MUHAMMAD IQBAL KALHORO, J. Petitioner through this petition has assailed inquiry/proceedings initiated by National Accountability Bureau Lahore against Directors/Owners of M/s. Azgard Nine Limited, Agritech Limited and others and a Call Up Notice dated 15.03.2018 issued in this connection to him on the ground of being barred under section 41B of the Securities and Exchange Commission Act, 1997 as amende d the Securities and Exchange Commission (Amendment) Act, 2016 (2016, Act).
2. As per brief facts, petitioner belongs to a business entrepreneur and is son of Jahangir Siddiqui a renowned business man. Immediately after he was designated as Ambassador to USA, a negative propaganda against him was launched on different TV Channels at the instance of a stock broker with whom petitioner's family has business rivalry . On 15.03.2018 an anchor person in a TV show aired on Samaa TV Channel at about 11pm displayed impugned call up notice and claimed that petitioner was being investigated by NAB for having committed a criminal offence. The anchor person thereafter invited different panelists including the said stock broker , who maligned the petitioner and his father . The aim of entire of discussion was to stop petitioner from being appointed as Ambassador to USA . The impugned call up notice, which has been issued to the petitioner in his capacity as Director of M/s. Azgard Nine Limited ( M/s ANL), relates to allegations, which are as under:- a) Siphoning off funds amounting to Earos 23.758 Million in 2008 for the purchase of an Italian Company Monte Bello SRL using a foreign company "Fairytal" SRL Sweden which resulted in loss to the company/shareholders. b) Selling shares of Agritech Limited to different financial/government institutions by Azgard Nine Limited at higher price than market price to settle the loan defaults of the company , which resulted in approximate loss of Rs.40 billion to dif ferent financial/government institutions.
3. The case of petitioner is that NAB has no jurisdiction to conduct any probe enquiry , investigation or proceedings in respect of said allegations in view of specific bar under Section 41B of the Act, 1997. The transactions referred to in the impugned notice are regulated under the provisions of the Securities Act, 2015 (Act III of 2015) and only Securities and Exchange Commission of Pakistan (SECP) has the mandate to take cognizance of said transactions. The regulated activities defined in (pa) and (pb) of 2016, Act are complex financial transactions and only SECP has expertise to enquire and appreciate these transactions and start both civil and criminal proceedings against defaulter . That NAB has no such expertise to enquire into the matter . That in terms of section 31D of National Accountability Ordinance, 1999 (NAO, 1999) NAB cannot enquire into such matters unless a mandatory reference is received in this respect from Governor , State Bank of Pakistan. That anyway the petitioner has not committed any illegality to warrant any probe by SECP even, as the State Bank of Pakistan after due evaluation had permitted M/s ANL to remit EURO 23.758 million for acquisition of a foreign company . That petitioner had resigned from the Board of Directors of M/s ANL on 20.03.2010, whereas alleged sale of its shares to different financial institutions took place in the year 2012, as such he has nothing to do with such transactions. That loss of Rs.40 billion to M/s. ANL was due to force majeure and .not the result of any illegality committed by petitioner or others. In the backdrop of such facts the petitioner has prayed as under:- "I. Declare that the inquiry/proceedings initiated by the Respondents Nos.3 and 4 vide the impugned notices dated 15.3.18 are barred under Section 41B of the Securities and Exchange Commission Act, 1997 as amended the Securities and Exchange Commission (Amendment) Act, 2016.
II. Declare that no inquiry / proceedings could be initiated in respect of the subject matter of impugned notice dated 15.3.18 except on a prior reference by Respondent No.2 as stipulated in Section 41B of the Securities and Exchange Commission Act, 1997 as amended the Securities and Exchange Commission (Amendment) Act, 2016.
III. Declare that the impugned notices dated 15.3.18 issued by Respondent No.4 is arbitrary , mala fide, without jurisdiction and motivated and quash the same.
IV. Prohibit the Respondents Nos.3 and 4 and its officers from taking any action or conducting any inquiry , proceedings or, prosecution against the Petitioner in respect of the subject matter falling under the jurisdiction of Respondent No.2 including the transactions subject matter of the impugned call up notices dated 15.3.18 issued by Respondent No.4.
V. Grant any other relief deemed just and appropriate in the circumstances of the case.
VI. Grant costs of the petition."
4. Mr. Khalid Javed Khan, learned counsel for the petitioner has contended that NAB has no jurisdiction to initiate subject enquiry against the petitioner; that action of NAB is arbitrary , capricious, mala fide, coram non juidice , illegal and without jurisdiction; that jurisdiction of NAB in respect of the subject matter is ousted by Section 41B of 2016, Act so also the same is barred under section 31D of NAO, 1999; that petitioner has committed no illegality , allegations mentioned in the call up notice are completely misconceived; that the transactions for acquisition of M/s Montebello was approved by the State Bank of Pakistan; that SECP had taken cognizance of such matter under section 492 read with section 476 of the Companies Ordinance, 1984 and decided it vide order dated 11.05.2016, which was challenged before the Appellate Bench No.1 of SECP in Appeal No.34/2017 by M/s ANL and others, which decided it vide order dated 15.05.2017 setting aside the said order imposing penalty in terms of section 492 of the Ordinance, 1984; that as subject transactions have already been adjudicated by Appellate Bench of SECP which is a special forum for such purpose , further probe by NAB into same allegati on is not justified; that under the relevant SECP laws, the entire hierarchy is available, which can be approached in case anyone is aggrieved by a regulated activity; that action of NAB is tainted with mala fide as is evident from the fact that before the said notice was issued or received by the petitioner , it was aired in a TV program; that purpose of such campaign was to malign the petitioner and stop his appointment as Ambassador to USA; that NAB suffers from lack of expertise to understand complexities and intricacies of such transactions and therefore cannot be expected to properly appreciate the same. He referred to the cases reported in PLD 2001 Karachi 311, 419, PLD 2013 SINDH 357, 2017 SCMR 1218 in support of his contentions on this point.
5. On the question of maintainability of this petition before this court, he has relied upon the case law reported in PLD 2001 K 311, 419, 2009 CLD 1498 , 1514, 2017 SCMR 1179, 1985 SCMR 758, 2010 CLC 1810 , and PLD 2016 Sindh 26 and submitted that petitioner is resident of Karachi, the subject transactions took place at Karachi, the remittance on these transactions were made from Karachi. The permission for the remittance was granted by the State Bank of Pakistan at Karachi; that NAB is a federal body and its impugned action is affecting the petitioner who lives at Karachi, as such this court has jurisdiction to entertain the petition. Furthermore, NAB Karachi has already investigated allegation relating to selling of shares of M/s Agritech Limited to the different financial institutions at a higher than market price and has filed Reference No.21 of 2017 in this regard against the accused before relevant Accountability Court at Karachi; that it cannot be said that this court has territorial jurisdiction to hear the petition in respect of one allega tion viz. selling of shares by M/s ANL of M/s Agritech Limited, keeping in view reference filed at Karachi, whereas in respect of other viz. siphoning off money it has not; that registration of M/s ANL at Lahore is of no value and it is to be seen where the alleged offense has taken place. He further argued that this court vide order dated 14.09.2018 has granted bail to accused facing afore said reference on the ground that there was no sufficient evidence against them; that the petitioner and his family were joined in the investigation of the said reference but nothing was found against them and their names were dropped; that the case of the petitioner is on better footing than those against whom reference has been filed. He further urged that in the event this Court decides that NAB Lahore can still continue with the subject enquiry , at least the same treatment already extended to accused in Reference No.02 of 2017 may be meted out to the petitio ner by confirming the ad-interim order passed on 20.03.2018 , whereby NAB Lahore was restrained from taking any adverse action including arrest against him.
6. On the other hand Barrister Yaser Ahmed appearing for NAB in his arguments questioned maintainabi lity of the petition and jurisdiction of this court. Per him, impugned notice has been issued by NAB Lahore, place of occurrence is at Lahore, place from where evidence is being collected is in Lahore; the future course of action is in Lahore and place of filing of probable reference is at Lahore. He further argued that Head Office of M/s ANL is in Lahore and the petitioner has already joined the enquiry at Lahore, as such this court has no jurisdiction to entertain this matter . He emphasized that the allegation being enquired against the petitioner are different than the ones which are subject matter of reference No.21 of 2017 filed in Karachi in that the said reference is limited to allegations only against National Bank of Pakistan purchasing shares at a higher value to reschedule its loan of Rs.3.412 billion against M/s. ANL in connivance with its Directors. But the scam involves Rs.40 billion which M/s ANL owes to 63 different financial institutions and which it got rescheduled illegally . Hence a further probe has been ordered by the Chairman NAB at Lahore to unearth remaining part of the scam involving other financial institutions who in connivance with Directors of M/s ANL allowed rescheduling of their outstanding loans illegally . Explaining why the inquiry is being held at Lahore, he contended that Head Office of M/s ANL is in Lahore and these transactions originated from there; and further that this inquiry has no nexus with the reference filed in Karachi, hence this High Court lacks territorial jurisdiction to entertain petition against it. In support of his arguments, he relied upon the case law reported in 1985 SCMR 758 , PLD 2015 Sindh 1 and 2016 PCr .LJ 1056 .
7. We have considered submissions and perused the record including the case law cited at bar. The issue which needs determination first is whether this court has territorial jurisdiction to quash an inquiry or a call up notice issued in this connection to the petitioner by NAB Lahore. A reading of comments filed by NAB reveals that there are three main allegations regarding which this enquiry is being conducted, (i) siphoning off funds amounting to Euros 23.758 million in the year 2008 for purchasing an Italian company Monte Bello SRL using a foreign company Fairytal SRL Sweden which resulted in a loss to the company/shareholders, (ii) fraudulent listing of M/s. Agritech Limited in Karachi Stock Exchange (Pakistan Stock Exchange) by concealing the fact that the company had overdue loans in 2010 that resulted in a loss of approximately Rs.500 million to general public, and (iii) selling shares of Agritegh Limited to different financial/governmental institutions by M/s. Azgard Nine limited at higher than market price to settle loan defaults of the company resulting in an approximate loss of Rs.40 billion to different financial / governmental institutions. The reason which has prevailed over NAB to launch such inquiry is the discovery that M/s ANL in its audited accounts for the year 2008 showed remitta nce of Euros 23.758 million for purchasing an Italian company Monte Bello SRL along with Fairytal SRL incorporated in Sweden. And then in the audited accounts pertaining to the year 2013, it reported that Fairytal SRL was dissolved as Monte Bello had been declared insolvent due to its receivables turned into bad debts. Such statements in the company's accounts have raised suspicion that the whole transacti on was conceived simply to misappropr iate aforesaid invested amount.
Further , M/s ANL got M/s Agritech Limited listed at Stock Exchange by concealing its overdue/defaults amounting to Rs.2.573 billion in March 2010 which led to floating of its Initial Public Offering (IPO) and collection of Rs.500 million from general public through sale of its shares with premium of Rs.20 per share. M/s ANL succeeded in raising finances by selling shares of a defaulted company to various financial institutions. Furthermore, M/s ANL settled its loans to various banks by a formula of adjustment whereby shares of M/s Agritech Limited were sold to the banks at the price of Rs.35 per share whereas its actual market price was Rs.11 to 13 causing loss to the financial institutions including government entities. This allegedly happened when the petitioner was Director , M/s ANL as well as the Chairman / Director , M/s Agritech Limited.
8. Additionally , the information gleaned by NAB after authorization of this inquiry , and which is reflected in its comments, indicates that Mr. Sohail Dayala was CEO M/s Invest and Finances Securities Limited (IFSL), which was underwriter of Offer for Sale Document (OFSD) of M/s Agritech Limited. He joined as Commissioner SECP in March 2009, gave approval for issuance of OFSD of M/s Agritech Limited and left SECP in April 2010 only to join the same company IFSL. Further , M/s Crosby Securities Pakistan Limited was Co-Manager of OFSD of M/s. Agritech Limited whose CEO Mr. Zafar Abdullah was reportedly working as Acting Chairman, SECP . These particulars on the one hand have raised suspicion about these individuals' role in the alleged transactions causing loss to many financial institutions including government entities, and on the other hand show that not only Directors/owners of M/s ANL, and M/s. Agritech Limited but certain other persons who worked in SECP , etc. at the relevant time are being probed by NAB in the subject inquiry . This fact is even evident from the subject matter of very call up notice Inquiry against Directors/owners M/s. Azgard Nine Limited, M/s. Agritech Limited and others .
Meaning thereby this enquiry is not limited to a regulated activity only nor is being held only against regulated person as contended so as to attract bar provided under section 41B of 2016, Act over jurisdiction of NAB to look into it without a reference from the Comm ission. However , we have seen there is an apparent conflict between the provisions of 2016 Act and Act NAO, 1999, section 41B of 2016 Act starts with non-obstante clause and stipulates no action, enquiry , etc. into regulated activity , regulated securities activity , transaction, etc. shall be taken by federal or provincial investigation agency , bureau, etc. without reference from the Commiss ion, whereas in terms of section 3 of NAO, 1999, provisions of the Ordinance have been given overriding effect over any other law for the time in force. The honorable Supreme Court in the case of Syed Muhammad Shah and others vs. Federal Investigation Agency (2017 SCMR 1218 ) while explaining the effect of overriding clauses in two special laws dealing with the same subject matter has observed that when there are two special laws both of which contain overriding clauses, in the case of conflict between the two laws generally the statute later in time will prevail over the statute prior in time. Said presumption is, however , not automatic, instead a host of other factors including the object, purpose and policy of both statutes and the legislature's intention, as expressed by the language employed therein, need to be considered in order , to determine which of the two special laws is to prevail. Therefore, the contention that 2016 Act being special law and later in time with an overriding clause shall prevail over NAO, 1999, would not be accepted on its face value unless a determination of other relevant factors as above is made in favour of such proposition. In any case, this case does not seem to be a case involving a conflict of jurisdiction attracting provisions of section 41B of 2016 Act on the premise of it being the law later in time. SECP in paragraph (B) of its comments has clarified the position that NAB vide letter dated April 25, 2018 has requested it to conduct a detailed analysis of acquisition of Pak American Fertilizer Limited through Dominion Fertilizer Private Limited by M/s ANL in the year 2006. Therefore, it (SECP) in order to extend proper assistance to NAB has constituted a committee of senior officers for such purpose. Since it (SECP) investigating the matter in collaboration with NAB, a question of jurisdiction as envisaged under section 41-B does not arise in the subject matter .
9. Be that as it may, we started above discussion with the question whether this court has territorial jurisdiction to entertain this petition and quash inquiry being held by NAB Lahore against petitioner and others. The argument of petitioner is that he is resident of Karachi and alleged transactions were effected through Pakistan stock Exchange at Karachi and was approved by the State Bank of Pakistan at Karachi. NAB is a federal statutory authority functioning all over the country and has presence at Karachi. The notices are to be served at Karachi, the fundamental issue relates to the jurisdiction of two federal statutory authorities i.e. Securities and Exchange Commission of Pakistan and NAB having presence at Karachi. Hence this court has territorial jurisdiction to hear and decide the case.
10. In ordinary criminal matters the territorial jurisdiction to try the case lies with the court in whose jurisdiction the offence is committed. Section 177 Cr.P.C. provides for that 'Every offence shall ordinarily be inquired in and tried by a Court within local limits of whose jurisdiction it was committed'. The provincial government has, however , been empowered under section 178, Cr.P.C. to direct any cases or class of cases to be tried in any Sessions division.
Section 179, Cr.P.C. adds that accused could be tried by the court where act is done or by the court in whose territorial jurisdiction its consequence ensues. In terms of section 180, Cr.P.C. if an act is an offence by reason of its relation to any other act which is also an offence or would be an offence if committed may be enquired into or tried by a court within local limits of whose jurisdiction either act was done. The above provisions of law clearly stipulate that place of enquiry or trial would be where the offence is committed, or where the provincial government may direct it to be, or where its consequence ensues or where related offence has been committed. However , where an offence is partly committed in one local area and partly in another , or continues to be committed in more local areas than one, or where it consists of several acts done in different local areas and it is uncertain where an offence was committed in several local areas, then in terms of section 182, Cr.P.C. it may be enquired into or tried by a court having jurisdiction over any of such local areas. Further , in terms of section 183, Cr.P.C. if offence is committed in a journey or voyage may be inquired into or tried by a court through or into the local limits of which the offender or the person against whom or the thing in respect of which, the offence was committed passed in the course of that journey or voyage. However , in case of doubt as to which of two or more courts shall enquire into or try an offence, the High Court under section 185 Cr.P.C. has been empowered to decide the said question. But in case where two or more courts not subordinate to the same High Court have taken cognizance of the same offence, the High Court within local limits of which the proceedings were first commenced may direct the trial of such offence be held in any court subordinate to it, and in such event all other proceedings against the accus ed shall be discontinued. But if such High Court does not decide the said question, then any other High Court within whose jurisdiction such proceedings are pending may give a like decision and upon which all other such proceedings shall be discontinued.
As is evident from above discussion, in the whole scheme the place of residence of accused is immaterial and the determinative factor to decide territorial jurisdiction for an offence to be inquired into or tried by a court would be essentially the place where the offence is committed or partly committed or the place where its consequences have followed.
11. No doubt NAO, 1999 is a special law having its own scheme to regulate proceedings of enquiry or investigation.
But as per section 17 NAO, 1999, Criminal Procedure Code is applicable to its provisions and therefore entire above procedure for inquiring or trying an offence would mutatis mutandis apply to inquiry or trial being held under NAO, 1999. Further , section 18 NAO, 1999 empowers the Chairman NAB or any person duly authorized by him to initiate proceedings against any person and for this purpose refer the matter for inquiry or investigation. And if any material is collected appraise the same and if he decides that it justifies filing of a reference refer the matter to a court. Here the court, if read with the discussion in paragraph 10, would essentially mean the court in whose jurisdiction the of fense has been committed or partly committed or its consequences reached and inquired into.
12. In the scheme of NAO, 1999, the office of the Chairman NAB is central and has absolute powers for taking a decision to start an inquiry or investigation against a person and, with reference to relevant facts, where or by whom it shall be conducted. Here in the present case, the Chairman NAB has delegated his authority to DG NAB Lahore to hold subject inquiry and which prima facie seems to be because M/s ANL is registered and its Head Office is situated at Lahore and aforesaid activities suspected by NAB originated statedly from Lahore. NAB Lahore has already started the inquiry and the petitioner has joined it there. In case the material collected in the inquiry justifies filing of a reference, the same would be filed at Lahore. The jurisdiction of NAB Lahore to hold the inquiry has not been disputed by the petitioner and it was only when NAB objected to territorial jurisdiction of this court over the issue, the petitioner raised pleas of his residence in Karachi, the call up notice sent to him at Karachi address, the alleged transactions having been performed in Karachi and regulated by SECP at Karachi besides NAB being a federal body having its presence all over country including Karachi as a justification to maintain this petition before this court. But in our humble view these facts would be relevant and give territorial jurisdiction to this court to examine validity of inquiry proceedings being held in some, other province by a federal entity with presence all over the country only when a civil right of the petitioner is being questioned therein. In a case where inquiry is in respect of accusations which are criminal in nature and which if proved would culminate in filing of a criminal case or a reference under NAO, 1999 these grounds would hardly form a ground to confer territorial jurisdiction on this court to quash inquiry being held in some other province.
13. Further , although NAB is a federal entity having presence in the entire country but its regional bureaus working in the respective provinces are independent to each other . If an enquiry or investig ation entrusted to a bureau of a particular province is matured into a reference, it will have to be filed in the Accountability Court situated in that particular province. The Accountability Court situated in a particular province remains under administrative control of the High Court of that province, and in case there are more than one Accounta bility Courts in the province the Chief Justice of that province designates a judge of that court as an administrative judge in terms of section 16 of NAO, 1999 and before him the reference is filed and which either he himself can try or assign it to any other court established at that place. And then in terms of section 32 of NAO, 1999 if a person is aggrieved by the final judgment or order of the court, he has a remedy of filing appeal but only before the High Court of the province where such court is situated. This indicates that the law in clear terms has defined lines for inquiring or investigating any matter involving an offence under NAO, 1999, the Chairman's authority to refer such matter for inquiry or investigation and in the event of a reference, the relevant Accountability Court where the matter would be referred to for trial. A right, if any, of a person to challenge the inquiry or investigation before the High Court that is being held by the regional bureau of a different province would be governed by such defined outlines qua territorial jurisdiction. This would mean that if an inquiry or investigation is being conducted by the bureau of a particular province into an alleged offense and that is because the occurrence has taken place there, or its consequences have reached there, or people of that province have been affected, or relevant evidence having nexus to allegations is available there, etc.; the remedy to question such inquiry or investigation under Article 199 of the Constitution would lie before the High Court of that province only. Therefore any petition challenging the same before the High Court of other province on the grounds of petitioner's residence there, or call up notices sent to such residence or the alleged transaction having taken place there would not be maintainable. Learned Islamabad High Court in the case of Jamshoro Joint Venture Ltd. and anot her vs. Federation of Pakistan and others (2016 PCr.LJ 1056), when a call up notice issued by NAB Karachi in an inquiry being held there was challenged before it almost on similar grounds as having been vouched here, has examined this question of territorial jurisdiction of the High Court and has draw n at least 8 factors (a to h) in paragraph 17 of the judgment to determine it, which for a ready reference is reproduced here with.
"17. It is pertinent to mention here that the concept of cause of action has not been defined in C.P.C. in particular , rather the same has only been referred in Order VII, Rule 1(e), C.P.C. which only denotes the facts in pleadings hence, we while examining the issue have to go through the available documents, petitions in the writ petition which collectively constitute the cause of action and especially the events, facts and actions referred in different paragraphs of writ petition are considered while assuming jurisdiction of the Court. However , NAO, 1999 is a Federal Law and the Head office of NAB is situated at Islamabad but at the same time its Regional Offices are situated in all four Provinces having provincial Headquarters and in other cities of Pakistan, hence, it is assumed that all High Courts have concurrent rent jurisdiction but in order to regulate the procedural aspect of the inquiries, complaints, investigations, references and trials at least certain principles are required to govern the situation where:- i) Concurrent jurisdiction of two High Courts are involved or; ii) Subject matter of inquiry or complaint relates to one province and the Authorizati on has been ordered from Head office of NAB at Islamabad or; iii) Accused or person under inquiry are residents of one province or different provinces, loss caused to other provincial exchequer , project under inquiry is situated in other province.
The aggrieved persons usually seeks relief in Writ Petition under Article 19S of the Constitution of Islamic Republic of Pakistan, 1973 from the High Courts of their choice keeping in view their convenience on the analogy of section 20, C.P.C. where part of cause of action has been accrued but in order to understand the legal principle one has to keep in mind that Civil Procedure Code, 1908 is only applicable as General Law in writ jurisdiction in terms of section 117, C.P.C. but where Special Law is available like National Accountabil ity Ordinance, 1999 or Criminal Procedure Code, 1898 and subject matter relates to a criminal act and where civil rights are not in issue, the applicability of procedural aspect to regulate such Constitutional Petitions are dif ferent from ordinary Rules.
Therefore, in order to understand the concept of jurisdiction one has to keep in mind the following factors to comprehend term "Cause of Action" in Criminal matters:- a) Place of occurrence of Crime; b) Place from where major portion of evidence is collected to link the chain of events; c) Loss caused to Public exchequer of Province; d) Investigation Officer inquired the matter to confirm the prima facie involvement of any person in any Crime with a view to proceed for future course of action. e) NAB Head Office has given any Instruction/order for inquiry at particular place or territory keeping in view the chain of events; f) Matter in question relates to Provincial authority or Federal Authority from where major evidence is to be collected to connect the accused with the of fence; g) Whether any court has already exercised its jurisdiction qua the subject matter during pendency of any inquiry , investigation and NAB authorities have not raised any objection regarding territorial jurisdiction of the Court; h) NAB authorities have submitted/filed Reference against the accused persons in any Court or transferred the Trial to any other Court under the Provisions of NAO, 1999."
14. A perusal of above coupled with what has been discussed in preceding paragraphs would indicate that this court has no territorial jurisdiction to quash the proceeding of inquiry being held by NAB Lahore against the petitioner and others. Resultantly this petition before this court for the relief(s) as above must fail. But since the petitioner has prayed for granting him a relief deemed just and proper , we have decided to convert this petition into a petition for protective bail and grant him protective bail for 8 days with effect from today i.e. 22.03.2019 enabling him to seek remedy as provided under the law before the relevant court against furnishing a solvent surety in the sum of Rs.1 million (one million) to the satisfaction of the Nazir of this court. The protective bail shall continue for 8 days from today or when the petitioner approaches the relevant court whichever is earlier . The petition stands disposed of in the said terms along with pending applications.