SARDAR MUHAMMAD SARFRAZ DOGAR, J. By means of the captioned constitutional petitions, the petitioners, namely, Mrs. Uzma Adil Khan, Shahzad Mohsin, Basit Habib and the two OMCs i.e. Askar Oil Services Pvt. Ltd. and the Fossil Energy Pvt. Ltd., have called in question the validity and legality of the impugned notice/order dated 29.10.2021 passed by Director Coordination, FIA (North), whereby, multiple directions were issued to the respondents/banks including the direction qua the seizure of bank accounts of the petitioners immediately (impugned herein). As there is similarity and commonality of question of facts and law involved in all the petitions, therefore, the same are disposed of through this single judgment.
2. Briefly stated the facts are that in the month of June, 2020, the country faced the Petroleum Crisis due to acute shortage of petroleum products, the Government of Pakistan by exercising its powers under the provisions of Pakistan Commissions of Inquiry Act, 2017 vide Notification dated 28.7.2020, constituted an Inquiry Commission to probe into the shortage of petroleum products in the country and matters related or incidental thereto. The Commission submitted its reports before the Federal Government and the Federal Cabinet on 15.12.2020 constituted a committee comprising 04 Federal Ministers to properly examine the report of the Commission of Inquiry and to make recommendations. The said Cabinet Committee prepared its recommendations and the Cabinet Division Islamabad through its letter dated 23.4.2021 forwarded the decision dated 1.4.2021 of the Federal Cabinet along with recommendations of the committee of 04 Federal Minsters to FIA for forensic investigation to unearth evidence/proof of criminal act/intent upon the following matters:- a. Failure to maintain minimum 20-days stock as per the license requirement of OMCs over a prolonged period. b. Failure to ensure lifting of products by the OMCs from local refineries as per PRM decisions of February, March & April. c. Failure to ensure implementation of PRM decisions regarding imports. d. Apparent maneuvering of berthing plan of vessels. e. Fake sales, hoarding & discrepancies between the reported and actual supplies to retail outlets by OMCs. f. Illegalities regarding provisional marketing licenses to OMCs, unlawful JVs & hospitalities, illegal private storages and illegal retail outlets. g. Inquiry into the affairs by BYCO refinery & OMC regarding MT Rhea, MT Elsa and reported involvement in sale of illegal petroleum products. h. Inquiry of companies involved in adulteration of petroleum products.
By complying with the said directions, the FIA registered eight (8) enquiries to probe into the eight
(8) different/distinct aspects of the issue as directed by the Government by associating the relevant departments to determine the role of government functionaries as to whether, prima facie, they abused misused their official position as public servants and whether any unlawful gains/pecuniary advantages have been derived by the OMCs as a result of said petroleum crisis/shortage. By finalizing the inquiries, the FIA Authorities found that two Oil Marketing Companies (OMCs) i.e. Askar Oil Services Pvt. Ltd. and Fossil Energy Pvt. Ltd. committed illegalities while joining hands with the officers of Oil and Gas Regulatory Authority (OGRA) and Ministry of Energy Petroleum Division (MoEPD), resultantly, case FIRs No.80/2021 & 81/2021 were registered on 29.10.2021 with the Police Station FIA ACC, Punjab Zone-I, Lahore in respect of offences under sections 420, 468, 471, 109 PPC read with Section 5(2) of The Prevention of Corruption Act (Act No.II), 1947 and Sections 3, 4 of Anti-Money Laundering Act, 2010 (to be referred as AMLA). The petitioners are aggrieved of the order/notice dated 29.10.2021, whereby, the respondents/banks have been directed to seize the bank accounts of the petitioners. Hence, this petition.
3. Arguments heard. Record perused.
4. First of all the question of foremost consideration arises that whether the powers blessed upon the members of FIA under section 5(5) of the Act of 1974 are unfettered or the same required to be used frugally in exceptional cases with certain restrictions and limitations? The power of an FIA official, having relevancy with the proposition in hand is mentioned in section 5(5) of the Act of 1974 which for correctly dilating upon the controversy in hand is being reproduced as under:- "5. Powers of the members of the Agency.--- (1)
(2) ...................... .
(3) ...................... .
(4) ......................
(5) If in the opinion of a member of the Agency conducting an investigation, any property which is the subject-matter of the investigation is likely to be removed, transferred or otherwise disposed of before an order of the appropriate authority for its seizure is obtained, such member may by order in writing direct the owner or any person who is, for the time being in possession thereof, not to remove, transfer or otherwise dispose of such property in any manner except with the previous permission of that member and such order shall be subject to any order made by the Court having jurisdiction in the matter."
The perusal of Section 5 (5) of the Act of 1974, so mentioned above, reveals that it is based on four ingredients: (i) property has some nexus with the investigation/alleged offence; (ii) if there is likelihood that the property is to be removed, transferred or otherwise disposed of before an order passed by appropriate authority for its seizure is obtained; (iii) by issuing an order in writing directing the owner or any person who is for the time being in possession thereof not to remove, transfer or otherwise dispose of such property in any manner; and (iv) the order shall be subject to any order made by the Court having jurisdiction in the matter. Reference is made to "Najib Rahim Vs. Federation of Pakistan through Secretary, Ministry of Interior and 3 others" (PLD 2017 Sindh 53). Furthermore, in a case reported as "Muhammad Sohail Shaikh Versus The State and 2 others" (PLD 2021 Lahore 612), this Court has already extracted the remits within which the powers so mentioned in section 5 (5) are to be used and the same for the sake of ready reference are reproduced as under:-
(i) such powers can only be used during an investigation and cannot be exercised in an inquiry by the FIA;
(ii) Before issuing an order under this Section, the FIA official concerned must form a definite opinion that subject matter property is likely to be removed or transferred before getting an order of seizure from the appropriate authority;
(iii) After forming such an opinion, the FIA official is to issue direction in writing to the person in possession of the property and to restrict him from transferring or otherwise disposing it;
(iv) The direction so issues under section 5(5) is subject to an order required to be passed by the Court having jurisdiction;
(v) The provision of section 5(5) can only be invoked in cases of emergent nature, more importantly when the member of Agency has fear that if he will have recourse to the appropriate authority or the court, the time so required will provide an opportunity to the possessor of property to remove it.
5. The perusals of above-said provision of law makes it clear that members of Federal Investigation Agency have powers to issue an order in writing for placing an embargo upon the removal, transfer or otherwise disposing of a property which is subject matter of an ongoing investigation and of course the order under the above quoted provision can only be passed by the member of FIA, if he is of the opinion that process of investigation is likely to be thwarted by removing, transferring or disposing of subject matter property and only in cases of utmost urgency wherein time required for having recourse to the court will provide an opportunity to the possessor of the property to remove or dispose of it. It can inexorably be concluded that primarily the order of seizure is to be obtained from appropriate authority. In the latter part of section 5 (5), it is mentioned that such seizure order is subject to confirmation by the court. The use of expressions " "appropriate authority" and "the court" in Section 5 (5) make obvious that initial order of seizure and subsequent confirmatory order are to be passed by two entirely different forums. So far as, latter expression "the court" is concerned, it needs no scholarly discussion to hold that it refers to the court having jurisdiction to try the offence. At the same time, an FIA official cannot be absolved from his obligation of mentioning the grounds which persuaded him to draw an opinion in terms of section 5(5) of the Act of 1974. As such it can safely be held that the powers blessed upon members of FIA under section 5 (5) of the Act of 1974 are not unfettered, rather are subject to certain restrictions and limitations, required to be used sparingly and in cases of exceptional nature. Reliance is placed on "Fazal Mahmood Vs. Sardar Khan) (PLD 1996 Karachi 475), the relevant portion thereof is reproduced as under:- "a member of F.I.A. should not frequently or freely resort to the use of power under section 5 (5) of the F.I.A. Act but such powers should be exercised with restraint and caution as its use may sometime result in the infringement of Article 24 (1) of the Constitution, 1973, which guarantees that no person shall be compulsorily deprived of his property save in accordance with law."
While deviating from the normal procedure of having recourse to appropriate authority, the member of FIA is to satisfy the mandate of Section 5 (5) of the Act, 1974 by incorporating in case diaries, the reason of his opinion regarding apprehension of immediate removal of property. After having eloquently scanned the record, it divulged that the respondent/FIA has failed to show that there was any apprehension of disposal of property by the petitioners before obtaining orders of competent authority and there was any urgency and no sufficient time for obtaining such order was available to them. Even there is no opinion in writing of the Investigating Officer to that effect, thus, the respondents/FIA have acted in sheer violation of Section 24A of General Clauses Act, 1897 which for the sake of ready reference is reproduced as under:- 24A. Exercise of power under enactments.--(1) Where, by or under any enactment, a power to make any order or give any direction is conferred on any authority, office or person such power shall be exercised reasonably, fairly, justly and for the advancement of the purposes of the enactment.
(2) The authority, office or person making any order or issuing any direction under the powers conferred by or under any enactment shall, so far as necessary or appropriate, give reasons for making the order or, as the case may be for issuing the direction and shall provide a copy of the order or as the case may be, the direction to the person affected prejudicially.
There is yet another aspect of the matter that under section 5(5) of the Act, 1974 only the member conducting investigation can direct the owner or person in possession of a property not to transfer, remove or dispose of the property, whereas, in the instant case, the said letter has been sent by the Director FIA, which is against the spirit of law. To sum up, the omission to fulfill prerequisite of any of the remits within which the powers so mentioned in section 5(5) of the Act of 1974 are to be used is violation of section 5(5) of the Act of 1974, thus, renders the order of seizure nothing but a nullity in the eye of law.
6. As far as sections 3 & 4 of Anti-Money Laundering Act, 2010 (hereinafter to be referred as AMLA, 2010) are concerned, it will be expedient to reproduce the same:- "3. Offence of money laundering.--A person; shall be guilty of offence of money laundering, if the person:--(a) acquires, converts, possesses, uses or transfers property, knowing of having reason to believe that such property is proceeds of crime; (b) conceals or disguises the true nature, origin, location, disposition, movement or ownership of property, knowing or having reason to believe that such property is proceeds of crime; (c) holds or possesses on behalf of any other person any property knowing or having reason to believe that such property is proceeds of crime; or (d) participates in, associates, conspires to commit, attempts to commit, aids, abets, facilitates, or counsels the commission of the acts specified in clauses (a), (b) and (c). Explanation-I.--The knowledge, intent or purpose required as an element of offence set forth in this section may be inferred from factual circumstances in accordance with the Qanun-e- Shahadat Order, 1984 (P.O. 10 of 1984). Explanation II.--For the purposes of proving an offence under this section, the conviction of an accused for the respective predicate offence shall not be required.
4. Punishment for money laundering.--(1) Whoever commits the offence of money laundering shall be punished with rigorous imprisonment for a term which shall not be less than one year but may extend upto ten years and shall also be liable to fine which may extend upto twenty- five million rupees and shall also be liable to forfeiture of property involved in money laundering or property of corresponding value.
(2) The fine under sub-section (1) may extend upto one hundred million rupees in case of a legal person. Any director, officer or employee of such legal person who is also found guilty under this section shall also be punishable as provided under sub-section (1).
Perusal of said Sections reveals that there has to be some nexus with the crime proceeds and, therefore, it pre-supposes that some crime had been committed. Reliance is placed on "Maryam Nawaz Sharif Vs. Chairman, NAB and 2 others" (PLD 2020 Lahore 205). Mere taking/possessing local money is not a crime until and unless the same is proved to be derived from any illegal means. Section 3 of the Act, prescribes the offence of money laundering, while section 4 provides the punishment for commission of such an offence. On cumulative reading of sections 3 and 4 of Anti-Money Laundering Act, 2010, the expression 'proceeds of crime' appears to be a prerequisite of an offence committed under the Act. It shows that any money or property derived or obtained by any person directly or indirectly as a result of criminal activity is said to be proceeds of crime.
Reference in this regard is made to the case reported as "Rafi Ullah Vs. State" (2019 P.Cr.L.J. 1608).
7. On the other hand, it has frankly been conceded on behalf of the respondents that the Bank Accounts are being maintained by the petitioner Mrs. Uzma Adil Khan even prior to joining OGRA i.e. on 18th July, 2016 and even the money in the said Bank Accounts of the petitioner Uzma Adil Khan has duly been declared with the FBR. Furthermore, from the tax return of the year 2020-21, and the returns filed prior to joining OGRA, on July 18, 2016 alongwith wealth statement filed before FBR appended with this petition, it is prima facie established that the said money is of pre-dates of her appointment in OGRA and have had no nexus or bearing whatsoever with the cases registered against the petitioner. Even otherwise, the prosecution so far could not bring anything on record depicting that the money lying in the petitioners' bank accounts has been derived from any criminal activity. Mere possession of local money was not a crime until and unless the same was proved to be derived from any illegal means. Reading of sections 2 & 3 of the AMLA, 2010 provides that necessary element of the offence of money laundering was the commission of a predicate offence. The execution of this offence gave birth to the proceeds of crime, the movement of which attracted the criminal conduct of money laundering. Therefore, without the commission of a predicate offence there could be no offence of money laundering. Reliance is placed on "Justice Qazi Faez Isa vs. The President of Pakistan" (PLD 2021 SC 1).
8. Coming to th contention of learned counsel for the petitioners that the impugned notice dated 29.10.2021 issued by the respondent/FIA and the consequent seizure of the bank accounts of the petitioners is clearly offended the provisions of section 14 (2) of the Anti-Money Laundering Act, 2010 which requires a mandatory prior permission from the Court before passing the impugned notice for the seizure of the bank accounts? At the same time, it is emphasized that since the impugned notice has purportedly been issued under Section 25 of the Anti-Money Laundering Act, 2010 wherein the reporting entities are only required to provide assistance to the Investigating Officer if such assistance is reasonably required and the investigation is carried out in accordance with the provisions of AMLA, 2010. For better appreciation it will be expedient to reproduce both the provisions of law as under:- "14. Search and seizure.--(1) ................
(a)................................
(b)...............................
(c)..............................
(i)...............................
(ii)................................
(iii)...............................
(iv)...............................
(v)................................
(iv).............................
(2) The powers to search under sub-section (1) shall be exercisable by the investigating officer with the prior permission of the Court: "25. Assistance to authorities.--(1) Notwithstanding the provisions of any other law, the officers of the Federal Government, Provincial Governments, local authorities and reporting entities shall provide assistance including but not limited to production of record, documents and information reasonably required by the investigating or prosecuting agency or FMU for the purposes of money laundering, predicate offences and financing of terrorism proceedings and investigations in accordance with the provisions of this Act."
Before dilating upon the aforesaid provisions of law, for better understanding it would be appropriate to have a glance on the scheme of law which ought to be adopted. Section 7 of AMLA, 2010 read with Regulation 4 of the Anti-Money Laundering Regulations, 2015 require every reporting entity to file a Suspicious Transaction Report (STR) to the Financial Monitoring Unit (FMU) if it knows, suspects or has reason to suspect that the transaction (or a pattern of transactions of which the transaction is a part) involves funds derived from illegal activities or is intended or effected in order to hide or disguise proceeds of crime, is designed to evade any requirements of Section 7 of AMLA, 2010 or has no apparent lawful purpose after examining the available facts, including the background and possible purpose of the transaction. The Suspicious Transaction Report (STR) is to be filed immediately but not later than seven working days after the suspicion arises in respect to a particular transaction, regardless of whether the transaction was completed or not. Under section 6 (4) Financial Monitoring Unit (FMU) is to disseminate on confidential basis information of material relating to STR/CTR (Currency Transaction Report) to concerned investigating or prosecuting agencies for enquiry or other action under AMLA or any other applicable law. Under Section 8 of AMLA, 2010, the Investigating Officer may, on the basis of the report in his possession received from the concerned investigating or prosecuting agency, by order in writing, with prior permission of the Court, provisionally attach a property, which he reasonably believes to be the property involved in money laundering for a period not exceeding one hundred and eighty days from the date of the order, whereas, under section 14 the Investigating Officer on the basis of information in his possession has reason to believe that any property is involved in Money laundering after searching may seize any record or property but prior to such searching the Investigating Officer with the prior permission of the Court. Under section 9 of AMLA, 2010 the Investigating Officer is to give notice within 7 days from order of attachment and within 30 days from the date of seizure of property (u/s 14 or 15) to the accused to show cause and give evidence showing that the property is not involved in money laundering. Under Section 9(2) of AMLA, 2010 the Investigating Officer is to provide opportunity of hearing to accused, take into consideration material on record and record findings as to whether all or any property so attached is involved in money laundering. Under Section 9 (3) in case of determination u/s 9 (2) to the effect that the property is involved in money laundering, the Investigating Officer will apply to the Court for confirmation of attachment or seizure. In the instant case, mandatory prior permission from the court before passing the impugned notice for the seizure of Bank Accounts of the petitioners under Section 14 (2) of AMLA, 2010 has not been obtained and same has been dispensed with without any cogent reasons. As such the seizure of accounts of the petitioners is found to be violation of Section 14 (2) of AMLA, 2010, which requires a mandatory prior permission from the court but in the instant case no such permission was taken.
And under section 25 of the AMLA, 2010 the reporting entities are only required to provide assistance to the Investigating Officer if such assistance is reasonably required and the investigation is carried out in accordance with the provisions of AMLA, 2010, whereas, this provision neither empowers FIA to order qua seizure of accounts nor does it mandate or require the reporting entities to take any adverse action against the individuals without due course of law. In the light of the aforementioned scheme of law, the action of the respondent Authority is not justified as neither any Suspicious Transaction Report (STR) nor the respondent has any report in his possession to reasonably believe that the property is involved in Money-Laundering nor the respondent I.O. sought the permission of the Court to attach the bank accounts nor send any notice thereof to the petitioner. Therefore, it cannot be said that the impugned seizure was made in accordance with the law rather the same has been found to be in contravention of the aforesaid provision of law.
Thus, the seizure of bank accounts of the petitioners is nothing but a nullity in the eye of law.
9. Last but not the least point for determination of this Court is as to whether the petitioner Mst.
Uzma Adil Khan along with her co-accused illegally allowed Marketing of Petroleum Product to M/s Fossils Energy Pvt Ltd as well as extensions in provisional marketing license to M/s Askar Oil Services (OMCs)? Licensing of the OMCs is undertaken under the ECC criteria/policy and the Pakistan Oil (Refining Blending, Transportation, Storage and Marketing) Rules, 2016, (hereinafter to be referred as Oil Rules, 2016) to get storage infrastructure in the country so that each OMC has the required tankages to hold the volume of 20 days of its own sale. In this regard, the new applicant submits an initial/proposed plan of constructing storage facilities in three years. Once the licence is granted, companies start construction of storage facility as per their proposed plan. On completion of a storage facility by the company, OGRA carries out physical inspection of the site through its Third Party inspector (TPI) for ascertaining whether that facility exist on grounds and has been constructed in accordance with the applicable technical standards. Upon receiving the Third Party inspector (TPI) report, OGRA allows the company to start its marketing operations to the extent of province where it has developed the storages facility. In the same sequel, the companies complete their work program and OGRA allows those to expand their marketing network to the extent of other provinces on completion of storage facilities in respective provinces. Since, the actual sales volume of each OMC determines its 20 days storage requirement, therefore, each OMC is liable to increase their tankages/storage capacity throughout their operation and OGRA keeps monitoring the same against their sales volume. Any new OMC who starts sales operations is allowed in the above said policy provision as well as Rule 35 of the Oil Rules 2016. For bringing clarity it is placed on record that Oil Rules, 2016 were made by OGRA in exercise of the powers conferred under section 41 of the OGRA Ordinance, 2002 and the section 23 (3) of the same Ordinance deals with the subject of the licensing, which states/defines the other regulated activity other than undertaking marketing of petroleum products in two phases i.e. No person shall (a) construct or operate any pipeline for oil
(b) Construct or operate any oil testing facility (c) construct or operate any installation, construct or operate any refinery etc. But in the case of undertaking marketing of refine oil product the Ordinance does not specify separately the construction phase, rather makes it clear that no person shall undertake marketing of refined oil product unless a general or specific licence to undertake such activity has been issued and is in full force and effect and the person is the licensee. Now Part VI under the heading of "Marketing" in Oil Rules, 2016, deals with the licensing of the OMCs, which nowhere restrict the new OMC to operate the newly built storage facility and undertake marketing of refined oil products/petroleum products as the new applicant submits an application under rule 34 for a licence to set up a new oil marketing company to undertake marketing of petroleum products or refined oil products. The said rule is reproduced hereunder: "34. An application for licence to set up a new oil marketing company to undertake marketing of petroleum products shall be made, on the format set out in Part-J of Schedule-I, before the start of marketing of petroleum products under these rules."
10. The Authority under rule 35 (1), of Oil Rules, 2016 which stipulates the criteria for the grant of licence to new oil marketing company, examines the application made by an applicant for setting up a new company to undertake marketing of petroleum products/refined oil petroleum products and initially issues a licence under rule 35(2), which is reproduced hereunder for ready reference: "35(2). The Authority after examining the application made under rule 34 shall initially issue a licence for a period of three years during which the marketing infrastructure i.e. storages, retail outlets and filling stations etc., as given in the work programme, shall be completed in accordance with the laid down technical standards. In case of failure to complete the aforesaid marketing infrastructure within the stipulated period of provisional licence without any valid reason, the Authority may refuse the extension of the licence or, depending on the nature of non-compliance and subject to penalties under the Ordinance and the rules, may grant extension on such terms and conditions and for such period as deemed appropriate.
There is no doubt that during the initial licence period, the company has to develop the marketing infrastructure storages, retail outlets and filling stations etc., but the word "licence" which is a defined term in OGRA Ordinance, solely has been used in the above quoted rule. Now joint reading of section 2 (xi), 2 (xv), 23 (3) (f), 23 (4) and 23 (6) of the OGRA Ordinance, 2022 and rule 34 (1) and 35 (2) of Oil Rules, 2016 make it very clear that there is no embargo on undertaking marketing of petroleum products or refined oil products on a new license under rule 35(2). Rather, the licensee also develops retail outlets along with storage infrastructure. Accordingly, OGRA allowes the provisional license to undertake marketing of petroleum products/refined oil products, when it completes the first storage facility and the area of marketing restricted to the province, where it develops that storage/depots and so on till it is completed the entire work programme, which entitles the licensee to have a licence for a longer period i.e. maximum 30 years.
11. The above mechanism of law and rules makes it clear that it cannot be said that the new licensee has to first complete all its entire marketing infrastructure before having licence for undertaking marketing of petroleum product/refined establish retail outlets and filling stations during the initial license period which are a part and parcel of the work programme as the Rule 35 no-where places any embargo that the licensee cannot operate retail outlets or its storages during the initial license term of three years.
12. For what has been discussed above, I have come to an inescapable conclusion that the impugned seizure letter dated 29.10.2021 issued by the Director Coordination, FIA (North) being suffered from perversity and clear transgression of authority is nullity in the eye of law, therefore, the same is hereby set aside by accepting all the captioned writ petitions.