' RAHMAT HUSSAIN JAFFERI, J.--- The present appeal is directed against the judgment, dated 2-3- 2001, passed by the Accountability Court No,IV Sindh, Karachi in Reference No,22 of 2000 (State v.
Messrs Central Cotton Mills Limited and others) for offence punishable under section 10 of the National Accountability Bureau, 1999 (hereinafter referred to as "Ordinance, 1999"). Under the impugned judgment, the learned Judge convicted the appellant under section 10(a) of Ordinance, 1999 and sentenced him to suffer R.I. For 8 years and fine of Rs,150 millions. In default thereof to undergo R.I. For 2 years. It was further ordered that the appellant shall not be allowed to avail any financial facilities in the form of any loan or advances from any financial institution or bank owned or controlled by the Government for a period of 10 years. The benefit of section 382-B, Cr.P.C. Was extended in favor of the appellant.
2. Brief facts giving rise to the present appeal are that on 12-9-1979 Messrs Central Cotton Mills Ltd.
(thereinafter referred to as "CCML") being a public limited company opened an account with Foreign Exchange Branch of Habib Bank Ltd., Karachi. They submitted a resolution passed by the Board of Directors of the CCML. They also filed Memorandum of Association, Article of Association, Specimen signatures of the Directors authorizing anyone of the three Directors namely Gulzar Ahmed, Aftab Ahmed and Munir Ahmed (the present appellant) to operate the said account. The CCML obtained various financial and credit facilities from the bank. It is alleged that CCML did not adjust the loan amount. The bank demanded the outstanding amount from the CCML but they did not clear their liabilities. Therefore, the bank filed winding up petition against them. The bank also filed a suit for recovery of dues from the CCML being suit old No,86 of 1995 and new No,1419 of 1997.
The suit was decreed in the sum of Rs,89,379,880 with mark-up in favor of the bank against the CCML and its Directors. It is further alleged that on 31-12-1999, dues of Rs,306,178 million were outstanding against the CCML with break up; principle amount of Rs,122,722 million, mark-up (debited) Rs,49,165 million and mark-up (undebited) Rs,134,289 million. It is alleged that in spite of the demands, the CCML and its Directors did not clear the dues. Therefore, they became wilful defaulters within the meaning of section 5(r) of the Ordinance, 1999, which amounts to corruption and corrupt practices as defined under section 9(g)(viii) of Ordinance, 1999.
3. F.I.A. Authorities duly investigated the matter. The investigation papers were presented before the Chairman, National Accountability Bureau (hereinafter referred to as "NAB"). After examining the material placed before the Chairman NAB he filed the reference as required under section 18(g) of the Ordinance, 1999 before the Accountability Court.
4. On 21-7-2000, a charge under section 9(a)(viii) of Ordinance, 1999 punishable under section (10) of Ordinance, 1999 was framed against the appellant but he pleaded not guilty.
5. In support of the case the prosecution examined the following 3 witnesses:-- S.No, P.W.No, Name of witness Brief Summary of Evidence 1 P.W.1 Izhar Ahmed Azhar Vice-President of Habib Bank Ltd. He produced various documents; such as, application of opening account by CCML and documents allowing over draft and financial facilities, Demand Notice, copies of petition under sections 305/306 of the Companies Ordinance, 1984 for winding up the company, Order passed thereon, copy of the plaint of suit bearing Old No,86 of 1995, New No,1419 of 1997 filed by the bank against the CCML for recovery of amount, decree passed by the Court in the said suit, complaint made to Chairman, NAB, etc. From Exhs.9/1 to 9/46.
2 P.W.2 Muhammad Jamil An Officer of Litigation Department Habib Bank Ltd. He took papers to their Legal Department from where a Notice of Demand was issued to CCML. His evidence reveals that the High Court of Sindh appointed liquidator in winding up petition but subsequently the orders were stayed by the Supreme Court of Pakistan. The bank filed the Civil suit for recovery of amount being old No,86 of 1995 new No,1419 of 1997. The Banking Court decreed the said suit but an appeal was filed, which is pending.
The bank filed another Suit bearing No,87 of 1995, which is still pending. The total dues against the CCML are Rs,306.176 million. Out of which principal amount was Rs,122.722 million.
He produced the reply sent by CCML against their Demand Notice.
3 P.W.3 Ghulam Asghar JatoiS.-I. F.I.A., Karachi.
He conducted the investigation. He gave the details of his investigation and secured various documents.
' The appellant in his statement recorded under section 342, Cr.P.C. Denied all the allegations of the prosecution. He filed his written statement in which he gave the details of formation of various companies including the CCML by his father and after the death of his father the companies were distributed among 3 brothers. He admitted that he had less than 5% share in CCML and was one of the Directors of CCML. The bank provided various facilities to CCML, which is a public Ltd. Company.
No loan was granted to the appellant in his personal capacity. The CCML obtained the loan and financial facilities after completing the required formalities. The entire loan was secured in the shape of first charge on equitable mortgage on fixed assets of CCML valued at Rs,175.113 million, raw material of 15,195 cotton bales, which 'were pledged with the bank and are still in the custody and possession of the bank. Machinery valued at Rs,15 million is lying in the custody of the bank. All the materials are lying in the warehouse of the bank. He took the plea that claim of the bank for Rs,306.176 million is incorrect. An appeal bearing No,319 of 1999 was preferred against the judgment, decree passed in Suit new No,1419 of 1997, and the same is pending before the Appellate Court. He admitted the filing of winding up proceedings against the CCML but the matter is sub judice before the Honourable Supreme Court of Pakistan in Appeal No,1694 of 1999. He took the plea that in the year 1994, the CCML filed a suit for declaration and rendition of accounts against the bank being Suit No,441 of 1994 and the suit is pending before the High Court of Sindh. He further took the plea that bank did not honour the buy-back agreement between the CCML and the Habib Bank Ltd. After they had taken 15195 cotton bales in their custody. The amount claimed by the bank include the value of debited and undebited mark-up which is not permissible after 1984. He further took the plea that CCML never committed any default and whatever amount is due, it will be paid as per orders of the superior Courts because the matters are sub judice before the Courts.
According to him, there are no dues as the suit for rendition of accounts and other suits are sub judice before the superior Courts. He produced various documents in support of his contentions.
7. The appellant examined himself on oath in which he stated the same facts as mentioned above.
In the cross-examination, he admitted that he signed the documents before the bank for allowing financial facilities to CCML as their guarantor and one of its Directors. He also admitted that by a resolution of a CCML he was authorized to operate bank accounts and to run the affairs of the CCML. The appellant did not . Examine any witness in his defence.
8. After considering the material available on the record and hearing the parties counsel the learned trial Judge convicted the appellant as mentioned above under the impugned judgment.
9. The appellant was dissatisfied with the said judgment; therefore, he has preferred the present appeal.
10 We have heard the Advocate for the appellants, Deputy Prosecutor-General (DPG) for NAB and perused the record of this case very carefully.
11. The learned Advocate for the appellant has stated that there are no dues against CCML within the meaning of section 5(r) of Ordinance, 1999; that in the year 1994, there was a dispute between the CCML and bank over the outstanding dues, therefore, the CCML filed the suit No,441 of 1994 against the bank for declaration and rendition of accounts which is still pending; that subsequently, the bank filed a suit, a decree was granted in favor of the bank by the Banking Court but the said decree was challenged before the High Court in an appeal which is still pending; that the matter of settlement of accounts is sub judice before the competent Courts of law, therefore, without determination of the dues the appellant cannot be termed as wilful defaulter. He has relied upon cases of Agricultural Development Bank of Pakistan v. Sanaullah Khan PLD 1988 SC 67; Abdul Latif v. Government of West Pakistan PLD 1962 SC 384 and Abdul Shakoor Kaloondi v. The State SBLR 2002 Sindh 1263. He has further stated that the appellant had requested the bank to sell cotton bales, machinery etc. Which were in their custody and possession to clear their dues but they failed to do so, therefore, the appellant cannot be termed as wilful defaulter.
12. On the other hand the learned D.P.G. Has stated that the suit filed by the bank for recovery of amount was decreed for an amount of Rs,69,379,880 on 28-9-1999 as per decree (Exh.10/1), as such the amount was determined but the appellant failed to pay the same, therefore, he has committed wilful default within the meaning of section 5(r) of Ordinance, 1999. He has admitted that the said decree has been challenged before the High Court and the appeal is pending; that the cotton bales and machinery etc. Were pledged with the bank on a buyback condition as such, the same cannot be adjusted in the loan. He has admitted that the CCML had filed the Suit bearing No,441 of 1994 for declaration and rendition of accounts against the bank and the same is pending before the High Court of Sindh. Alternatively he has argued that the case may be remanded to the trial Court to be kept pending until the decision of above civil litigation between the parties for finally determining the amount, due against CCML.
13. We have considered the arguments, gone through the material available on the record and examined the relevant provisions of law. It will be advantageous to reproduce section 5(r) of the Ordinance, 1999 as applicable at the time of filing the reference in order to appreciate the definition of wilful default. The same reads as under:-- "Wilful default" A person is said to commit an offence of wilful default under this Ordinance if he does not pay, (or continues not to pay,) or return or repay the amount to any bank, financial institution, cooperative society, or a Government Department or a statutory body or an authority established or controlled by a Government on the date that it became due (as per agreement containing the obligation to pay, return or repay or) according to the laws, rules, regulations, instructions issued or notified by (the State Bank of Pakistan or the Bank), financial institution, cooperative society, Government Department or a statutory body or an authority established or controlled by a Government as the case may be, and a period of thirty days has expired thereafter.
' Provided that it is not wilful default under this Ordinance if the accused was unable to pay, return or repay the amount as aforesaid on account of any wilful breach of agreement or obligation or failure to perform statutory duty on the part of any bank, financial institution, cooperative society or a Government Department or a statutory body or an authority established or controlled by Government."
14. For attracting the above provisions of law, it is essential that the prosecution should prove the following ingredients:--
(i) There should be a person within the meaning of Ordinance, 1999.
(ii) There should be a Bank, Financial Institution, Cooperative Society, Government Department, Statutory Body or an Authority established or controlled by a Government.
(iii) There should be an amount taken by the person mentioned at S.No,(i) from any institution as mentioned at S.No,(ii).
(iv) There should be dues.
(v) That such persons did not pay, or continues not to pay, or return or repay such dues on the date it became due as per agreement containing an obligation to pay, return or repay the same according to laws, rules, regulations or instructions issued or notified by the State Bank of Pakistan and other above mentioned institutions.
(vi) That a period of 30 days has expired thereafter.
15. If the above ingredients are proved, then the person will be held guilty of wilful default.
16. But there is a proviso added to the above section under which there will be no default under the Ordinance if the accused was unable to pay, return or repay the amount as aforesaid on account of wilful breach of agreement or obligation or failure to perform the statutory obligation on the part of the bank or financial institution, cooperative society or a Government Department or Statutory Body or authority established or controlled by the Government.
17. Admitted positions are that the appellant being one of the Directors of the CCML is a person within the meaning of section 5(r) of the Ordinance. The CCML through the appellant took various amounts from the Bank. The appellant being one of the Directors of CCML was required to repay the said amounts to the bank. The dispute between the parties is about the dues.
18. From the above position the most important fact for consideration is the amount of dues as stood on the date as per agreement containing the obligation to pay, return or repay the same.
Without determining the amount due, it will not be possible for the bank to demand or recover the amount from the borrower.
19. In the present case, it is an admitted position that there was a dispute between the bank and CCML before 1994 as accounts were not settled between the parties. Faced with the said situation the CCML filed a suit bearing Suit No,441 of 1994 in the High Court for declaration and rendition of accounts which is still pending as admitted by both the parties. Subsequently, the bank filed the Suit bearing new No,1419 of 1997 against the CCML for recovery of outstanding dues. The suit was decreed for a specified amount. The CCML challenged the said decree before the Appellate forum and the same is still pending for final decision. The bank also filed another Suit bearing No,87 of 1995 but the said suit is still pending before the Court.
20. From the above position, it is manifest that the dispute concerning the settlement of accounts is sub judice before the Court of law. It is also pointed out that the P.W.1 made a complaint to the Chairman, NAB on 15-1-2000 vide Exh.9/46. After investigation the Chairman, NAB filed the Reference on 15-2-2002. Thus, before making complaint to the Chairman, NAB by the bank against CCML about the amount due against them on 15-1-2000 or the start of the investigation or filing of the reference by the Chairman, NAB on 15-2-2002, the accounts were not settled between the parties. In fact, the CCML did not know the exact amount due against them; therefore, they filed the Suit No,441 of 1994 against the bank for declaration and rendition of accounts. After eight years of the said suit, P.W.1 made a complaint (Exh.9/46) to the Chairman NAB and then the Chairman, NAB filed the reference. Thus, the accounts were not settled between the parties from the year 1994 even before the promulgation of Ordinance, 1999. When the dues are not determined as per law, rules and regulations, then the question of recovery of such dues does not arise. Hence the case would not be covered within the definition of wilful default.
21. A Division Bench of this Court in the case Abdul Shakoor Kaloodi v. The State reported in 2003 PCr.LJ 626 examined the question of wilful default. In this case, the applicants were carrying a partners business of import of mercantile. Habib Bank Ltd. Granted advance facilities to them which the applicants enjoyed and deposited various amounts. On the change of the management of the bank, the said facilities were stopped. The bank demanded huge amounts from the applicants as dues. Upon checking of record the applicants found the demand wholly illegal. The applicants, therefore, requested for accounts but such request was declined, thereafter the applicants filed a suit for accounts and recovery of some amount due against the bank. The bank subsequently, filed F.I.R. Against the applicants for offences punishable under Offences Against the Banks (Special Courts) Ordinance, 1994. Subsequently, the matter was investigated by F.I.A. And Accountability Reference was filed against the applicants. In these circumstances it was observed at page 1275 as under:-- "However, it would he safe to conclude that when a bona fide 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."
22. The Honourable Supreme Court of Pakistan in a case of Agricultural Development Bank of Pakistan v. Sanaullah Khan PLD 1988 SC 67 also examined the question of dues under Land Revenue Act. The facts of the case were that the father of the respondent borrowed some money from the appellant bank. The bank demanded that amount from the respondent under section 25 of Agricultural Development Bank of Pakistan Act. The said provision enabled the bank to recover all sums, dues from the borrowers as arrears of Land Revenue. It was held in the authority that machinery provisions for recovery as arrears of Land Revenue are only resorted when the amount due has been determined after proper adjudication. In the above authority a case of Abdul Latif v.
Government of West Pakistan PLD 1962 SC 384 was relied upon. Thus, before the machinery of recovery of amount is activated, the amount due against the borrower should be determined and adjudicated upon.
23. In the present case before any complaint was made the dues were not determined. Therefore, the appellant cannot be termed as wilful defaulter, within the meaning of section 5(r) of Ordinance, 1999.
24. As regards the alternative prayer of the learned D.P.G., it is pointed out that the Accountability Reference has been finally decided. It is not known when the civil suits will be decided by finally determining the dues against the appellant or otherwise. Until the amount due is not determined, the appellant cannot be termed as a wilful defaulter. Thereafter, after fulfilling the conditions mentioned in the section 5(r) of the Ordinance, 1999 then a reference can be filed subject to all legal exceptions. Therefore, it is futile to keep the matter pending before the Accountability Court.
25. After considering the material available on the record, we are of the considered view that no case of wilful default has been made out against the appellant.
26. Above are the reasons of our short order dated 10-4-2003, by which we had allowed the appeal in the following manner:- ' "For reasons to be recorded separately, this appeal is allowed. The appellant is present on bail.. He is acquitted. The impugned judgment is set aside. Bail bonds of the appellant are cancelled. Surety is discharged. The surety papers shall be returned to surety upon proper verification and identification."