' This application for revision is directed against the order of the learned Accountability Court No,IV, Karachi, dated 17-4-2002 dismissing the applicant's application under section 265-K, Cr.P.C. In Reference No,9 of 2000.
2. The relevant facts appear to be that the applicants, who are father and son respectively were carrying on the business of import of mercantile in partnership at one time and were granted running finance and P.A.D. Facilities by Habib Bank Limited (hereinafter mentioned as the Bank).
According to them they continued to enjoy such facilities and made deposits of various amounts, but in 1994 after the change of the management of the Bank it suddenly stopped the use of such facilities and demanded huge amounts from the applicants as dues. Upon checking all 'records, the applicants found the demand to be wholly illegal and noticed that the payments received by the Bank were far in excess of the amount lent and mark-up thereon. The applicants, therefore, requested for accounts, but such request was declined.
3. Thereafter, according to the applicants the Bank started using coercive and unlawful pressure tactics through agencies of the Stat; and a Director of the Federal Investigation Agency was flown into Karachi to cause the arrest of the applicants and they were made to execute some blank documents and acknowledgements etc. Before being released. The applicants protested against this attitude through legal notices and in reply from the Bank while causing of arrest of the behest of the Bank was denied, the execution of documents on the date mentioned was admitted.
4. The applicants thereafter, filed Suit No,423 of 1994 on the original side of this Court exercising Banking Court jurisdiction for injunction, accounts and recovery of Rs,2,445,751,332.14 stated to have been received by the Bank in excess of their legal dues. It was claimed that the said amount was due to the applicant on account of the following acts and omissions on the part of the Bank:
(i) Charging excess rate of mark-up.
(ii) Illegally charging mark-up over mark-up.
(iii) Not giving credit for some credit vouchers issued by the Bank.
(iv) Not crediting certain payments received by the Bank.
5. The Bank thereafter lodged F.I.Rs, against the applicants alleging commission of offences under the Offences Against Banks (Special Courts) Ordinance, 1984 whereupon the applicants were arrested once again. However, they were granted bail by the Court and eventually directed to settle their disputes amicably. A suit bearing No,2198 of 1995 for recovery of Rs,2,157,477,000 had also been filed by the Bank before the Banking Tribunal at Karachi, but was thereafter transferred to this Court numbered as 1425/97 and directed to be tried alongwith applicants' Suit No,423 of 1994. It appears that some efforts were made to settle the dispute amicably in Suit No,423 of 1994 and great deal of correspondence took place between the .Parties. Nevertheless, it seems that no final settlement could be reached and the matter is still pending.
6. According to the applicants, the applicant No,1 was once again arrested during the night between 12th and 13th November, 1999 without any basis. However, he was subsequently informed that his arrest had been effected under the National Accountability Bureau Ordinance (NAB Ordinance) which was promulgated on 16th November, 1999. In the meantime the Special Banking Court by order dated 17-11-1999 directed the State Bank of Pakistan to appoint one of its internal auditors to audit the accounts of the applicants with the Bank. However, without waiting for the result of the audit the F.I.A. Submitted a report to the Chairman, NAB on 25-1-2000 whereupon the latter filed Reference No,9 of 2000 before the IVth Accountability Court, Karachi alleging that the applicants were wilful defaulters in terms of the NAB Ordinance. The applicants requested for determination of the due amount in terms of section 25-A of the NAB Ordinance through a Conciliation Committee and the Committee after hearing the Chartered Accountants for the parties held that an amount of Rs 2.611.423,000 was payable by the applicants to the Bank. On the recommendation of the Committee the Governor State Bank ordered that 30% of the outstanding liability he settled through down payment within 30 days and thereafter schedule for balance payment will be determined.
7. The applicants, however, failed to pay the amount required by the Governor, State Bank within the given time whereupon the Accountability Court started proceeding with the reference. The applicants inter alia moved an application before the Court praying that they may he acquitted on the ground that they could not he treated as wilful defaulters without a finding of the Civil Court to the effect that they were liable to pay certain sums of money to the Bank but this application was rejected by the Court. Consequently, the applicants have approached this Court under section 561-A. Cr.P.C. Seeking stay of proceedings before the Accountability Court.
8. The main contention of Mr. Abdul Hafeez Lakho learned counsel for the applicants is that section 10 of the NAB Ordinance contemplates trial of the offence of wilful default and a person can be treated to have committed wilful default in terms of section 2(r) of the Ordinance if he refuses or fails to pay any amount due to a Bank. Therefore, according to learned counsel a reference under section 18 for the purposes of trial can only he made if an amount is found to he due to the B nk and such determination could only he made by a competent Civil Court. He. Therefore, argued that the applicants could he prosecuted before the Accountability Court only if a definite sum of money was found to be payable by them to the Bank as a result of adjudication of the civil suits pending before this Court exercising Banking Court jurisdiction. He emphasized that the applicants had flied a suit for recovery of an amount exceeding Rs,2 billions long hefcre the promulgation of the NAB Ordinance and had been consistently claiming that they did not owe any amount to the Bank. In support of his contention learned counsel inter alia relied upon the pronouncement of the Honourable Supreme Court Agricultural Development Bank of Pakistan v. Sanaullah Khan PLD 1988 SC 67. In this case the appellant had sought recovery of the amounts due to the appellant by way of arrears of land revenue under section 25 of the A.D.B.P. Act. Their Lordships held that such procedure could only be resorted to after amount due was adjudicated upon and in the absence thereof the respondent could not be treated as defaulter.
9. While pressing for stay of proceedings before the Accountability Court, Mr. Lakho argued that though civil and criminal proceedings premises upon the same set of facts could continue simultaneously, the rule laid down by the Supreme Courts in Pakistan was that when a penal offence was inextricably linked with civil liabilities, proceedings for the penal offence must invariably be stayed till civil liability was determined so as to avoid a conflict of judgments. In this context he relied upon the pronouncement of the Honourable Supreme Court in Muhammad Akber v. State and another PLD 1968 SC 281. In this case while the question of ownership of a bus was being adjudicated upon in a suit for dissolution of partnership of a firm, prosecution on a police challan under sections 411 and 379/147 was initiated against one of the partners for forcibly detaining the vehicle. Upholding the order of the High Court passed under section 561-A, Cr.P.C.
Staying criminal proceedings till the disposal of the civil suit their Lordships observed:-- "Normally it is true, that criminal proceedings should not be postponed pending the disposal of civil litigation connected with the same subject-matter. But where it is clear that the criminal liability is dependent upon the result of the civil litigation or is so intimately connected with it that there is a danger of grave injustice being done in the case if there be a conflict of decision between the Civil Court and the Criminal Court. In such event it is equally clear that the Criminal Court has not only the right to but should also stay its hands until the civil litigation is disposed of, for, it is not desirable that when the little to the property itself is in dispute, the Criminal Courts should give a finding in respect of the same question."
10. Mr. Lakho then relied upon principles of law laid down by the Honourable Supreme Court in Abdul Latif v. Government of West Pakistan PLD 1962 SC 384 and Agricultural Development Bank of West Pakistan v. Sanaullah Khan PLD 1988 SC 67. The facts in the latter case appear to be that the father of the respondent had apparently borrowed some money from the appellant-Bank and the latter attempted to collect the amount from the appellant under section 25 of the A.D.B.P. Act.
Which enabled the appellant-Bank to recover all sums due from an agriculturist as arrears of land revenue. Their Lordships while following the law declared in the earlier precedent proceeded to hold that the machinery provisions for recovery as arrears of land Revenue could only be resorted to when the amount due had been determined after proper adjudication. Learned counsel contended that the NAB Ordinance did not purport to oust the jurisdiction of Court and unless the amount due was adjudicated upon the applicants could not be considered as defaulters.
11. Mr. Muhammad Anwar Tariq learned D.P.G. On the other hand at the outset objected to the maintainability of this revision application. He contended, without adverting to merits that under section 32(c) of the NAB Ordinance a revision application against the order of an Accountability Court could lie only if such Court had exercised a jurisdiction not vested by law, or failed to exercise a jurisdiction so vested or had acted illegally in the exercise of its jurisdiction. He argued that none of these three pre-conditions have been met and therefore, the revision application would not maintainable.
12. As to the merits of the case Mr. Anwar Tariq contended that there was no universal principle of law requiring that proceedings for a criminal offence must invariably be stayed when a civil suit in respect of the same subject-matter was pending, dealing with the main contention of Mr. Lakho learned counsel asserted that even if it he assumed that the fact of default had to he determined for the purpose of proceedings against the applications, under the NAB Ordinance, the Ordinance was special law and itself provided a mechanism for the purpose of determining whether a person could be tried for the offence of having committed wilful default. In this context he relied upon the detailed provisions of section 25-A of the Ordinance which may be reproduced as under:-- "25-A. Payment of loans etc.--- (a) Where a person has been arrested or is in the custody of NAB or apprehends such arrest or custody for the investigation of the charge against him of committing an offence of wilful default on account of non-payment of dues to a bank or financial institution or Cooperative Society, he may at any stage before or after such arrest or before, during or after such custody or investigation apply to the Governor. State Bank of Pakistan for reconciliation of his liability through the Conciliation Committee and the Governor may. If he deems fit. Refer the matter to the Conciliation Committee.
(aa) The Governor, State Bank of Pakistan shad constitute .One or more Conciliation Committees of the purposes of this Ordinance.
(b) The Conciliation Committee shall consist of a nominee of the Governor. State Bank of Pakistan.
Being a Senior Officer of the State Bank well-qualified in that profession of banking who shall be the Chairman of the Committee, two nominees of the NAB to be nominated by the Chairman. NAB, two Chartered Accountants to be nominated by the Governor, State Bank of Pakistan. One Chartered Accountant it to be nominated by the Council of the Institute of Chartered Accountants of Pakistan, Karachi, such nominated to be obtained by the Governor, State Bank of Pakistan a Chartered Accountant to be nominated by the lender bank or financial institution.
' Explanation.-- Where the leader is a consortium or group of banks of financial institutions, the lender means the lending bank or financial institution.
(bb) The Chairman of the Conciliation Committee shall convene the meetings and conduct proceedings of the Committee in the manner he deems fit.
(c) The Conciliation Committee after examination of the record of the lending bank or financial institution and the borrowers and after hearing the parties through their Chartered Accountant, shall determine the amounts outstanding against the borrower calculated in accordance with law, rules regulations and circulars of the State Bank of Pakistan and further determine the manner and the schedule of repayment having regard to the facts of each case. The borrower, if he so desires, shall be heard at commencement and before the conclusion of proceedings: ' Provided that the borrower shall have the right to have access to, and instruct, the Chartered Accountant representing him before the Conciliation Committee even if the borrower is in the custody during the proceedings of the Conciliation Committee.
(d) The Conciliation Committee shall conclude the reference within thirty days and its recommendations shall he recorded by its Chairman and shall contain the view of all members of the Committee. The recommendations of the Conciliation Committee shall he submitted to the (Governor, State Bank of Pakistan.(.
(e) The Governor, State Bank of Pakistan shall consider the recommendations submitted-to him under subsection (d) and may accept the recommendations or may, for reasons to he recorded, pass such other appropriate order thereon as he deems fit. The acceptance of the recommendations of the Committee or passing any other order as aforesaid shall constitute the decision of the [Governor, State Bank of Pakistan.]
(f) Where the borrower undertakes to repay the amount as determined by the Conciliation Committee, the Chairman, NAB with the approval of the Court, may release the accused.
(g) The decision of the Governor. State Bank of Pakistan shall be communicated to the Chairman.
NAB, which shall be binding on him, except for valid reasons to be recorded in writing subject to approval of the Court, to be accorded within a period of seven days.
(h) In the event of failure either of the Conciliation Committee to conclude the reference within thirty days of the commencement of the conciliation proceedings or the failure of the borrower to accept and implement the decision of the Governor, State Bank of Pakistan regarding the payment and matter relating thereto, such failure to accept or implement the decision shall be referred to the Accountability Court subject to the provision of section 31-D and the Court may proceed with the case thereafter: Provided that the period of thirty days may be extended by the Governor, State Bank of Pakistan such further period or periods as he may find necessary having regard to the facts and circumstances of the case and for reasons to be recorded."
13. Learned counsel argued that the above-quoted provisions provided a self-contained code for determining whether a person could be prosecuted for committing the offence of wilful default it enables any person even apprehending arrest or investigation of the party of wilful default to apply to the Governor, State Bank for reconciliation of his liability, the Governor could refer the matter to a Conciliation Committee where the accused was to be represented by his Chartered Accountant, could lead evidence through him and had a right to personal access to such Accountant even while in custody to be able to instruct him and also the right to personally address committee at the commencement and before the conclusion of proceedings. The Conciliation Committee would determine the liability of the borrower and also lay down the mode of repayment having regard to the facts of each case. The recommendations of the Committee were to acquire the form of an order of the Governor', State Bank unless the Governor recorded reasons for not doing so and such order would be binding on the Chairman, NAB except for valid reasons to be recorded in writing subject to the approval of the Court. The borrower could be tried for the offence of wilful default only in the event of his failure to comply with such order within 30 days of the passing thereof.
14. Learned counsel argued that such procedure was laid down in displacement of the ordinary procedure for determination of liability of a borrower through Civil Courts. He further contended that it was essentially an extremely fair procedure providing the fullest opportunity to a borrower to present his point of view. Coming to the facts of the instant case Mr. Anwar Tariq pointed out that the applicants themselves requested for reference of the question of their liability to a Conciliation Committee and thereby opted for the mechanism provided in section 25-A in supersession of the adjudication before this Court. This procedure had certain advantages inasmuch as a borrower could not be prosecuted for wilful default even if some amounts were found to be due and payable to bank but only when payments were not made according to the manner and schedule recommended by the Committee. The Committee found a certain amount to be due and payable by the applicants whereupon the Governor. State Bank ordered that only 30% of the amount due may be paid instantly and the question of repayment of the remainder in instalments be decided subsequently. The applicants, however. Failed to take advantage of these concessions as well.
15. In support of his contention Mr. Anwar Tariq placed strong reliance upon the well-known pronouncement of the Honourable Supreme Court in Asfand Yar Wali v. Federation of Pakistan PLD 2001 SC 607 where the concept of wilful default as contemplated by the NAB Ordinance has been discussed in great detail from paras. 198 to 219 (pages 885 to 905) and also pointed out that appropriate amendments have already been made in the Ordinance according to the directions of the Honourable Supreme Court. He also referred to the observations of the Court holding that the offence of wilful default was a continuing offence as .Long as the obligation to pay the Bank was not performed and argued that mere conscious failure in paying would amount to an offence irrespective of proof of mens rea. In this context learned counsel also referred to the pronouncement of the Full Bench of the Lahore High Court in Shahida Faisal v. Federation of Pakistan PLD 2000 Lah.
508.
16. We have given our anxious consideration to the respective points of view of the parties very ably presented by their learned counsel. The main question to be decided, in our view are:--
(a) Whether the procedure prescribed in section 25-A displaces the normal mode of settlement of disputes between a Bank and borrower; and
(b) If not whether it would be appropriate to stay criminal proceedings under the NAB Ordinance, pending the determination of civil liabilities by a Banking Court.
17. As regards the first question it needs to be kept in view that normally disputes between banker and customer are to be decided by the Banking Court under the Financial Institutions (Recovery of Finances) Ordinance, 2001, which was promulgated after the promulgation of the NAB Ordinance.
Under this Ordinance the jurisdiction of a Banking Court is exercised by a Judge of this Court when the amount involved is more than Rs,5 millions.
18. The applicants' Suit No,1423 of 1994 was originally filed in the original civil jurisdiction of this Court but upon the enactment of the Banking Companies (Recovery of Loans, Credits, Advances and Finances) Act. 1997, it stood transferred to a Banking Court under the Act though, the Banking Court jurisdiction was exercisable by this Court in view of the amount involved. Subsequently, the 1997 Act was repealed by the Financial Institutions (Recovery of Finances) Ordinance, 2001 and notionally the suit stood transferred to a Banking Court established under this Ordinance by virtue of section 7(6) thereof though practically it continued to remain triable by a Judge of this Court in view of the amount involved.
19. We consider a narration of this Bank ground necessary for the reasons that though this Ordinance was promulgated after the enforcement of the NAB Ordinance, it does not contemplate that liabilities of borrowers being charged with the offence of wilful default will be determined according to section 25-A of the NAB Ordinance. On the contrary section 7(4) stipulates that the jurisdiction of a Banking Court with respect to matters falling within its domain except those provided by special law under which a Financial Institution is established, will be exclusive.
Moreover, unlike the 1997 Act, section 4 of this Ordinance provides that the provisions of this Ordinance will override anything in consistent therewith in any other law. As such it is extremely difficult to accept Mr. Anwar Tariq's contention to the effeci that the question of liability of the applicants (if any) could be decided according to the mechanism provided under section 25-A of the NAB Ordinance.
20. To be fair to learned counsel, we tend to agree with Mr. Tariq that determination through Conciliation Committee in terms of section 25-A provides a reasonably fair procedure.
Nevertheless it is equally important to keep in view that the Conciliation Committee does not invariably determine the extent of liability of person accused of wilful default. It acts only when the accused applies for reconciliation of his liability to the Governor, State Bank and the Governor deems it fit to refer the matter to such Committee. The consequence of the acceptance of the determination of the Conciliation Committee by the borrowers has been spelt out in clause (f) of section 25-A to the effect that in such case the Chairman, NAB with the approval of the Court may release the accused. It is nowhere stated that such determination will be conclusive as regards the borrowers' civil liability. At the same time, it is evident that the determination by a Conciliation Committee is not subject to the incidents of appeal before a judicial forum. It is extremely difficult to assume that while the NAB Ordinance contemplated trial of offences in accordance with strict judicial principles, it allowed resolution of civil disputes through non-judicial institutions.
21. Indeed statutory provisions of section 25-A of the NAB Ordinance cannot be altogether overlooked. Nevertheless. Keeping the above principles in view, we are of the opinion that determination through a Conciliation Committee is intended to serve a limited purpose to the extent that when a person who is prima facie a wilful defaulter seeks reconciliation of his liability and abides by the determination of such Committee he may be released from detention. As observed by the then Chief Justice Allah Nawaz in the Full Bench decision of the Lahore High Court in Shahida Faisal v. Federation of Pakistan PLD 2000 Lah. 508 relied upon by Mr. Anwar Tariq this section provides:-- "a new strategy to effect the recovery of outstanding laws from the defaulters who have been designated wilful defaults and the principle of reconciliation and hearing wilful defaulters was incorporated in this new strategy."
22. In view of the above, we are clearly of the opinion that section 25-A only serves a limited purpose and the rights and liabilities between bankers and borrowers can only be determined by Banking Courts. In view of the above, we are also of the opinion that the appellants' request for reference to Conciliation Committee was only made for the limited purpose of securing their release or avoiding prosecution under the NAB Ordinance and does not in any manner affect the power of the competent Banking Court to determine the rights and liabilities of the parties to suits.
23. Alternatively, Mr. Anwar Tariq argued that there was no universal principle of law requiring that criminal proceedings. Must invariably be stayed till civil liabilities were determined in matters where criminal proceedings were also permissible for a civil wrong. Indeed the above principle cannot be disputed in view of the pronouncement of the Honourable Supreme Court in Muhammad Akber's case PLD 1968 SC 281 referred to in para.9 above and the subsequent decision.
In Syed Muhammad Ahmed v. State 1972 SCMR 85, where their Lordships upheld the order of the High Court declining to stay criminal proceedings. Mr. Lakho, however, argued that though technically civil and criminal proceedings could proceed simultaneously, the latter ought to be stayed when the existence of penal liability was inextricably linked with the result of civil proceedings as had happened in Muhammad Akber's case. Moreover, relying upon the case of A.D.B.P. v. Sanaullah Khan PLD 1988 SC 67 learned counsel contended that in view of the suit filed by the applicant claiming that certain sums of money were payable by the Bank filed long before the promulgation of the NAB Ordinance, the applicants could only be prosecuted for the offences of wilful default if as a result of adjud'cation in the civil suits, they were found liable to pay certain amounts to the Bank.
24. Having carefully considered the respective contentions of the learned counsel, we are of the view that no hard and fast rule can be laid down in the above context. However, it would be safe to conclude that when a bona tide dispute as to the existence of liability was pending before a competent Court, it would not be proper to treat a party as wilful defaulter for the purpose of criminal prosecution. Indeed it' the applicants had tiled a suit for accounts after investigation into the offence of wilful default had commenced it might have been possible to conclude that such proceedings were instituted only by way of attempt to forestall prosecution and no stay was justified in accordance with the dicta laid down in Muhammad Ahmed's case. Nevertheless, keeping in view the facts of the instant case inasmuch as the applicants' suit for recovery was prior in time both to the banks suit as well as the promulgation of the NAB Ordinance, we are clearly of the opinion that proceedings under the NAB Ordinance ought to be stayed until it is found that the applicants are liable to pay any amount to the Bank and have defaulted in such payment according to the provisions of the Ordinance.
25. Accordingly, we would allow this application and stay the proceedings before the learned Accountability Court. At the same time keeping in view the importance of proceedings under the NAB Ordinance we would like to observe that the learned Single Judge may proceed with the suits which are ripe for regular hearing on a priority basis, avoid granting unnecessary adjournments and dispose them of within 6 months from today.