RECOVERY OF FINANCES UNDER THE NATIONAL ACCOUNTABILITY ORDINANCE, 1999 WITH THE PERMISSION OF THE STATE BANK OF PAKISTAN

RECOVERY OF FINANCES UNDER THE NATIONAL ACCOUNTABILITY ORDINANCE, 1999 WITH THE PERMISSION OF THE STATE BANK OF PAKISTAN <!--[if gte mso 10]> RECOVERY OF FINANCES UNDER THE NATIONAL ACCOUNTABILITY ORDINANCE, 1999 WITH THE PERMISSION OF THE STATE BANK OF PAKISTAN By Jawad Hassan, Advocate Supreme Court Lahore In the presence of various laws on the recovery of finances, loans, credits and advances such as the Financial Institutions (Recovery of Finances) Ordinance, 2001 can the National Accountability Bureau (NAB) recover the huge unpaid amount/public money from the powerful and well connected defaulters on the complaints filed against them by the Bank? This article examines whether on the request of the creditors could NAB initiate investigations against the defaulters for their refusal to pay back under the National Accountability Bureau (Amendment) Ordinance, 1999 (the "NAB Ordinance")? If, yes, what are the steps for launching a complaint before NAB? Whether an action before the NAB can proceed during the pendency of the banking suit regarding the same transaction? And what will be the offences under the NAB Ordinance? The main purposes of the NAB Ordinance are, inter cilia, to provide for setting up of the NAB so as to: (a) eradicate corruption and corrupt practices and to hold accountable those who are accused of such practices, (b) conduct speedy disposal of cases involving misuse/abuse of power, misappropriation of property, kick-backs and commissions, and (c) to recover outstanding amounts from persons who have committed default in the repayment of amounts to Banks, Commercial Institutions, Government and other agencies. The scheme of the NAB Ordinance mainly applies to cases involving public money and interest and misappropriation thereof by a holder of a public office or any other person. The NAB Ordinance has been amended various times after the judgments of the superior courts pointing out the illegalities. For a person to become subject to prosecution under the NAB Ordinance, it is essential that he or she be or have been involved in commission of any of the offence under the NAB Ordinance and/or being subject of an investigation/inquiry by the NAB or a concerned Agency. In order to determine the scope applicability of the NAB Ordinance, it is relevant to examine the meaning of the word "person" as used therein and to see what are the acts the commission whereof would render a person accused of an offence under the NAB Ordinance. The word "person" is defined in Section 5(o) of the NAB Ordinance as follows: "Person" unless the context otherwise so requires includes in the case of a corporate body, the sponsors, Chairman. Chief Executive, Managing Director, elected Directors, by whatever name called, and guarantors of the company or any one exercising direction or control of the affairs of such corporate body and in the case of any firm, partnership or sole proprietorship, the partners, proprietor or any person having interest in the said firm, partnership or proprietorship concern or direction or control thereof. The above definition is not exhaustive but inclusive, and it is obvious that any reference in the NAB Ordinance to a "person" would include, in the case of a corporate body, company, a firm or a sole proprietorship, all sponsors, officers, directors, partners and persons in control in relation to such concerns. Resultantly, the scope of the NAB Ordinance extends to not only the holders of public offices, as defined under Section 5(m), but also to any person, which expression includes those specifically mentioned in Section 5(o). Resultantly, the directors of' the Company could be proceeded against under the NAB Ordinance provided that they are guilty of having committed an act that constitutes an offence under the NAB Ordinance. The word "offence" finds definition under Section 5(n) in the following words: "Offence" means the offences of corruption and corrupt practices as defined in this Ordinance and includes the offences specified in the Schedule to this Ordinance. Section 9 of the NAB Ordinance defines the offence of corruption and corrupt practices as under: Corruption and Corrupt Practices: (a) A holder of a public office, or any other person, is said to commit or to have committed the offence of corruption and corrupt practices: (i) if he accepts or obtains from any person or offers any gratification directly or indirectly, other than legal remuneration, as a motive or reward such as is specified in Section 161 of the Pakistan Penal Code (Act XLV of 1860) for. doing or for-bearing to do any official act, or for showing or for-bearing to show, in the exercise of his official functions, favour or disfavour to any person, of for rendering or attempting to render any service or dis-service to any persons: or (ii) If he accepts or obtains or offers any valuable thing without consideration, or for a consideration which he knows to he inadequate, from any person whom he knows to have been or likely to be, concerned in any proceeding or business transacted or about to be transacted by him or having any connection with his official functions or from any person whom he knows to be inserted in or related to the person so concerned; or (iii) If he dishonestly or fraudulently misappropriates or otherwise converts for his own use, or for the use of any other person, any property entrusted to him, or under his control, or wilfully allows any other person so to do; or (iv) if he by corrupt, dishonest, or illegal means, obtains or seeks to obtain for himself, or for his spouse and/or dependents or any other person, any property, valuable thing, or pecuniary advantage; or (v) if he or any of his dependents or benamindars owns, possesses, or has any right or title in acquired moveable or immovable property or pecuniary resources disproportionate to his known sources of income, which he cannot reasonable account for: or (vi) misuses his authority so as to gain any benefit or favour for himself or any other person or to render or attempt to do so or willingly fails to exercise his authority to prevent the grant, or rendition of any undue benefit or favour which he could have prevented by exercising his authority. (vii) If he has issued any directive, policy, or any SRO (Statutory Regulatory Order) or any other order which grants or enables any concession or benefit in any taxation matter or law or otherwise so as to benefit himself or any relative or associate or a benamidar or any other person, or (viii) if he commits an offence of wilful default, or (ix) if he commits the offence of cheating as defined in section 415 of the Pakistan Penal Code and thereby dishonestly induces members of the public at large scale to deliver any property including money or valuable security to any person or he commits the offence of criminal breach of trust as defined in section 405 of the Pakistan Penal Code with regard to any property including money or valuable security entrusted to him by members of the public at large scale". As mentioned above, the jurisdiction under the NAB Ordinance extends to holders of public office, or other persons, who have committed the offences of corruption and corrupt practices as defined in Section 9 or any of the other offences as set out in the Schedule of Offences. Commission of such offences must have resulted into wrongful gain, benefit, concession, misappropriation of property or pecuniary advantage obtained or made by a person for himself or for any other person through abuse or misuse of his office or authority. Also, the persons who are defaulters of any banks or financial institutions are guilty of the offence of wilful default under the NAB Ordinance. An analysis of the offences shows that one element is the involvement and misappropriation of the public money or the public interest that results into liability under the NAB Ordinance. (Emphasis added). The procedure for filing a complaint under NAB Ordinance is stated under Section 18 and Section 31 if the loan is involved. Section 18 of NAB Ordinance provides as follows: 18. Cognizance of Offences: (a) The Accountability Court shall not take cognizance of any offence under this Ordinance except on a reference made by the Chairman NAB or an officer of the NAB duly authorized by him. (b) A reference under this Order shall be initiated by National Accountability Bureau on (i) a reference received from the appropriate government; or (ii) receipt of a complaint; or (iii) its own accord. (c) Where the Chairman NAB or an officer of the NAB duly authorized by him is of the opinion that it is or may be, necessary and appropriate to initiate proceedings against any person, he shall refer the matter for inquiry or investigation. A perusal of the above section shows that under clause (a) a fetter has been placed on taking of congnizance of any offence by the Accountability Court under the Ordinance, except on a reference made by the Chairman National Accountability Bureau, or an officer of the National Accountability Bureau, duly authorized by him. Clause (b) empowers the National Accountability Bureau, for initiating reference on reference received from the appropriate Government or receipt of a complaint or on its own accord. The clause (c) enjoins upon the Chairman National Accountability Bureau or an officer of National