PESHAWAR: Peshawar High Court on Tuesday stopped management of Bank of Khyber from issuing any final order against two of its senior executive officers over show-cause notices issued to them over alleged negligence in matter of an early default of a loan facility advanced to a project ‘without adequate assessment of its future viability.’

A bench consisting of Justice Ijaz Anwar and Justice Inamullah Khan issued the order after preliminary hearing of two almost identical petitions filed by senior executive vice president Ihsanullah Ihsan and executive vice president Sher Mohammad Mohmand, both of whom were members of Head Office Credit Committee (HOCC), challenging issuance of notices to them for initiating disciplinary action against them.

The bench put on notice and sought response from respondents including Bank of Khyber through its managing director, its board of directors through its chairman, secretary of Board Human Resource and Remuneration Committee and provincial government.

The petitioners claimed that National Accountability Bureau (NAB) had already closed an inquiry into the same matter on basis of a reply submitted by the bank.

Petitioners claim issuance of show-cause notices to them contrary to rules

The petitioners have requested the court to declare the impugned show-cause notices, received by them on May 16, as illegal and without lawful authority as these were issued without conducting any mandatory inquiry.

They requested the bench to order quashing the proceedings against them as those were initiated by the bank without considering the closure of investigation by NAB into the matter.

Senior lawyers Shumail Ahmad Butt and Ali Gohar Durrani appeared for Sher Mohammad and Ihsanullah, respectively. They stated that their clients were senior and highly competent bankers and had discharged their duties with utmost dedication, which appeared to have drawn hostility of certain senior officials, who perceived them as threat to their positions.

They said that the petitioners received the undated notices on May 16 each, wherein they were accused of alleged omissions and negligence in their capacity as members of HOCC, which had contributed to an early default of a significant amount thereby causing financial loss to the bank and exposing it to regulatory risk.

They stated that their clients’ mere membership in HOCC was wrongly used as a basis for imputing liability through impugned notices, despite the absence of any direct role or decision attributed to them.

They argued that the impugned show-cause notices were carried out in complete disregard of the mandatory rules and procedural safeguards governing disciplinary proceedings, as they were neither served with a charge sheet nor provided with a formal statement of allegations, as required under the applicable service rules.

They said that no inquiry, whether through an inquiry officer or inquiry committee, was initiated in accordance with the prescribed procedure.

They contended that there was no formal order issued by the competent authority dispensing with the requirement of holding an inquiry, which was a necessary precondition under rules.

They claimed that the allegations levelled against the petitioners pertaining to the project named Eclipse Resort Living and Mall, had already been thoroughly investigated and scrutinised by internal audit team of the bank, pursuant to specific directions issued by BoD.

They stated that a former managing director Ali Gul Faraz, who was head of HOCC and was considered a central figure in the matter, was also subjected to an inquiry by NAB. They added that in response to NAB’s questionnaire, the bank categorically clarified that the final authority responsible for approving the said loan was BoD.

This institutional clarification, the lawyers said, absolved the petitioners of individual liability and demonstrated that the decision-making authority related to the transaction rested with other designated departments and individuals within the bank hierarchy.

Published in Dawn, May 28th, 2025