SC orders proceedings against Ittefaq Foundries’ guarantor

Published November 26, 2014
The Supreme Court of Pakistan building in Islamabad.    - Online/file
The Supreme Court of Pakistan building in Islamabad. - Online/file

ISLAMABAD: The Supreme Court on Tuesday held that provisions of the National Accountability Ordinance (NAO), 1999, are applicable with equal force even to a person who is not holder of a public office and ordered to proceed against a guarantor of Messers Ittefaq Foundries (Pvt) Ltd in a loan default case.

Authored by Justice Anwar Zaheer Jamali, the six-page verdict came on a controversy that had cropped up on a NAB reference against the acquittal of a guarantor in the wilful default case by the Sharif brothers.

On Nov 10 a three-judge Supreme Court bench reserved its ruling on the National Accountability Bureau (NAB) appeal against the June 3, 2006, Lahore High Court (LHC) order of exonerating Mukhtar Hussain, one of the directors and guarantor of the Ittefaq Foundries in the wilful default case.

According to NAB reference, Ittefaq Foundries and its then directors namely Prime Minister Nawaz Sharif, Punjab Chief Minister Shahbaz Sharif, Mian Javed Shafi, Mian Yousuf Aziz, Mian Tariq Shafi and others were guilty of wilful default to the National Bank of Pakistan (NBP) to the tune of over Rs1 billion since 1994.

In June 11, 1998, Prime Minister Nawaz Sharif had announced in his address to the nation of handing over his assets, including the Ittefaq Foundries, to the creditor bank to realise the loans of Sharif family by selling them.

Consequently a petition under the Company’s Ordinance, 1984, was filed before the LHC under the directions of the State Bank of Pakistan for the proposed arrangements of loan recovery.

During the hearing of that case, the accused company admitted their liability to the tune of Rs728 million against the claim of the bank of Rs1 billion. It was also transpired during the proceedings before LHC, according to the reference, that the company was not serious in retiring of its debts and with malafide intention was raising obstacles in the recovery of their loans and had thus committed wilful default.

Later after the bloodless coup of Oct 12, 1999, by the then army chief Gen Pervez Musharraf, Nawaz Sharif along with his family members preferred exile in Saudi Arabia after which NAB arrested one of the guarantor and oldest confident of Sharif family, Mukhtar Hussain, who along with his wife was one of the directors of the group.

Later Fehmida Mukhtar, wife of Mukhtar Hussain, instituted a habeas corpus petition before the LHC for the recovery of her husband.

Subsequently a five-judge high court bench order to acquit Mukhtar Hussain on the grounds that the guarantor could not be prosecuted for the alleged crimes of the Sharifs.

Being aggrieved NAB moved an appeal before the Supreme Court in 2000 which on Tuesday held that NAO applies with equal force to guarantors like the sponsors or “owners” of a company.

A person may be a director or employee of the company and at the same time a guarantor as well, the judgment said.

In the instant case, Mukhtar Hussaid was not only a director of Ittefaq Foundries, but he was also its guarantor.

Therefore, the question of the applicability of the exclusion contained in section 5 (o) of NAO does not arise in the instant case, the verdict explained.

As per the preamble of NAO, the verdict stated, one mischief that the ordinance sought to curb is the recovery of outstanding amounts from those persons who committed default in the repayment of amounts to banks, financial institutions, government agencies and other agencies.

Admittedly Mukhtar Hussain was the surety or guarantor of the loan facilities etc, availed by Ittefaq Foundries, which form the subject matter of the instant case and it was his responsibility under the guarantee of a principle debtor that all moneys due from Ittefaq Foundries should have been paid. Therefore, once the company defaulted in its liability to repay the loan amount, it was the obligation of Mukhtar Hussain to repay the said amount, the judgment explained.

However, the court said further proceedings against Mukhtar Hussain in the NAB reference will commence after hearing before LHC is completed.

Published in Dawn, November 26th, 2014

Opinion

Editorial

Defining extremism
Updated 18 Mar, 2024

Defining extremism

Redefining extremism may well be the first step to clamping down on advocacy for Palestine.
Climate in focus
18 Mar, 2024

Climate in focus

IN a welcome order by the Supreme Court, the new government has been tasked with providing a report on actions taken...
Growing rabies concern
18 Mar, 2024

Growing rabies concern

DOG-BITE is an old problem in Pakistan. Amid a surfeit of public health challenges, rabies now seems poised to ...
Provincial share
Updated 17 Mar, 2024

Provincial share

PPP has aptly advised Centre to worry about improving its tax collection rather than eying provinces’ share of tax revenues.
X-communication
17 Mar, 2024

X-communication

IT has now been a month since Pakistani authorities decided that the country must be cut off from one of the...
Stateless humanity
17 Mar, 2024

Stateless humanity

THE endless hostility between India and Pakistan has reduced prisoners to mere statistics. Although the two ...