhammad Mujeebullah Siddiqui Title: HAKIM ALI ZARDARI vs THE STATE and another Case No.: Criminal Revision Application No,42 of 2002 Date of Judgment:2002-03-19 Reported As: PLD 2002 Karachi 374 Result: Application dismissed
JUDGMENT
JUDGMENT MUHAMMAD MUJEEBULLAH SIDDIQUI, J.---The petitioner facing trial in Accountability Court No,V, Karachi, seeks quashment of proceedings initiated on Reference No,7 of 2001 at the instance of Chairman, National Accountability Bureau. 2. The facts as stated in the revision application are that the applicant Hakim Ali Zardari, Ex-M.N.A., is alleged to have purchased a palatial house in France during February, 1990. The applicant/accused was elected M.N.A. From Nawabshah constituency in the elections held in 1988 and 1993. It is further alleged by the prosecution that the applicant being holder of public office was required to declare his assets and liabilities under section 78(d), Representation of the People Act, 1976, but he failed to declare abovementioned property to the Election Commission. 3. It is further alleged by the prosecution that in his return of total income filed by the accused/applicant from the years 1974 to .1990 the Agricultural income was declared at Rs,16,15,455 and other income for the 10 years at Rs,12,33,270 which is less than the value of the property purchased by him for Rs,85,00,000. It is further alleged that the applicant failed to declare the half share of his wife in the property abroad in his Wealth Tax Return. 4. It was revealed during the course of investigation that the applicant revised his Wealth Tax Return on 31-2-1996 declaring the value of the above property in France at Rs,85,00,000. According to prosecution it was violative of section 15 of the Wealth Tax Act, 1963, which provided for filing revised return before the assessm ent is made. It is further alleged by the prosecution that the applicant failed to declare the foreign property in 1993 before the Election Commission in compliance of the Ordinance No,XVI of 1993 read with Representation of the People Act, 1976. After the investigation/inquiry, the Chairman NAB made the reference to the Accountability Court,
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praying that the applicant/accused may be tried under section 9(v) read with section 10 of the National Accountability Bureau Ordinance, 1999. 5. During the pendency of the trial, the applicant submitted an application under section 265-K, Cr.P.C. On 3-12-2001 praying that he may be acquitted as he has not committed any offence. It was stated in the application that two earlier applications under section 265-K, Cr.P.C. Were dismissed for the reason that by that time evidence was not recorded. The application under section 265-K, Cr.P.C. Giving rise to the present revision was submitted after the prosecution closed its side, after examining all the witnesses. The main contention before the trial Court was that the applicant purchased the property in question from the F.E.B.C. And, therefore, the applicant enjoyed complete immunity from disclosing the source with the result that the allegation of corruption and purchasing of the property beyond the known and declared sources of income cannot be established. It was contended before the trial Court that even if entire prosecution story was believed no case was made out under section 9(v) of the NAB Ordinance, 1999. 6. The learned trial Court observed that the only question for consideration was whether or not the accused purchased the property in question and if so, whether the consideration amount paid was out of his legal sources. The learned trial Court observed that it cannot be decided on an application under section 265-K, Cr.P.C. And the completion of trial was necessary. 7. The learned trial Court in addition to the observation that the question can be decided through a final judgment, observed that the questions pertaining to immunity claimed was alleged in earlier application under section 265-K, Cr.P.C. And the plea was rejected vide order, dated 20th June, 2001. 8. The learned trial Court further observed that the plea that the property was purchased out of encashment of F.E.B.C. And at the time of purchase of the property it was not an offence and that the provisions contained in the NAB Ordinance, 1999 creating new offences were violative of the provisions contained in the Constitution, were the subject-matter ofvarious petitions filed before the Hon'ble Supreme Court. The contentions were repelled by the Hon'ble Supreme Court. 9. The learned trial Court further observed that in its earlier order, dated 24th June, 2001, reliance was placed on the judgment of Sindh High Court in H.C.A. No,281 of 2000. 10. The learned trial Court observed that the learned counsel for the accused has placed reliance on the judgment in the case of Hudabiya Engineering (Pvt.) Ltd. v. Pakistan PLD 1998 Lahore 90, but it is subject to the decision of Hon'ble Supreme Court of Pakistan in the case popularly known as NAB case and therefore, the holders of F.E.B.C. Shall enjoy protection subject to the decision of Hon'ble Supreme Court. 11. The learned trial Court held that "the prosecution has already produced its entire evidence and its side of evidence stands closed. Such evidence requires to be rebutted by the accused under section 20(c) of NAB Ordinance and the allegations to be disproved, demands that accused has to prove his sources of income as to how and by which means he had acquired Foreign Exchange Bearer Certificates, by encashment whereof the accused allegedly got the U.S. Dollars in his name". 12. Being dissatisfied with this order dated 27-2-2002, the applicant preferred this revision application. 13. Pre-admission notice was issued to the respondents. We have heard Mr. M. Yousuf Leghari, learned counsel for the applicant and Mr. Anwar Tariq, Advocate, D.P.G.A., NAB for the respondents. 14. Mr. Yousuf Leghari, learned counsel for the applicant stated that he will not address any argument on fact and shall confine his contention on the point of law only. With the consent of learned Advocates for the parties, we heard the revision application at length and disposed of the same at the Katcha Peshi stage. The application was dismissed by a short order after hearing the learned Advocates for the parties on 19-3-2002 and following are the detailed reasons.
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15. Mr. Yousuf Leghari, learned counsel for the applicant has submitted that P.W. No,4, Predy Rustamjee Sathena, Head of Operation Deutsche Bank, has stated that on verification of record he found that on 29-3-1990 Foreign Exchange Bearer Certificates worth rupees Seventeen million and two hundred thousand were got encashed, and thereafter draft for U.S. Dollars' worth 795968.32 was got issued in the name of Mr. Hakim Ali Zardari. So also Foreign Exchange Bearer Certificates worth Rs,1,78,000 were got encashed and thereby demand draft for U.S. Dollars' worth 8222.05 was got issued in the name of Mr. Hakim Ali Zardari (London). No encashment certificate was issued pertaining to the said Foreign Exchange Bearer Certificates, as the same were got utilized for issuance of demand draft towards the U.S. Dollars and that encashment certificate could only be issued if amount in Pakistani currency would have been received by the persons against Foreign Exchange Bearer Certificates. He has further submitted that this witness has conceded in cross- examination that under the rules framed by State Bank, the Commercial Banks were not competent to make any inquiry about the source of acquiring Foreign Exchange Bearer Certificates. 16. He has further contended that under the Foreign Exchange Bearer Certificates Rules, 1985 framed by the Federal Government in exercise of powers under section 28 of the Public Debt Act, 1944 (XVIII of 1944), it is provided in rule 4 as follows: "These certificates may be purchased by foreigners and Pakistanis without limit, against payment in foreign exchange from any office of issue. No question shall be asked regarding source of fund." He has further submitted that the Foreign Exchange Bearer Certificates, issued under the Foreign Exchange Bearer Certificates Rules, 1985, enjoyed exemption from payment of Wealth Tax and the assets acquired from Foreign Exchange Bearer Certificates were not required to be included in the net wealth of the assessee. 17. He has further submitted that protection is available to the applicant under section 5 of the Protection of Economic Reforms Act, 1992, which reads as follows:-- "5. Immunities to foreign currency accounts.--(1) All citizens of Pakistan resident in Pakistan or outside Pakistan who hold foreign currency accounts in Pakistan, and all other persons who hold such accounts, shall continue to enjoy immunity against any enquiry from the Income Tax Department or, any other Taxation Authority as to the source of financing of the foreign currency accounts. (2) The balances in the foreign currency accounts and income therefrom shall continue to remain exempted from the levy of wealth tax and income-tax and compulsory deduction of Zakat at source. (3) The banks shall maintain complete secrecy in respect of transactions in the foreign currency accounts. (4) The State Bank of Pakistan or other banks shall not impose any restrictions on deposits in and withdrawals from the foreign currency accounts and restrictions, if any, shall stand withdrawn forthwith." 18. In, support of his contention he has placed reliance on a Full Bench judgment of the Lahore High Court in the case of Hyudabiya Engineering (Pvt.) Limited v. Pakistan PLD 1998 Lahore 90, wherein it has been held as follows:-- "On proper analysis, the conclusion which follows is that subsection (1) of section 5 bars the Authorities from taking any action against the person on the basis of transactions in the foreign currency accounts." 19. He has pointed out the following findings by the Full Bench of the Lahore High Court in the judgment cited above:-- "31. It is also to be seen that as sections 4 and 5 of the Act, both deal with foreign currency, while interpreting section 5, section 4 of the Act cannot be lost sight of. It provides complete freedom to
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all citizens of Pakistan and all other persons to bring, hold, sell and take out foreign currency in any form. It specifically provides that no person shall be required to make any foreign currency declared at any stage and also ordains that no one shall be questioned in regard to the same. This clearly brings out the legislative intent that no question can be asked from the person holding any foreign currency in respect of the same. That being so, no inquiry either into the source or the holding of the foreign currency can be initiated or made by any agency especially when non obstante clause in section 3 of the Act provides that the Act shall override all other laws. 32. On consideration of various provisions of the Protection of Economic Reforms Act, 1992, we have reached the conclusion that so far as foreign currency accounts are concerned, the holders thereof, have complete immunity from inquiry and scrutiny and complete secrecy must be maintained in respect of those accounts which cannot be violated by any agency or functionary. That being so, neither the Income Tax Authorities nor Federal Investigation Agency had any jurisdiction to hold any inquiry in respect of the transactions in the foreign currency accounts nor could the same be made basis of criminal prosecution." 20. The learned counsel for the applicant has submitted that section 3 of the Protection of Economic Reforms Act, 1992, has overriding effect and therefore, the applicant is fully protected. Section. 3 of the Protection of Economic Reforms Act, 1992, reads as follows:-- "3. Act to override other laws.--The provisions of this Act shall have effect notwithstanding anything contained in the Foreign Exchange, Regulation Act, 1947 (VII of 1947), the Customs Act, 1969 (IV of 1969), the Income Tax Ordinance, 1979 (XXXI of 1979), or any other law for the time being in force." 21. Mr. Yousuf Leghari, learned counsel for the applicant has concluded his arguments contending that the applicant enjoys complete protection from any inquiry under any law in respect of source of acquiring Foreign Exchange Bearer Certificates and the assets created out of Foreign Exchange Bearer Certificates. Consequently, all the authorities are debarred from making any inquiry in respect of the source of acquiring properties from Foreign Exchange Bearer Certificates. According to him, when the source cannot be inquired into the consequence would be that the prosecution cannot establish that the property in question was acquired beyond the known sources of income or from any illegal means or corrupt practices and thus, no offence shall be deemed to have been committed by the applicant, entitling him to be acquitted under section 265-K, Cr.P.C. As there is no probability of the accused being convicted of any offence. He has further submitted that an accused under section 265-K, Cr.P.C. Can be acquitted at any stage of the case: According to learned counsel, the learned trial, Court committed illegality in not acquitting the applicant under section 265-K, Cr.P.C. And, therefore, the impugned order is liable to be set aside, with the direction for acquittal of the applicant. 22. On the other hand, the learned D.P.G.A. Has submitted that the contentions raised by the learned counsel for the applicant are totally uncalled for. He has fully supported the impugned order of the learned trial Court rejecting the application under section 265-K, Cr.P.C. He has submitted that so far section 5 of the Protection of Economic Reforms Act, 1992, is concerned, it only provides immunity against any inquiry from the Income-tax Department or any other taxation authority as to the source of financing of the foreign currency accounts. He has submitted that the immunity is not available for prosecution under the NAB Ordinance, 1999, and likewise the provisions in the F.E.B.C. Rules to the effect that no question shall be asked regarding the source of funds, is also of no help to the applicant because of the provisions contained in sections 2 and 3 of the NAB Ordinance, to the effect that Ordinance shall come into force at once and shall be deemed to have come into force from the 1st day of January, 1985 and that the provisions of the Ordinance, shall have effect notwithstanding, anything contained in any other law for the time being in force. He has submitted that the applicant may not be liable to the levy of Income-tax, Wealth Tax or any other tax but shall still be liable for punishment provided in the NAB Ordinance. He has submitted
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that under section 9(v) of the NAB Ordinance, it is provided that holder of public office, or any other person, is said to commit or to have committed the offence of corruption and corrupt practices: " (v) if he or any of his dependents or benamidars owns, possesses, or has acquired right or title in any movable or immovable property or pecuniary resources disproportionate to his known sources of income, which cannot reasonably account for." 23. He has contended that if sections 2, 3, 9 and 10 are read together, no doubt shall be left in the proposition that because of the overriding effect of the NAB Ordinance, any person who is established to have committed any offence envisaged under the said Ordinance shall be liable to the punishment provided in the said Ordinance, 24. We have carefully considered the contentions raised by the learned Advocates for the parties and in order to appreciate the contentions, it would be appropriate to reproduce the provisions contained in sections 2, 3 and 9 of the NAB Ordinance, which read as follows:-- 2. Commencement.--This Ordinance shall come into force at once and shall be deemed to have come into force from the 1st day of January, 1985. 3. Ordinance to override other laws.--The provisions of this Ordinance shall have effect notwithstanding anything contained in any other law for the time being in force. 9. Corruption and corrupt practices.--(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 practices-- (i) if he accepts or obtains from any person or offers any gratification directly or indirectly, -other than legal remuneration, as a motive or reward such as is specified in section 161 of the Pakistan Penal Code (Act XLV of 1860) for doing or forbearing to do any official act, or for showing or forbearing to show, in the exercise of his official functions, favour or disfavour to any person, or for rendering or attempting to render any service or disservice to any person; or (ii) if he accepts or obtains or offers any valuable thing without consideration, or for a consideration which he knows to be inadequate, from any person whom he knows to have been, or likely to be, concerned in any proceeding or business transacted or about to be transacted by him, or having any connection with his official functions or from any person whom he knows to be interested in or related to the person so concerned; or (iii) if he dishonestly or fraudulently misappropriates or otherwise converts for his own use, or for the use of any other person, any property entrusted to him, or under his control, or willfully allows any other person so to do; or (iv) if he by corrupt, dishonest, or illegal means, obtains or seeks to obtain for himself, or for his spouse and/or dependents or any other person, any property, valuable thing, or pecuniary advantage; or (v) if he or any of his dependents or benamidars owns, possesses, or has acquired right or tide in any movable or immovable property or pecuniary resources disproportionate to his known sources of income, which he cannot reasonably account for; or (vi) misuses his authority so as to gain any benefit or favour for himself or any other person, or to render or attempt to do so or willfully fails to exercise his authority to prevent the grant, or rendition of any undue benefit or favour which he could have prevented by exercising his authority; (vii) if he has issued any directive, policy, or any S.R.O. (Statutory Regulatory Order) or any other order which grants or enables any undue concession or benefit in any taxation matter or law or otherwise so as to benefit himself or any relative or associate or a benamidar or any other person; or (viii)if he commits an offence of willful default; or (ix) If he commits the offence of cheating as defined in section 415 of the Pakistan Penal Code and thereby dishonestly induces members of the public at large scale to deliver any property including money or valuable security to any person or he commits the offence of criminal breach of trust as
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defined in section 405 of the Pakistan Penal Code with regard to any property including money or valuable security entrusted to him by members of the public at large scale. (b) All offences under this Ordinance shall be non-bailable and, notwithstanding anything contained in sections 426, 491, 498 and 561-A or any other provision of the Code, or any other law for the time being in force no Court shall have jurisdiction to grant bail to any person accused of any offence under this Ordinance. (c) Where the Chairman NAB decides to release from custody or detention a holder of a public office or any other person accused of an offence under this Ordinance he shall do so after considering the gravity of the charge against such person and the accruing quantum of loss involved in the offence alleged to have been committed and may impose any reasonable conditions for such release. (d) The amount deposited by the accused with the NAB shall be transferred to the Federal Government or, as the case may be, a Provincial Government or the concerned bank or financial institution (corporate body, cooperative society, statutory body or authority concerned) within one month from the date of such deposit. 25. The first and foremost emphasis of Mt. Yousuf Leghari, is that under the Foreign Exchange Bearer Certificates Rules, 1985, it is provided that no question shall be asked regarding source of funds for purchasing Foreign Exchange Bearer Certificates: and that under section 5 of the Protection of Economic Reforms Act, 1992, immunity is available to the Foreign Currency Accounts. He has submitted that a Full Bench of Lahore High Court has already decided the issue in his favour in the case of Hudabiya Engineering (Pvt.) Limited v. Pakistan (supra). 26. On a careful examination of all these provisions we are unable to agree with the learned counsel for the applicant that the provisions on which reliance has been placed provide complete protection and immunity to the applicant from the operation of NAB Ordinance, 1999. We have reached to this conclusion for the reason that the Foreign Exchange Bearer Certificates Rules, 1985, framed by the Federal Government, under section 28 of the Public Debt Act, 1944, have limited application. They merely deal with the matters pertaining to the issuance of F.E.B.C., the manner and mode of purchasing the Foreign Exchange Bearer Certificates, encashment of the said certificates, the amount which shall be payable on encashment, the currency in which the encashment shall be made the limit on purchase, possession, import or export of the certificates. In addition to these matters certain protections have been provided for the specific purposes and in respect of the authorities stated in the Rules. Rule 4 on which Mr. Leghari, has placed reliance provides that certificate may be purchased by foreigners and Pakistanis without limit, against payment in Foreign Exchange from any office of issue. In this rule it is further provided that no question shall be asked regarding source of funds. It is established principle of the interpretation of statutes that the words, expressions and the provisions take complexion and colour with reference to the context in which they are used and the matters with which the particular provisions deal. Thus, the provisions in rule 4, that no question shall be asked regarding source of funds, pertains to the office of issue of the Foreign Exchange Bearer Certificates Rules. It means that wherever, any person purchases any Foreign Exchange Bearer Certificates from any office of issue such office of issue shall not question the purchaser regarding the source of funds. Certain other protections are also contained in the Rules. Under rule 11, the profit earned on these certificates is not liable to income-tax or compulsory deduction of Zakat in Pakistan nor is to be taken into account for the purpose of determining rate of income-tax on total income. It is further provided in rule 13 that where any certificates are encashed in Pakistani rupees, the office of issue concerned will give the holder a certificate in the form as prescribed in the Rules and in case any amount is covered by such certificate no question will be asked by Taxation Authorities regarding source of funds. Thus, it is abundantly clear that under the Foreign Exchange Bearer Certificates Rules, the profit earned on
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such certificates enjoys immunity from payment of income-tax and compulsory deduction of Zakat. Moreover, it is not to be taken into account for determining the rate of tax on total income. If certificates are en cashed in Pakistani rupees and the encashment certificate is issued then to the extent of amount in Pakistani rupees by conversion of Foreign Exchange Bearer Certificates the Taxation Authorities shall not ask any question regarding source of funds. The effect of this protection is that in case of an amount representing encashment certificate it shall enjoy immunity from being subjected to tax under section 13 of the Income Tax Ordinance, as income from undisclosed sources. Here, we would like to point out that the applicant is not in possession of encashment certificate as clarified by P.W.4, Freedy Rustamjee Sethena. The statement of this witness recorded by the trial Court has been produced by the learned counsel for the applicant/accused alongwith revision application as Annexure 'C/4'. Here, we would like to further point out that in spite of certain protections to the holders of Foreign Exchange Bearer Certificates from the probe and inquiry by the taxation authorities and immunity from levy of tax on the profit earned on these certificates it was not found sufficient by the Legislature to provide complete protection from levy of income-tax and wealth tax, with the result that specific provisions have been made in Part IV of the IInd Schedule to the Income Tax Ordinance, 1979, under the caption "exemption from specific provisions". The Second Schedule of the Income Tax…
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