PESHAWAR, July 9: The Peshawar High Court has ruled that property of a private limited company cannot be attached in settled area under the collective responsibility clause of the Frontier Crimes Regulation (FCR).

The court ruled that under section 21 of the FCR, known as collective responsibility clause, there was no absolute or unconditional discretion of the concerned authorities to take action against a tribe or its members.

A two-member bench comprising Chief Justice Tariq Pervez Khan and Justice Mohammad Raza Khan on June 29 accepted two writ petitions filed by M/S Toyota Frontier (Pvt) Ltd. and Imdad Khan, owner of Imdad Kambal House, both situated in Peshawar, and declared as illegal and unconstitutional the attachments of the property by the local police on the directives of the political administration of Khyber Agency.

In its detailed judgment, the bench ruled: “The corporate body is a juristic person having an independent right to own and possess property. The directors merely manage the property of the company. They are the owners of respective shares which can be transferred to others. Thus the property of the company is not the exclusive property of directors or of shareholders.”

The court observed: “The penal action against one or more of the directors does not justify the coercive action against the property belonging to a corporate body.”

The judgment is considered a landmark as till date political authorities of different agencies used to issue orders of sealing/attaching business concerns of entire tribes in the settled areas by invoking section 21 of the FCR under which every member of a tribe is collectively responsible for any crime even if he resides in settled area.

Through two orders issued on June 11 and 12 by the political agent of the Khyber Agency, certain properties of both the petitioners, and several others, were ordered to be sealed/attached for the reason that “the owners are involved in creating unrest in Bara sub-division by supporting Mangal Bagh group”.

The respondents including the political agent and local police adopted the plea that under section 21 of the FCR the political agent could attach the property of persons belonging to tribal areas despite the fact that the properties might be situated in the settled area.

Advocate M. Sardar Khan appeared for Toyota Frontier Ltd. and Advocate Abdul Lateef Afridi represented Imdad Khan. They contended that the FCR could not be applied in such an arbitrary manner.

The high court ruled that the plain reading of the section indicated that taking penal action under this provision was qualified by the phrase “action in hostile or unfriendly manner towards the government”. The court observed that “acting in hostile manner” was a serious charge which was not applicable in the case.

The court observed that the term ‘unfriendly manner’ was a diluted but a wide term and ‘creating unrest’ may or may not amount to ‘acting in unfriendly manner”.

“Therefore, it presupposes that before taking any action under the said statutory provision, the persons concerned must be informed of the action proposed to be taken against them. Principles of natural justice must be followed,” the bench ruled.

About the case of Toyota Frontier Ltd., the respondents claimed that notices were issued to Haji Abdul Hanan Afridi of Bar Qambarkhel clan of the Afridi tribe. The bench observed that the examination of documents displayed that the petitioner — Toyota Frontier (Pvt) Ltd — was a corporate body and Haji Hanan did not appear to be one of the directors.