ISLAMABAD - Allowing the National Accountability Bureau (NAB) appeal, the Supreme Court Tuesday set aside the Lahore High Court judgment regarding arrest of a guarantor in financial deal of Ittefaq Foundry .

The Lahore High Court in a writ petition No.914/2000 dated 30.6.2000 in a majority judgment had delivered Mukhtar Hussain, guarantor in a financial deal of Ittefaq Foundry , being employee of the company, despite being a guarantor, was not liable for prosecution before the NAB court.

Justice Anwar Zaheer Jamali, who had reserved the judgment on NAB appeal on 10th November, declared Mukhtar Hussain was not only a Director of Ittefaq Foundry (Pvt.) Ltd., but he was also its guarantor. Therefore, the question of the applicability of the exclusion contained in sub-section (o) of section 5 of the NAB Ordinance does not arise in the instant case.

Section 5(o) of NAB Ordinance, says; “Person includes in the cause 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, but will not include employees appointed and designated as Director or Chief Executive; 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 court observed that according to Abdul Aziz Memon judgment, Mukhtar Hussain is covered under the NAB Ordinance. It said although the definition of ‘person’, in section 5 (o) of the NAB Ordinance, has been amended from time to time, however, admittedly, the amendments have brought no material change in the scope of the word ‘guarantors of a company’.

The six-page judgment said any further proceedings against Mukhtar Hussain in NAB Reference No.8/2000, will be subject to the fate of the appeal pending before the Lahore High Court.

The Ittefaq Foundries (company) in 1994 obtained Rs720 million loan from National Bank of Pakistan (NBP) that with the passage of time increased to Rs1. Rs1.6 billion. The company did not return even a single penny. The Zonal Chief and Manager of NBP, Lahore, therefore, wrote a letter to the NAB against Ittefaq Foundries, its directors comprising Mian Muhammad Sharif, Mian Nawaz Sharif, Mian Javed Shafi, and Mian Shahbaz Sharif.

Assistant Director FIA conducted the investigation and recorded the statements of the bank officers and all the concerned persons. The inquiry found that the company (Ittefaq Foundries) committed wilful default as defined in the NAB Ordinance 1999.

After the General (retd) Pervez Musharraf coup the Sharif family had flown out of the country and the NAB authorities arrested Mukhtar Hussain, who had given guarantee in that deal, for wilful default of the company loan. His (Mukhar) wife Fehmida Mukhtar filed a writ petition against the NAB action and a five-member bench of Lahore High Court, with majority judgment 3-2, held that the guarantors could not be arrested, therefore, he was released.

The Supreme Court in 2013 in Abdul Aziz Memon judgment held that the guarantors could also be arrested in case the owners were available. In view of that the NAB had filed an appeal against the LHC decision stating that the high court judgment was wrong.

Ibrahim Satti, representing NAB, on 10th November and referring the definition of “person” under the NAB Ordinance, contended that though Mukhtar was an employee of Ittefaq Foundry , but it would not change his status of being a guarantor on behalf of the company. Therefore, he is still liable to face prosecution before the Accountability Court in his capacity as a guarantor. He had prayed that the LHC order should be set aside as it was an obstacle in other cases of NAB.