SUNRISE TEXTILES LIMITED through Ex-Managing Director vs CRESCENT
This matter concerns a petition for leave to appeal against a Lahore High Court judgment that dismissed a writ petition filed by a company in liquidation. The petitioners sought to compel the consideration of their application for loan settlement under a State Bank of Pakistan circular and challenged the cognizance taken by an Accountability Court regarding wilful default under the National Accountability Ordinance 1999. The core legal questions were whether the Dispute Resolution Committee was obligated to entertain the settlement application despite the company's winding-up status, and whether prosecution under the Ordinance could proceed before a final adjudication of wilful default by a civil or banking court. The Supreme Court dismissed the petition, holding that the determination of wilful default falls squarely within the jurisdictional domain of the Accountability Court based on evidence. The Court affirmed that it would not pre-empt the Accountability Court's functions absent a jurisdictional defect. The key principle established is that the Accountability Court possesses the primary jurisdiction to determine the existence of wilful default, and such proceedings are not contingent upon a prior civil or banking court adjudication.
- Does the Accountability Court have the exclusive jurisdiction to determine whether a wilful default has been committed?
- Can prosecution under the National Accountability Ordinance 1999 for wilful default proceed before a civil or banking court has finally adjudged the debtor to be a wilful defaulter?
- Is the Dispute Resolution Committee under a legal obligation to entertain a settlement application from a company that has already been wound up?
- Section 31-D, National Accountability Ordinance 1999
- Section 25-A, National Accountability Ordinance 1999
- Section 5(r), National Accountability Ordinance 1999
' FAQIR MUHAMMAD KHOKHAR, J.--- The respondent No,1, a Commercial Bank Ltd., instituted a recovery suit. C.O.S. No,4 of 2000, which was decreed by the Banking Court, in the sum of Rs,292,433,417.40, vide judgment dated 16-1-2001. The petitioners filed R.F.A. No,153 of 2001 thereagainst in the Lahore High Court, Lahore, which was stated to be pending. The petitioner- Company was also wound up by the High Court on 3-7-1997, and the winding up was upheld by this Court. In the meantime, the Governor, State Bank of Pakistan, the respondent No,2, filed a Reference under the provisions of section 31-D of the National Accountability Ordinance No,XVIII of 1999 in which the Accountability Court, had taken cognizance of the offence. The petitioners also moved an application to take the benefit under Circular No,29 issued by the State Bank of Pakistan for the settlement of its outstanding liability. They filed Writ petition No,418 of 2005 in the Lahore High Court, Lahore for declaring the Reference under section 31-D of the Ordinance to be without lawful authority and also sought a direction to the respondents Nos.1, 2: and 5 to decide their application under Circular No,29. A learned Division Bench of the High Court dismissed their aforesaid writ petition vide impugned judgment, dated 12-4-2007.
2. The learned counsel vehemently argued that the Disputes Resolution Committee constituted by the State Bank of Pakistan under Circular No,29 was under a legal obligation to decide the application of the petitioners on merits and that the Committee, ought not have refused to entertain the application on the ground that the petitioner-Company had been wound up. The Circular No,12 of 2004 dated 26-4-2004 issued by the State Bank of Pakistan did not nullify the operation of Circular No,29. It was next contended that prosecution under section 31-D of the Ordinance could not be launched unless the petitioners were adjudged finally, by the Civil or Banking Court, to be the wilful defaulters of the bank loan or the financial facility. Reliance was placed on the case of Asim Textiles Ltd. And others v. The National Accountability Bureau and others PLD 2004 Kar.
638.
3. We have heard the learned counsel at length and have also perused the available record.
Admittedly, the Banking Court has already decreed the suit of the respondent No,1, a Banking Company to the tune of Rs,292,433,714.40. The petitioner-Company was wound up way back in the year 1997. The Accountability Court has also taken cognizance of the alleged offence of wilful default. As held by this Court in the case of Mrs. Shahida Faisal v. The Federation of Pakistan and others PLD 2005 SC 323, ordinarily, the question as to whether a wilful default was or was not committed, squarely fell within the jurisdictional domain of the Accountability Court, which was required to be determined on the basis of evidence. The application of the provisions of section 25- A of the Ordinance would, in the first instance be examined by the Accountability Court. The scope of Circular No,29 seems to have been properly dealt with by the High Court keeping in view the peculiar facts and circumstances of the present case. We would not like to pre-empt the functions of the Accountability Court without .Any jurisdictional defect having been found. Reference may usefully be made to the case of Manzar Qayyum v. The State PLD 2006 SC 343, in which a similar view was taken. The reference of Asim Textile Mills Ltd. (supra), was in-apt as in that case a show- cause notice had been issued by the National Accountability Bureau when the liability of the debtor had not yet been determined by any Court nor the prosecution in terms of sections 5(r) and 31-D of the Ordinance was pending before any Accountability Court. In our view, the impugned judgment of the High Court does not warrant interference by this Court. Even otherwise, this is not a fit case for grant of leave to appeal.
4. For the foregoing reasons, we do not find any merit in thisIB petition which is dismissed and leave to appeal is refused accordingly.