M. JAVED BUTTAR, J.---This judgment will dispose of Writ Petition No.17012 of 2002 also as the questions of law and fact involved in these two cases are common. These petitions arise out of the following circumstances.
2. The petitioner is a candidate for election to the National Assembly from Constituencies Nos. 141 and 142. Rana Liaqat Ali Khan, respondent No.2 in Writ Petition No. 17011 of 2002 raised objection against his candidature on the grounds that Hamid Textile Mills Limited, of which the petitioner has been a Director till 1990, had availed large amounts of loans from the Bankers Equity Limited (BEL for short) a financial institution of Netherlands and the Pakistan Industrial Leasing Corporation. His.
B.A. Degree was also objected to. It was further averred that in 1994-95, in his capacity as M.N.A., he interfered in the affairs of Phool Nagar Town Committee and caused a loss of Rs.65,00,000 also managed a payment of Rs.90 lacs to Khalid & Company and a reference was pending before the Ehtesab Authorities. The Returning Officer, vide order dated 29-7-2002, rejected the nomination papers of the petitioner from this Constituency on the ground that the spouse of the petitioner was a loan defaulter and that petitioner's were undertook to pay back the loan in any capacity "either as a Director or as a guarantor". The petitioner filed an appeal which was dismissed vide judgment dated 13-9-2002 with the observation that in her capacity as a Director, the were of the petitioner has accepted the liability to pay the loan and also "a written of to the tune of Rs.110.720 millions was given".
3. In respect of Constituency No.142, Rana Hayat Khan, respondent No.1 in Writ Petition No.17012 of 2002, filed the same objection. However, before the Returning Officer, Rana Muhammad Arif, respondent No.6 and Muhammad Anwar are shown to be the objectors. In this case the learned Returning Officer noted that a similar objection was earlier taken against the petitioner which was repelled in Election Appeal No.9 of 1993, Sardar Talib Hussain Nakai v. Returning Officer and another 1993 M LD 2485. It was further noted that the list of defaulters was not supplied to the Returning Officer by the BEL or the Banking Council and that the pendency of reference before the Ehtesab Authorities had no bearing because the petitioner was not found liable and convicted for misappropriation etc. Accordingly, the objections were overruled and the nomination papers of the petitioner were accepted. Rana Muhammad Hayat, respondent No.4, filed an appeal against the said order which was allowed vide order dated 13-9-2002 and the nomination papers of petitioner were rejected.
4. The learned counsel for the petitioner contends that Bankers Equity Limited filed a suit against Hamid Textile Mills Limited and others for recovery of an amount of Rs.507,164,442 alongwith mark- -up etc. On 30-9-1998. In the said suit the parties entered into a compromise on 30-4-1999 according to which the Bankers Equity Limited accepted an amount of.Rs.115 millions in full and final settlement of their claim. A down payment of an amount of Rs.50 millions was to be made, an amount of Rs.5 millions was to be paid before 31-5-1999 while the balance amount of Rs.60 millions was payable in 48 instalments commencing from 31st May, 2000. Based on the aforesaid agreement the suit filed by the BEL was decreed on 27-5-1999 in the terms of the aforesaid agreement. He maintains that were of the petitioner was not a defaulter within the meaning of clause (o) of sub--section (2) of section 8D of the Conduct of General Elections Order (Chief Executive's Order No.7 of 2002) or clause (s) of subsection (1-A) of section 99 of the Representation of the People Act (No.LXXXV), 1976. He emphasized that the loan was incurred by the Company of which the petitioner's were was only a guarantor and under the aforesaid provisions, guarantor's default, which was not there, could be visited with the penalty of ousting the petitioner from the Elections. He further submitted that the shareholding of the petitioner, his were, son and daughter in the company was 20% and, therefore, within the scope of clause (c) of subsection (2) of section 12 of Act No.LXXXV of 1976, no declaration was required to be made because the business concern was not mainly owned by the petitioner, his spouse or, any of his dependents. He relied on Sardar Talib Hussain Nakai (supra). In the said case nomination papers of the petitioner were rejected on the ground of default in repayment of loan incurred by Hamid Textile Mills Ltd. But his appeal was allowed by the Election Tribunal. He also relied on Ghulam Mustafa Jatoi v. A.D.S.J./R.O. And others 1994 SCM R 1299. It is contended that according to the rule laid down therein a loan agreement and an agreement of guarantee are two distinct transactions. He next relied on Haji Ghulam Sabir Ansari v. Returning Officer 1993 M LD 2508, another judgment of learned Election Tribunal, according to which in case of a loan incurred by a Company disqualification will be attracted only if the candidate, his spouses or any dependent owned 51% shares of the Company. He further contended that the disqualifying provisions as contained in section 8D(2)(o) of the Chief Executive's Order No.7 of 2002 or section 99(1-A)(s) of the Representation of the People Act (LXXXV of 1976) did not even refer to the provisions contained in section 12(2)(c) of Act (No.LXXXV of 1976). He maintains that the payment due under the aforesaid decree of the Court is being regularly made. He contends that it was a case of settlement of a dispute before a Court of law. Therefore, it cannot be said that any amount of loan was written of. In the alternative he submitted that if at all any loan was written of, the beneficiary was the Company which is a Public Limited Company listed on the Stock Exchange (it is not disputed) and it cannot be said that the beneficiary of the waiver of the loan was the were of the petitioner. It is next contended that neither the Bankers Equity Limited (which has been liquidated) nor its successor i.e. The State Bank of Pakistan made any grievance of the settlement of the dispute. It was lastly contended that the agreement dated 30-4-1999 brought about a new contract and the previous default if any, stands wiped out. Explanation (i) of section 12(2) of Act No. LXXXV of 1976 was so referred to for the definition of "loan".
5. On the other hand, the learned Deputy Attorney-General submits that the petitioner failed to declare the liability of his were as required by section 12(2)(c) of Act LXXXV. Of 1976 thus entailing rejection of his nomination, papers under section 14(3)(c) thereof. He contended that according to the agreement dated 30-4-1999, against an amount of Rs.507.164 millions outstanding against the Company, the BEL accepted an amount of Rs.115 millions and, therefore, the rest of the amount shall be deemed to have been written of. The intention of law is that persons availing such concessions should not be allowed to enter the Parliament. He next contended that there is no distinction as to whether an amount of loan was written of as a result of settlement before a Court of otherwise. As he puts it a claim which is abandoned will amount to writing of of the loan. He vehemently argued that the ballot papers have been printed and according to the Notification dated 24-8-2002 of the Election Commission of Pakistan, these will be supplied to the Election functionaries on 1-10-2002 in respect of the two constituencies. And in case this Court interferes the Election process will be thwarted, the dictate of large public interest demands judicial restraint. He relied on Federation of Pakistan v. Muhammad Saifullah Khan PLD 1989 SC 166 to contend that individual interest may have to be satisfied for the larger national interest even if it could be said that the petitioner had suffered any grievance or injury although he has suffered none.
6. Mr. Ashtar Ausaf Ali, Advocate appeared on behalf of respondent No.4. He submits that the dictum laid down by the Honourable Supreme Court in Jatoi's case (supra) was distinguishable inasmuch as that in the said case the nomination papers of Mr. Jatoi were accepted in the first instance by the Returning Officer and by way of a subsequent ex parte order his name was dropped from the list of contesting candidates. Further, no waiver of a loan was involved in the said case. According to his interpretation, the agreement was between the Company, the eight Directors (including petitioner's were) and the Bankers Equity Ltd. He maintained that this agreement contains an admission that the Directors of the Company as guarantors were in default of the repayment of the loan to BEL and the amount of default i.e. Rs.507.164 millions was also admitted. He was critical of the manner of payments contemplated by the said agreement, particularly the covenant that BEL will pay interest/profit at the rate of Rs.34.50% per annum on the amounts to be repaid by the company under the said agreement. He further contended that the certificates of investment (C.O.I.) were to remain in the names of the guarantors. He maintained that petitioner's were has been a Director in 1988, 1999 and even 2000. He referred to the annual report of the Company for the year 1999 which shows an amount of Rs.24,96,77,442 under the head "Gain on Settlement". He also referred from the Netherlands Company was Rs.96,885,431. These gains, according to him, clearly amounted to writing of, of the loan in favour of the company of which petitioner's were was a Director. According to him it was a family concern inasmuch that out of the total shares of 13272100, 6730800 shares were owned by the petitioner and his close relatives.
According to him, the Company was mainly owned by the petitioner and his family members and, therefore, declaration under section 12(2)(c) of Act No.LXXXV of 1976 was mandatory. Thus, the nomination papers of the petitioners were rightly rejected. He contended that factum of default, the guarantee furnished by the petitioner's were persistent default and writing of, of the loan having been admitted in the agreement, the petitioner's failure to disclose it as a liability could not be condoned as petitioner's were continued to be personally liable for the concession. As to the expression "written of" he relied on Muhammad Aslam Butt v. Returning Officer, Gujranwala 1993 M LD 2496. He further contends that the terms of the agreement demonstrate that it was unconscionable inasmuch as that the rate of interest allowed by BEL on the deposits of the Company was exorbitant and against the Banking practice. He relied on the letter dated 11-9-2002 of the Manager Accounts of Hamid Textile Mills Limited addressed to the petitioner which acknowledges that the Company had to pay Rs.115 millions. It may be noted here that according to this letter an amount of Rs.81 millions has already been paid out of the aforesaid amount under the agreement dated 30-4-1999.
7. Rana Muhammad Arif, Advocate appeared on behalf of respondents Nos.2 and 3 and adopted the arguments of Mr. Ashtar Ausaf Ali Khan, Advocate.
8. We have given our anxious consideration to the submissions made by the learned counsel for the parties and have perused the record with their assistance. As far as Constituency No. 142 is concerned, the Returning Officer had accepted the nomination papers of the petitioner while in case of Constituency No. 141 these were rejected. In the two appeals taken before the learned Election Tribunal, one of the petitioner and the other by respondent No.4, the nomination papers of the petitioner from both the constituencies were rejected. As far as the order rejecting the nomination papers of the petitioner from N.A. No. 141 is concerned, the finding of the learned Returning Officer was that the were of the petitioner was defaulter inasmuch as that, in the suit successfully filed by the Bankers Equity Limited, she "herself undertook to pay back the loan in any capacity either as Director or as a guarantor" (emphasis supplied) and she will continue to be a defaulter unless the decree is satisfied. The learned Returning Officer concluded that either the spouse of the petitioner is a defaulter or beneficiary of the writing of of the loan. The learned Election Tribunal held that the petitioner's were being one of the guarantors, while entering into the agreement with the BEL had accepted the liability to pay the loan and had also availed the facility of writing of, of the loan to the tune of Rs.110.720 millions. It was further observed that the terms of the agreement specified the liability of the Directors/guarantors of the Company and the amount of the loan written of.
9. The impugned order of the learned Election Tribunal is based on the consideration that the guarantor of a Company, in whose favour the loan is written of incurs a disqualification and, therefore, the petitioner was disqualified. Since the controversy revolves round the agreement, it will be appropriate to reproduce, for facility of reference:-- AGREEMENT THIS AGREEMENT is made and executed at Lahore on this 30th day of April, 1999 by and BETWEEN (1)Hamid Textile Mills Limited, a public company limited by shares duly registered and incorporated as such under the Companies Ordinance, 1984 with its Head Office 96-Tipu Block, New Garden Town, Lahore through its duly authorized Chief Executive (hereinafter called "The Customer" which express means and includes its successors-in-interest) of the first part.
(2)Sardar Abdul Hamid.
(3)Sardar Muhammad Omar.
(4)Sardar Khurram Omar.
(5)Mst. Abida Omar.
(6)Miss Zainab Omar.
(7)Mst. Shahida Talib.
(8)Mst. Hamida Begum.
(Hereinafter called the shareholders and guarantors) of the second part.
AND Bankers Equity Limited, a Banking Company duly registered and incorporated under the Companies Law of Pakistan with its Head Office at Finance and Trade Centre, Shahrah---e-Faisal, Karachi and Regional Office at State Life Building, 15-A, Davis Road, Lahore, through its authorized officer (hereinafter called "BEL" which expression means and includes its successors and assigns) of the third per.
Whereas, BEL provided various types of financing to the customer for its textile project situated at Moza Wan Adham, Tehsil Chunian, District Kasur.
The said financial assistance was adequately secured through first mortgages, hypothecation's charges, in favour of BEL apart from promissory notes, personal guarantee of the share-- holders/guarantors.
Whereas, the customer as well as its Directors (as guarantors) defaulted in meeting repayment obligation to the BEL hence BEL filed a suit for recovery of Rs.507,164,442 alongwith mark-up etc. Due as on 30-9-1998 in the Banking Court, Lahore High Court. The said suit is pending/adjudication.
Whereas, the customer and its Directors during pendency of the suit have arrived at an agreement with BEL to voluntarily liquidate the liability of BEL through consent decree and in the manner provided herein:-- Now therefore this agreement witness as follows:-- (1)The customer Company shall pay Bankers Equity Limited on account of full and final total settlement; Rs.115 millions against total liability of Rs.507,104,442 millions, as under:-- (i)A down payment of Rs.50 millions' shall be made to BEL in the form of COI deposit for eight and a half years @ 34.50% p.a., at the time of the execution of this agreement. The said amount shall remain under exclusive, irrevocable and unconditional lien of BEL till maturity. The said amount at maturity date comes to Rs.196.625 millions shall be appropriated towards liquidating the BEL's partial liability.
(ii)Second payment of Rs.5 millions shall be paid before May 31, 1999 to BEL in the form of COI deposit for eight years and three months @ 34.50% p.a. The said amount shall remain under exclusive, irrevocable and unconditional lien with BEL till maturity. The said amount at maturity date comes to Rs.19.231 millions shall be appropriated towards liquidating the BEL's partial liability.
(i.e)The customer shall commence making the balance payment of Rs.60,000 millions to BEL in the form of COI deposition from 31 May, 2000, in 48 monthly instalments as per the Schedule I (attached).
(2)That the above payment when received as per the schedule by BEL, shall be invested in the COIs in the name of the customer for seven and half years to three and a half years @ 31.00 % to 21.45 % maturing at Rs.148.820 millions. The said amount shall remain under exclusive, irrevocable and unconditional lien with BEL till maturity. The said amount at maturity date comes to Rs.148.820 millions shall be appropriated towards liquidating the BEL's partial liability.
(3)That after the payment of the last instalment under the Schedule I (attached), BEL shall write of the balance liability of Rs.110.720 millions (excluding customer guarantee issued by BEL favouring EBI, amounting to Rs.31.7867 millions) and all the charges and sponsors" shares shall be released/ returned excluding the lien as mentioned at clauses (1) and (2) above.
(4)That in case an instalment is not paid on due date, a penalty @ 22% p.a. On the unpaid amount will be applicable, however, if the default in repayment of due instalments' continues and exceeds 3 months, the entire balance outstanding amount of full and final settled amount of Rs.115 millions together with penalty @ 22% p.a. Will be payable immediately. Moreover proposed waiver of Rs.110.720 millions will be reinstated and will become payable immediately. In such a case BEL will have the right to immediately initiate the execution proceedings against customer and guarantors for the amount remaining unsatisfied.
(5)BEL changes on the customer's company shall be restricted to Rs.148 millions and EOY financing and all other charges shall be validly a leased.
(6)Companies request for change in directorate as per detail below has been approved, subject to clear CIB report and satisfactory Credit Reports from Bank/DFIs.
OUTGOINGINCOMING DIRECTORSDIRECTORS
(a) Sardar Abdul(a) Altaf Hassan Hamid s/o Sardar Manns/ost Muhammad Akbar Muhammad Sadia Mann
(b) Miss Zainab(b) Zahid Lateef Omar d/o Sardars/o Abdul Lateef Muhammad Omar (7)BEL shall issue NOC for pari passu charge on the fixed assets of the customer Company subject to availability of cushion.
(8)The counter guarantee issued by BEL favouring Emirates Bank International for securing the exchange risk coverage through State Bank of Pakistan, for FMO Netherlands loan repayment, shall be vacated by the company/customer, and the original counter guarantee shall be returned to BEL by the customer. In case of default by the customer to provide original counter guarantee to BEL duly discharged by Emirates Bank International, BEL shall have the right to recover the amount of guarantee to the extent of Rs.31.767 millions including all charges and mark-up thereon by the customer and guarantors.
(9)Current personal guarantees of existing Directors should be replaced with fresh personal guarantees of Directors as per the revised approved list, to the tune of Rs.177 millions.
(10)The above agreement shall be enforced through a consent decree.
On behalf of On behalf of Hamid Bankers Equity Textile Mills Ltd.
Ltd.
Perusal of the said agreement shows that it was between three parties. The company being the first party, the eight Directors including petitioner's were being the second party, and the BEL being the third party his agreement recites that, during the pendency of the suit the company and its Director had agreed to liquidate the liability through the consent decree. This was allowed by covenants as to the details of the settlement, perusal of the terms of the settlements shows that nowhere the guarantors signing the agreement on behalf of the company had bound themselves with the terms of the agreement in their personal capacity. The covenants regarding the repayment of the loan and the concession of waiver of the loan were in favour of the company.
Therefore, we are unable to agree with the finding of the learned Election Tribunal that the were of the petitioner had accepted the liability to pay the loan and was beneficiary of the concession of waiver of the loan. It may be observed that the company is a Public Limited Company, listed with the Stock Exchange and in fact all the share--holders the beneficiaries of the said settlement. We are also unable to agree with the finding of the learned Election Tribunal that loan to the tune of Rs.110.720 was written of. Reference may be made to the paragraph 1 of the agreement which clearly specifies that the "proposed waiver of Rs.110.720 millions will be reinstated and will become savable immediately. In such a case BEL will have the right to immediately initiate the execution proceedings against customer and guarantors for the amount remaining unsatisfied." (Underlining is ours). Thus the waiver of Rs.110.720 millions was only a proposal which was to consummate in case of compliance of the terms of the agreement. The expression "write of" has been defined in the Black's Law Dictionary (6th Edition) as under:-- "To remove from the books of account an asset which has become worthless. Most often referred to in connection with accounts or notes receivable which are deemed worthless or uncollectible."
Viewed in the context of paragraph 4 aforesaid of the agreement and the definition of the expression, it could hardly be said that the amount of Rs.110.72 millions was written of. It is not being disputed that in accordance with the terms of the agreement, the liability thereunder of the company is being discharged without any default and even according to the letter dated 11-9- 2002 mentioned above, an amount of Rs.81 millions has already been repaid by the Company in pursuance of the said agreement.
10. The contention of the learned counsel for the objector that against the amount of Rs.507.164 millions the BEI accepted an amount of Rs.115 millions and therefore, the balance amount shall be deemed to have been written of has not, in the circumstances, impressed us. This was the amount claimed by the Bank in the suit and the liability, even of the Company, had to be finally determined when the parties entered into the aforesaid agreement. Mere recital in the agreement that the liability, was to the tune of Rs.507.164 millions does not mean that it was a determined liability.
11. Coming to the other contention of the objectors that full disclosure of the liability was required to be made by virtue of the provisions of section 12(2)(c) of Act LXXXV of 1976, it may be noted that the assertion of the learned counsel for the petitioner that the petitioner, his were, son and daughter own not more than 20% of the shares of the Company was not disputed but it was sought to be argued that a number of other shareholders are closely related to the petitioner. Not only we do not have any material in support of this contention but also that nomination papers of the petitioner were not rejected on the ground of alleged non--disclosure of the liabilities in the shape of Bank loans. We may add that the liability of the petitioner's were, even as a guarantor, stands rescheduled, the agreement dated 30-4-1999 substitutes all previous loan agreements and unless there was a default in compliance with the terms of the abovesaid agreement, it could not be said that the were of the petitioner was a defaulter of loan and the petitioner had incurred a disqualification. The contention of the learned counsel for the objectors that the agreement is unconscionable has no merit. It has not either been the case of any of parties before the Tribunals below and nothing turns on it when the loaning agency was satisfied with the terms and conditions naturally agreed upon, We may refer explanation (i) of section 12(2) according to which a loan, recovery of which has been stayed or suspended does not amount to a "loan" for the purpose of the said section. In this case, the effect of the agreement dated 30-4-1999 is that original transaction of loan stands superseded by the consent decree, of the Court and the terms thereof and being complied with by the company. The contention of the learned Deputy Attorney-General that the ballot papers have been printed and, therefore, it was a case of judicial restrain inasmuch as that interference of this Court will entail serious administrative problems has not, in the circumstances, impressed us because that a valuable right of the petitioner cannot be compromised on the basis of administrative difficulties which might be faced by the Election Commission.
12. For what has been stated above we allow these petitions, set aside the impugned orders of the learned Election Tribunal and declare the petitioner a validly nominated candidate for Election to N.A. 141 and 142. His nomination papers from both the Constituencies stand accepted.