IN THE SUPREME COURT OF PAKISTAN 
(ORIGINAL JURISDICTION) 
 
 
PRESENT: MR. JUSTICE MIAN SAQIB NISAR, HCJ 
 
 
MR. JUSTICE UMAR ATA BANDIAL 
 
 
MR. JUSTICE FAISAL ARAB 
 
 
CONSTITUTION PETITION NO.36 OF 2016 
(Under Article 184(3) of the Constitution of the Islamic Republic of Pakistan, 1973) 
 
 
Muhammad Hanif Abbasi 
... Petitioner 
VERSUS 
Jahangir Khan Tareen and others 
... Respondents 
... 
For the Petitioner  
: 
Mr. Muhammad Akram Sheikh, Sr. ASC 
 
 
 
 
 
Mr. Azid Nafees, ASC 
 
 
 
 
 
(Assisted by Ms. Gulalay Zeb and Ms. Maham  
 
 
 
 
 
Ahmed, Advocates) 
 
 
 
 
 
Syed Rifaqat Hussain Shah, AOR 
 
For Respondent No.1 
: 
Mr. Sikandar Bashir Mohmand, ASC 
 
 
 
 
 
(Assisted by Syed Zulqarnain Safdar, Advocate) 
 
 
 
 
 
Mr. Tariq Aziz, AOR 
 
For Respondent No.2 
: 
Mr. Muhammad Waqar Rana, 
 
 
 
 
 
Additional Attorney General for Pakistan 
 
 
 
 
 
Mr. M. S. Khattak, AOR 
 
For Respondent No.3 
: 
Mr. Hamid Ali Shah, ASC 
 
 
 
 
 
Mr. Mehr Khan Malik, AOR 
 
For Election Commission : 
Raja M. Ibrahim Satti, Sr. ASC 
of Pakistan  
 
 
Raja M. Rizwan Ibrahim Satti, ASC 
 
 
 
 
 
Mr. M. Arshad, D.G. (Law), ECP 
 
 
 
 
 
Malik Mujtaba Ahmed, Addl.D.G.(Law) ECP 
 
On Court’s notice 
: 
Mr. Ashtar Ausaf Ali, 
 
Attorney General for Pakistan 
 
Dates of Hearing            : 
3.5.2017, 
4.5.2017, 
8.5.2017,  
9.5.2017, 
10.5.2017, 
11.5.2017, 
23.5.2017, 
24.5.2017, 
25.5.2017, 
30.5.2017, 
 
31.5.2017, 
1.6.2017, 
13.6.2017, 
14.6.2017, 
11.7.2017, 
13.7.2017, 
25.7.2017, 
26.7.2017, 
27.7.2017, 
31.7.2017, 
1.8.2017,  
2.8.2017, 
3.8.2017, 
12.9.2017,  
26.9.2017, 
28.9.2017, 
3.10.2017, 
4.10.2017, 
5.10.2017, 
10.10.2017, 
11.10.2017, 
12.10.2017, 
17.10.2017, 
18.10.2017, 
19.10.2017, 
23.10.2017, 
24.10.2017, 
25.10.2017, 
7.11.2017, 
8.11.2017, 9.11.2017 and 14.11.2017 
Constitution Petition No.36 of 2016 
 
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... 
JUDGMENT 
 
 
 
MIAN SAQIB NISAR, CJ.- Honesty is one of the greatest 
virtues in a man. Where in an otherwise honest and upright society, the 
nation and the State, which are governed by the Constitution and the 
rule of law; if the affairs of the Government come to be entrusted to 
dishonest persons such a nation soon loses its way. Government does 
not mean the executive limb of the State alone, but it includes the 
Legislature and the Judiciary. The States which are not governed by 
honest and upright people are bound to suffer and lag behind the 
developed nations of the world, and, therefore, it is of utmost importance 
that the State structure must be built upon honesty of purpose by 
honest people. It is in this context that we have to judge and determine 
the people in power who are running the affairs of State, as to whether 
they are honest in general terms and specifically as the chosen 
representatives of the people, whether they qualify in terms of the true 
spirit and test of Article 62(1)(f) of the Constitution of the Islamic 
Republic of Pakistan, 1973 (the Constitution). 
2. 
 
The petitioner is a prominent member of Pakistan Muslim 
League (Nawaz) [PML(N)], the ruling party at the center. Respondent No.1 
(the respondent) is the General Secretary of Pakistan Tehreek-e-Insaaf (PTI), 
the second majority party in opposition at the center. In the by-elections 
held on 23.12.2015, the Respondent was elected as a member of the 
National Assembly from NA-154 Lodhran on the PTI ticket. Vide instant 
petition under Article 184(3) of the Constitution the petitioner seeks the 
disqualification of the respondent from being a member of the National 
Assembly on the basis of the provisions of Article 62(1)(f) and 63(1)(n) of 
the Constitution on the grounds that he is not honest and further, has 
got his bank loans written off. It may be relevant to mention here that 
Constitution Petition No.36 of 2016 
 
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the learned counsel for the petitioner at the start of his submissions, 
when questioned by the Court, unequivocally admitted that the instant 
petition is primarily in the nature of a quo-warranto. We may also like to 
point out that the learned counsel for the respondent raised a 
preliminary objection qua the maintainability of this petition on 
account of the fact that in view of the Panama leaks, Mr. Imran Khan 
Niazi, Chairman of PTI, filed a similar petition [Article 184(3)] against Mian 
Muhammad Nawaz Sharif, the Prime Minister of Pakistan [who belongs to 
PML(N)], seeking his disqualification as a member of the National 
Assembly on the touchstone of the Article ibid with the consequential 
relief that he should cease to be the Prime Minister of Pakistan. This 
petition has been allowed by this Court vide judgment dated 28.7.2017. 
It was during the pendency of the said petition that the present cause 
was initiated by the petitioner. The preliminary objection is dealt with as 
below. 
PRELIMINARY OBJECTION: 
3. 
 
The objection in this behalf is not to the effect that this 
Court lacks jurisdiction under Article 184(3) of the Constitution to take 
cognizance and to issue a writ of quo-warranto in appropriate cases or 
such a petition in law is not maintainable against the members of the 
Parliament or Provincial Assembly(ies) when the question of their 
qualification or disqualification to hold the membership is involved or 
has been assailed. It is also not proposed that the respondent is not the 
holder of a public office. Instead the precise contention of the learned 
counsel for the respondent is that the relief in quo-warranto proceedings 
is purely discretionary in nature and should not be granted as a matter 
of right or course: rather the bona fides, the object, the motive of the 
relator should be examined and if it is found that the action arises from 
Constitution Petition No.36 of 2016 
 
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ulterior motives, that it is for the benefit and advantage of someone else; 
then it is not initiated in the public interest and the relief should be 
refused for such reasons. In this context it is argued that the petition is a 
counterblast to the petition filed by Mr. Imran Khan, Chairman PTI 
against Mian Mohammad Nawaz Sharif etc. It is urged that though the 
name of the respondent does not appear in the Panama Leaks, yet in the 
memo of the petition it is falsely alleged to be so, which the respondent 
has clearly denounced not only through public statements, but also 
while responding to the notice of the income tax authorities. This 
misstatement of fact on the part of the petitioner has cast serious doubt 
upon his bona fides and by itself is sufficient to disallow this petition. 
Learned counsel for the respondent in support of his plea has relied 
upon the judgments reported as Dr. Kamal Hussain and 7 others Vs. 
Muhammad Sirajul Islamabad and others (PLD 1969 SC 42 at page 
51), Azizur Rahman Chowdhury Vs. M. Nasiruddin etc. (PLD 1965 SC 
236), Dr. Azim-ur-Rehman Khan Meo Vs. Government of Sindh and 
another (2004 SCMR 1299) and Makhdoom Ghulam Ali Shah Vs. 
Election Commission of Pakistan, Islamabad through Secretary and 
4 others (2008 CLC 738). There can be no cavil with the principle that 
to grant the relief in the nature of quo-warranto is within the 
discretionary power of the superior Courts, it should not be allowed as a 
matter of course, rather the conduct and the bona fides of the relator, 
the cause and the object of filing such petition is of considerable 
importance and should be examined; it should be ascertained if the 
petition has been filed with some mala fide intent or ulterior motive and 
to serve the purpose of someone else. We are of the considered view that 
quo-warranto remedy should not be allowed to be a tool in the hands of 
the relators, who approach the Court with mala fide intentions and either 
have their own personal grudges and scores to settle with the holder of 
Constitution Petition No.36 of 2016 
 
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the public office or are a proxy for someone else who has a similar object 
or motive. This remedy surely cannot be allowed to serve as a sword 
hanging over the heads of the Parliamentarians (members of the Provincial 
Assemblies) who are the chosen representatives of the people under the 
mandate of the Constitution (Article 2A) “wherein the State shall exercise its power 
and authority through the chosen representatives of the people”. Thus, Parliament is 
the supreme law making organ of the State; it is the supreme body to lay 
down the State policies. And the executive body of the State is also 
derived from this organ. Although the validity of legislative enactments of 
the Parliament, and the executive actions of the Administration (Note: 
which has genesis in the Parliament) are subject to the power of judicial review of 
the superior courts, this power should be exercised within the limits 
provided by the Constitution, as interpreted by the courts and the 
various principles of law enunciated in this behalf. Yet the sanctity of the 
Parliament and the Parliamentarian should not be allowed to be 
impinged or compromised lightly. The remedy of quo-warranto should 
not be permitted to be resorted to for demeaning, intimidating and 
causing undue harassment to the Parliamentarians. It should not be 
allowed to be used as a pressure tactic for purposes of restraining them 
from performing their functions and discharging their duties in 
accordance with the Constitution and the law. This remedy of quo-
warranto cannot be equated with the challenge to the holder of any other 
public office, which public office is statutory in nature or of an 
autonomous body; where the appointment is assailed as not having been 
made according to the law (regarding his qualifications etc.) or on account of the 
fact that the appointing authority lacked the authority to make such an 
appointment or the appointment is tainted with sheer mala fides, on the 
basis of political considerations, nepotism etc. and/or in utter absence 
and misuse of authority. The courts should not lose sight of the fact that 
Constitution Petition No.36 of 2016 
 
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the Parliamentarians as mentioned above are the elected representatives 
of the people and have come to the Parliament through a democratic 
process. Democracy is one of the basic features of the Constitution and 
the courts being the guardians and custodians of the Constitution are 
obliged to protect and safeguard the same. This relief (remedy) should not 
be allowed as a matter of course, the more so when the candidature of a 
candidate is duly scrutinized at the time of the scrutiny of his/her 
nomination papers to ascertain whether he is qualified or disqualified in 
terms of the Constitution and the law. Furthermore, after the election, 
his election can be challenged inter alia on the grounds of lack of 
qualification or disqualification before the Election Tribunal in 
accordance with the procedure provided by law the Representation of 
People Act, 1976 (ROPA). The bar contained in Article 225 of the 
Constitution in this regard as well is another reason for using this 
remedy with care and circumspection. We would not like to go further 
into the details of the said bar. But we are clear in our mind and view 
that quo-warranto writ can only be issued by the Court against the 
Parliamentarians (members of the Provincial Assemblies) in exceptional cases. 
And the cases of the Parliamentarians cannot be considered to be at par 
with the holders of any other public office. In the cases of 
Parliamentarians, the lack of qualification and disqualification is 
inherent in nature and if he (an unqualified or disqualified Parliamentarian) is 
allowed to stay as a member of the Parliament, he cannot be said to be 
the true and real representative of the people of his constituency as he 
lacks those inherent qualities and he cannot be allowed to perform his 
functions and discharge his duties as a trustee for the people whom he 
represents. Besides, it would be against the mandate of the qualifications 
and disqualifications provided by the Constitution and the law, which 
command has to be followed and given due effect by the courts in letter 
Constitution Petition No.36 of 2016 
 
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and spirit. Corruption, and anything done with dishonesty of purpose is 
the antithesis of honesty. And we have no doubt in our mind that the 
expression “honest” used in Article 62(1)(f) of the Constitution bears a 
close relation to preventing the scourge of corruption. Corruption can 
destroy the very fabric of the State. Thus the power of quo-warranto in 
relation to the Parliamentarians can be validly exercised by the courts if 
the disqualification attributed to them has direct and close nexus to 
corruption, because an act of dishonesty shall be covered by the Article 
supra. Thus for such reasons the bona fide and the conduct of the relator 
is quite significant. But at the same time the most important aspect is 
whether from the grounds set out in the petition a prima facie serious 
case, falling within the purview of quo-warranto jurisdiction, is made 
out. Therefore, if the grounds on the face of it are frivolous, baseless and 
vexatious and/or on the same grounds the election of the returned 
candidate was earlier challenged in appropriate proceedings before the 
Election Tribunal, but the plea(s) was rejected; then coupled with the 
conduct of the petitioner, the Court is not required to go into the merits 
of the case and should summarily dismiss the petition on the basis of 
lack of bona fides and extraneous motives of the petitioner and on 
account of the petition being frivolous. However, where on the 
consideration of the contents of the petition and the relevant record, the 
court forms an opinion that there is some substance to the matter, then, 
simply on account of the fact that some doubt can possibly be cast upon 
the conduct of the petitioner, the court shall not dismiss the petition 
summarily, rather it shall hear and decide the matter on merits, 
obviously not losing sight of the bona fides of the relator even then. We 
have examined the pleadings of the parties in this case; heard lengthy 
arguments of the counsel for the parties for weeks. We have considered 
serious points of law and facts which could reflect upon the 
Constitution Petition No.36 of 2016 
 
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qualification/disqualification of the respondent. Therefore regardless of 
our final opinion on merit, we are unable to agree that only because the 
petitioner is a member of PML(N) and some petition against the leader of 
his party head has been filed by the party head of PTI and that this 
petition is subsequent in time, therefore, it lacks bona fide or is a 
counterblast or as it is inaccurately stated in the petition that the name 
of the respondent appears in the Panama Papers, whereas it is not so, it 
should be dismissed on that account. Especially when from the contents 
of the concise statement of the respondent it appears that there exists an 
off-shore company which has genesis in the respondent. And the ground 
in this behalf and the other grounds too are worthy of consideration at 
the very least. Therefore, the preliminary objection in the facts and 
circumstances has no force and is hereby rejected. 
ON MERITS: 
4. 
 
Attending to the merits of the case, the learned counsel for 
the petitioner has provided to the Court his formulations in writing. 
These as agreed by both the sides are the propositions involved in the 
matter with some counter propositions submitted by the respondent’s 
counsel which are in the nature of a reply. And the learned counsels for 
the parties have made their submissions accordingly. However, in order 
to keep our opinion concise and to avoid repetition, we shall be making 
reference to the key submissions made by the learned counsel for the 
parties; 
whereas 
their 
elaborate 
contentions/arguments/counter 
arguments shall be adequately reflected in the reasons of this judgment. 
These formulations/propositions are reproduced as the headings of our 
opinion thereupon. 
INSIDER TRADING (Proposition No.1): 
(That Securities and Exchange Commission of Pakistan issued a show cause notice to 
Respondent No. 1 thereby accusing him of the offences of insider trading and acts and 
Constitution Petition No.36 of 2016 
 
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omissions lacking fiduciary behavior, whereupon Respondent No. 1 admitted 
commission of such offences and deposited the gains accrued from insider trading to 
SECP and also paid the fine for the offences for lack of fiduciary duty along with 
reimbursing the legal costs of SECP thus making him not qualified to contest the 
election of, or being, a member of Parliament by virtue of the provisions of Article 
62(1)(f) of the Constitution of Islamic Republic of Pakistan.) 
 
5. 
 
The gist of the submissions of the learned counsel for the 
petitioner on the noted proposition are:- that the respondent being a 
Director of JDW Sugar Mills Ltd. was aware of the fact that the said 
company is going to (purchase majority shares) take over United Sugar Mills 
Ltd. (USML). In order to achieve undue advantage of this exclusive and 
sensitive information, the respondent admittedly was involved in insider 
trading and purchased the shares of USML during November, 2004 to 
November, 2005, through his front men Haji Khan and Allah Yar who 
were his Gardener and Cook respectively; hence besides the violation of 
other laws mentioned in the SECP’s letter dated 3.12.2007 he has 
violated the provisions of Sections 15-A, 15-B and 15-E of the Securities 
and Exchange Ordinance, 1969 (Ordinance, 1969). Through this insider 
trading, the respondent made a gain of Rs.70.811 million by selling 
USML shares after its takeover by JDW Sugar Mills Ltd. by (through) 
public offer. In this context proceedings against the respondent under 
Section 217 of the Companies Ordinance, 1984 (Ordinance, 1984) and 
Section 15-A etc. of the Ordinance, 1969 and some other laws were 
initiated by the SECP, he was served with a show cause notice/letter 
dated 3.12.2007 with respect to the afore-mentioned violation of the 
relevant laws which was also a criminal offence under Section 15-B. As 
the respondent was guilty of such violations and commission of offence 
by him, therefore, in his reply to the show cause notice dated 8.12.2007 
he admitted to the commission of the violations/offences referred to 
above and in unequivocal terms offered to return the unlawful gain of 
Rs.70.811 million along with other penalties/fines. Besides, through the 
Constitution Petition No.36 of 2016 
 
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SECP’s letter dated 11.1.2008 in addition to the amount gained, 
respondent was asked to pay the requisite penalties/fines imposed upon 
him under the law and the legal costs of the SECP of Rs.1 million. This 
direction was complied with by the respondent who while admitting his 
liability returned the aforesaid amount of Rs.72.067 million as demanded 
by the SECP vide bank draft dated 14.1.2008 (emphasis supplied by us). Thus 
he has committed the offence of insider trading as mandated by Section 
15-E of the Ordinance, 1969 and violated other law(s), therefore, on 
account of the above act/offence the respondent is not honest and ameen 
in terms of Article 62(1)(f) of the Constitution and Section 99 of the 
ROPA. In response to the above, learned counsel for the respondent has 
taken the plea that neither any show cause notice was issued to the 
respondent nor any proceedings were initiated and concluded against 
him under the aforecited provision of law. The respondent though admits 
(admitted) the issuance of the letter dated 3.12.2007 by SECP, his reply 
thereto dated 8.12.2007; the final letter of the SECP dated 11.1.2008 and 
also the deposit of gained amount along with the penalties etc. and the 
legal cost as demanded by the SECP, yet it is argued that the respondent 
had not made any admission or confession in fact or law for having 
committed an offence or violation, rather as he wanted to settle the 
matter and get rid of this irritant, therefore, he decided to pay off the 
amount as demanded by the SECP. A bare perusal of respondent’s reply 
dated 8.12.2007 reveals that it was conspicuously marked as “without 
prejudice” and was concluded by underscoring that “this letter may not be 
used as evidence in any legal or quasi legal civil or criminal proceedings”. It is the 
respondent’s case that he had not committed any wrongful act, rather 
acted in good faith in purchasing the shares through his employees. No 
admission or confession, express or implied, can be attributed to the 
respondent on account of the contents of his reply or by virtue of paying 
Constitution Petition No.36 of 2016 
 
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the demanded amount to the SECP. It is also submitted that the letter 
dated 8.12.2007 to the SECP, underscored that there are sound legal 
defenses of the alleged irregularities. Moreover, the SECP in its reply 
dated 11.1.2008 to the respondent concluded that the SECP had not 
made any determination of fact or law as regards the allegations and that 
the matter stood disposed of with no further action. It is submitted that 
the above is a past and closed transaction and in exercise of its 
jurisdiction under Article 184(3) of the Constitution, when the petitioner 
is seeking issuance of a quo-warranto, this Court will not reopen a 
matter which relates to 7 years prior to the filing of his nomination 
papers in 2015 on the basis of which he got elected. Besides, the counsel 
for the respondent has made reference to (respondent’s) supplementary 
concise statement CMA No.3675/2017 and in line thereof, in his oral 
submissions has also challenged the vires of the provisions of Sections 
15-A and 15-B on the ground that such provisions were introduced and 
incorporated into the Ordinance, 1969 through Section 7(5) of the 
Finance Act, 1995 (Act No.1 of 1995) dated 2.7.1995. These provisions were 
subsequently substituted by entirely new Sections i.e. 15-A to 15-E 
through Section 6(2) of the Finance Act, 2008 dated 27.6.2008. Section 
15-E has been additionally impugned on the ground that it was not in 
force at the time when the alleged violation/offence was committed by 
the respondent or even when the letter dated 3.12.2007 was issued to 
him or when he settled the matter with the SECP by making the 
payments, on the contrary as the section came into force later it would 
have no retrospective application, therefore, it is absolutely misconceived 
and baseless to allege in the petition that the respondent has committed 
an offence under the section (15-E ibid). The subject matter of the above 
provisions introduced through both the Finance Acts are ex-facie outside 
the parameter, scope and ambit of a Money Bill as provided for in Article 
Constitution Petition No.36 of 2016 
 
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73(2) of the Constitution as, inter alia, none of the aforementioned 
provisions relate to the imposition, abolition, remission, alteration or 
regulation of any tax or any matter incidental thereto or any of the 
matters expressly stipulated in Article 73(2) (ibid). It is thus argued that 
the aforesaid provisions are ultra vires to the constitutional provisions of 
Article 70(2) ab initio and no action against the respondent either earlier 
or even now in these proceedings can be founded and based thereupon. 
In the context of the above, learned counsel for the respondent has 
placed reliance upon the judgments of this Court passed in Sindh High 
Court Bar Association through its Secretary and another Vs. 
Federation of Pakistan through Secretary, Ministry of Law and 
Justice, Islamabad and others (PLD 2009 SC 879) and Workers’ 
Welfare Funds, M/o Human Resource Development, Islamabad  
through Secretary and others Vs. East Pakistan Chrome Tannery 
(Pvt.) Ltd. through G.M. (Finance), Lahore and others (PLD 2017 SC 
28). He has also relied upon the provisions of Article 4 of the 
Constitution to argue, that it is the inalienable right of the respondent to 
be treated in accordance with law. And such law is the one which is 
validly made by the Legislature. In the context of the above submission 
and facts, three questions require the attention of and resolution by this 
Court under the captioned proposition: (1) whether the respondent being 
guilty of insider trading, the matter in this regards was investigated 
against him in terms of Section 15-A of the Ordinance, 1969 and he was 
proceeded and prosecuted under Section 15-B thereof and was duly 
convicted and punished by the competent authority; (2) whether the 
respondent by virtue of his letter dated 8.12.2007 and also by paying off 
the amount demanded by the SECP has admitted/confessed to the 
commission of offence of insider trading and violation of other laws 
mentioned in the letter of the SECP dated 3.12.2007 and irrespective of 
Constitution Petition No.36 of 2016 
 
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the fact that no action was taken against him by the competent authority 
at the relevant point of time, he should in these quo-warranto 
proceedings under Article 184(3) of the Constitution be declared as 
dishonest within the purview of Article 62(1)(f) of the Constitution; (3) 
whether the provisions of Sections 15-A, 15-B and 15-E of Ordinance, 
1969 are ultra vires of the Constitution and thus void ab initio and non-
est and therefore no offence of insider trading could be based thereupon 
against the respondent. The last proposition raises an ancillary question; 
whether the vires of such law can be attacked in these collateral 
proceedings. Before proceeding to attend and answer the questions it is 
expedient to mention that admittedly the respondent at the relevant 
point of time was the Director of JDW Sugar Mills Ltd. and we have little 
doubt in our mind that in principle a decision had been taken by the 
management of the JDW Sugar Mills Ltd. to take over USML. This can be 
validly inferred from the circumstances mentioned below.  It is spelt out 
from the record that the respondent was acting on behalf of JDW Sugar 
Mills Ltd. in negotiating for such takeover. The persons named in the 
notice of the SECP, namely, Haji Khan and Allah Yar are admittedly the 
employees of the respondent and when questioned, the learned counsel 
for the respondent states that they are in his employment since the last 
24 years and looking after his household/farm affairs meaning thereby 
that they were the persons worthy of the respondent’s trust and 
confidence. The respondent intended to hide these transactions, 
therefore, the shares were not directly purchased by him or in the name 
of any of his close relative. It is also not denied that an amount of 
Rs.41.970 million was paid by the respondent for the purchase of USML 
shares and the said employees had no means of their own to pay such a 
substantial amount. It is further not disputed that these shares were 
finally sold by the respondent and it is he who made a gain of Rs.70.811 
Constitution Petition No.36 of 2016 
 
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million. Thus for all intents and purposes the above-named two 
employees (employees on nominal salaries) were simply the benamidars, rather 
front men of the respondent and the transaction(s) were decidedly 
dubious, and conducted in a clandestine manner. At that point of time 
the respondent was the Federal Minister in the Government of Pakistan 
i.e. from August, 2004 to November, 2007 and was a holder of a high 
public position and office at the Federal level. He should perhaps have 
exercised greater care and diligence in the exercise of his fiduciary duties 
as Director of JDW Sugar Mills Ltd. rather than engaging in the purchase 
of USML in breach of such fiduciary duty in a clandestine manner as 
stated above. However, it is the case of the respondent that full 
disclosure was made to all the Board Members of JDW Sugar Mills Ltd. 
who were either close family members or otherwise closely connected 
persons. But it is never avowed that the sellers of the shares were also 
informed of the fact of such takeover. Besides, this is only a verbal 
assertion of the respondent not supported by any minutes of the Board 
of Directors of JDW Sugar Mills Ltd. that such disclosure was duly made. 
It is not controverted that the increase of the respondent’s shareholding 
in USML on account of such purchases increased to 10.6% and that the 
requisite disclosure was not made in terms of Section 222 of the 
Ordinance, 1984 and Section 4 of the Listed Companies (Substantial 
Acquisition of Voting Shares and Takeovers) Ordinance, 2002. Thus from 
these admitted facts the probability cannot be ruled out that if the 
respondent had decided to contest the matter, besides the liability of 
paying back the gained amount and the penalties and the fines, the 
respondent would have faced prosecution under the relevant law which 
may well have resulted in his conviction and punishment. Therefore he 
was left with no choice except to save his position and avoid the 
predicament in which he was caught by paying back the gained amount 
Constitution Petition No.36 of 2016 
 
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and the penalties/fines and to save himself from the criminal 
prosecution. The learned counsel for the respondent has not been able to 
satisfy us as to what could be a valid defence of his client in fact and law 
and that he was not guilty of insider trading and the violations of laws. 
Be that as it may, the question before us is whether the matter was 
investigated according to law and the action for insider trading was taken 
against the respondent by the competent authority and whether he was 
convicted and punished for the criminal offence or in other words 
whether the matter was taken to its logical legal conclusion. The 
ancillary and equally important aspect of the case is whether the 
respondent has admitted to having committed the offence and violation 
of law coupled with the admitted position that he has paid the entire 
amount gained from the sale of shares and also paid the penalties and 
fine and the legal fee as demanded by the SECP, though ultimately no 
action under the law was taken by it (the SECP) against him and thus on 
the basis of such an admission, should he be declared to be dishonest 
under Article 62(1)(f) of the Constitution in the instant proceedings? 
Because from the provisions of Sections 15-A and 15-B of the Ordinance, 
1969 and the relevant provisions of other law(s), in view of certain 
admitted facts of the case as mentioned above, it is emphatically 
reiterated that the probability that if proceeded against and prosecuted 
the respondent might have been convicted and punished in the criminal 
action initiated against him cannot be ruled out. Besides, he has 
admitted/acknowledged his civil liability in unequivocal terms not only in 
the reply but also by making the payments to the SECP which is a 
further proof that the purchase of the USML shares was a clear case of 
insider trading by the respondent. Be that as it may, we cannot ignore 
the settled law that the criminal liability of a person is not determined on 
the rule of probability, but on the proof of the facts which constitute an 
Constitution Petition No.36 of 2016 
 
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offence and that too by a court of competent jurisdiction, which in such a 
case was the court not inferior to the court of Sessions under Section 25 
of the Ordinance, 1969 and such court could only take the cognizance on 
the report of an  authorized officer of the SECP, or if the conviction was 
based upon a confession made by the respondent before such court 
having jurisdiction. But the admitted position on the record is that the 
respondent was never prosecuted under the said law nor was he ever 
convicted and punished by the court. In the circumstances we do not 
find ourselves conferred with any jurisdiction in these proceedings to 
prosecute the respondent and to convict and punish him now. The other 
part of respondent’s liability is civil in nature. The petitioner on the basis 
of certain facts which are not in dispute wants this Court to declare the 
respondent guilty of dishonesty. And in this behalf the petitioner has 
relied heavily upon the admissions made by the respondent in his reply 
dated 8.12.2007 coupled with the fact that he made the payment of the 
entire amount of gain and the fine and penalties as imposed by the 
SECP. Thus it is advantageous to reproduce the whole correspondence 
exchanged between the SECP and the respondent. The letter dated 
3.12.2007 of the SECP reads as under:- 
 “SECURITIES AND EXCHANGE COMMISSION OF 
PAKISTAN 
PRIVATE AND CONFIDENTIAL 
No.CLD/EMD/32/2006/513  
December 3, 2007 
Mr. Jahangir Khan Tareen, 
Director, 
JDW Sugar Mills Ltd, 
17-Abid Majeed Road, Lahore Cantt., 
Lahore. 
 
Sub: 
Investigation into the acquisition of United 
Sugar Mills (“USML”) by JDW Sugar Mills 
Ltd. (“JDW”) 
 
Dear Sir, 
 
Constitution Petition No.36 of 2016 
 
- 17 - 
 
We refer to our various recent meetings and correspondence 
in the matter in the context of the captioned investigation 
initiated by the Commission under Section 29(1) of the 
Securities and Exchange Commission of Pakistan Act, 1997, 
in relation to the acquisition of USML by JDW. The 
investigation was initiated vide Commission’s Order dated 
December 12, 2006 pursuant to the unusual trading pattern 
and price movement in the share of USML from November, 
2004 to November 2005. The investigation revealed that 
being a Director of JDW and having knowledge of JDW 
negotiating for the acquisition of a majority stake in USML, 
during the period January 17, 2005 to March 16, 2005 you 
acquired 316,780 share of USML (constituting 10.6% of the 
total issued capital of USML) through Messrs Haji Khan and 
Allah Yar. Subsequently by August 19, 2005, your 
shareholding in USML was increased to 336,680 shares 
(constituting 11.23% of the total issued capital of USML). 
Thereafter, when JDW acquired USML, you made a gain of 
Rs.70.811 million through sale of your shareholding in 
USML, under the public offer made by JDW pursuant to the 
provisions of law. 
(emphasis supplied by us) 
Prima facie, it appears that there are potential violations of 
certain applicable laws in relation to the purchase of the 
above shares in USML as stated hereunder: 
1. Section 15A of the Securities & Exchange Ordinance, 
1969 (“SEO 1969”) 
Under Section 15A of the SEO 1969 insider trading is 
prohibited. Being a Director of JDW, you had in your 
knowledge information regarding the possible acquisition 
of USML. Hence your purchase of shares of USML 
appears to have been made with a view to making a gain 
which you made in the sum of Rs.70.811 million (pursuant 
to the public offer made by JDW). 
2. Section 4 of the Listed Companies (Substantial 
Acquisition of Voting Shares and Takeovers), Ordinance, 
2002 (“Takeovers Ordinance”) 
Constitution Petition No.36 of 2016 
 
- 18 - 
 
Section 4 of the Takeovers Ordinance requires that any 
person acquiring more than 10% share of a listed 
company must make disclosure to the said company and 
to the stock exchange. 
Accordingly on March 16, 2005, when your shareholding 
in USML reached 10.6% i.e. crossed the 10% reporting 
requirement, you were required to make disclosure. 
3. Section 214 and 216 of the Companies Ordinance, 1984 
(“Companies Ordinance”) 
Under Section 214 of the Companies Ordinance, any 
director concerned or interest in any contract or 
arrangement entered or to be entered into by the company 
shall disclose his interest and under Section 216, the said 
director should not take part in any discussion or vote on 
the issue. 
It appears that despite the above requirements of 
disclosure of your interest in USML to the Board of 
Directors of JDW as required under the aforementioned 
section of the Companies Ordinance, no such disclosure 
was made and you also participated and voted in favour 
of the acquisition of JDW in the relevant Board meetings. 
4. Section 222 of the Companies Ordinance 
Section 222 of the Companies Ordinance provides that 
any person who is directly or indirectly the beneficial 
owner of more than 10% shares in the company shall 
submit a return in the prescribed form to the Registrar 
Companies and the Commission. 
On March 15, 2005, when your shareholding reached 
10.6% i.e. had crossed the 10% threshold, you were 
required to file a statement of beneficial ownership with 
the Commission as envisaged under Section 222 of the 
Companies Ordinance. 
Constitution Petition No.36 of 2016 
 
- 19 - 
 
In the above background, you are required to prove us with 
your clarifications/explanations as regards the above four 
issues within 10 days of receipt of this letter. 
_________________ 
TAHIR MAHMOOD 
Executive Director Enforcement” 
Respondent replied to this letter on 8.12.2007. The contents whereof 
read as under:- 
 
“PRIVATE AND CONFIDENTIAL 
WITHOUT PREJUDICE 
Date: 8 December 2007 
Mr. Tahir Mahmood 
Executive Director Enforcement 
Securities and Exchange Commission of Pakistan 
NIC Building, Jinnah Avenue 
Islamabad. 
 
Dear Sir, 
 
I refer to the Securities and Exchange Commission of Pakistan’s 
(“SECP”) letter dated December 3, 2007, bearing reference no. 
CLD/EMD/32/20061513, in relation to SECP’s investigation 
with respect to various transactions undertaken during the course 
of the year 2005 regarding the purchase, sale and subsequent 
surrender of the share of United Sugar Mills Limited (“USML”) 
in response to the public offer of JDW Sugar Mills Limited 
(“JDW”). AS part of the investigation SECP had earlier issued 
various notices/letters to JDW of which I am a director, seeking 
information and clarifications, which we had provided. The 
matter related to alleged violations of Sections 214 and 216 of 
the Companies Ordinance, 1984 (“1984 Ordinance”) attracting 
Section 217 of the 1984 Ordinance and Section 15A of the 
Securities and Exchange Ordinance 1969 (“SE Ordinance”), 
attracting Section 15B of the SE Ordinance, non-disclosure 
attracting section 4 of the Listed Companies (Substantial 
Acquisition of Voting, Shares and Takeovers) Ordinance, 2002 
(the “Takeover Ordinance 2002”) and non-filing of the return of 
Constitution Petition No.36 of 2016 
 
- 20 - 
 
beneficial ownership in terms of Section 222 of the 1984 
Ordinance. 
During the course of the investigation, certain meetings were 
also held between various officials of the SECP and myself, along 
with my representatives. I had the opportunity to examine the 
details of the various transactions undertaken on my behalf and 
would like to state that although there might have occurred 
certain inadvertent irregularities in relation to the same, it is my 
unequivocal assurance to the SECP that the irregularities 
occurred without any deliberate intent on my part or on the part 
of any of my representatives and were certainly not made with a 
view to making any gain or causing any loss or damage to any 
other person, including any of the companies that I dealt with or 
it was connected with, as regards the purchase and sale of USML 
shares.  
It has been suggested to me that the purchase made of USML 
shares on my behalf, without disclosure to the sellers of the 
possibility of take-over of USML by JDW in October/November, 
2005 might attract the above provisions of the law pertaining to 
insider trading apart from provisions pertaining to non-
disclosure of being an ‘interest’ director. As I have previously 
stated, in fact full disclosure was made to all board members, 
who are either family members or otherwise closely connected 
person, and the details of the various transactions that were 
entered into were in their full knowledge even though not taken 
up in a meeting of the Board of Directors of JDW. Also, at the 
time the shares were purchased by Messrs Haji Khan and Allah 
Yar, the acquisition of USML by JDW was still in very 
preliminary stages of consideration and there was no certainty of 
any deal being concluded at all. Hence, the acquisition of such 
shares was not intended to result in any gain or cause any loss to 
any person. However, in view of the alleged violations pointed 
out by SECP I admit it does seem possible that some provisions 
of law may have unwillingly been contravened. If that is the case, 
then let me assure you that such contraventions were inadvertent 
and unintentional and were without any knowledge. 
Constitution Petition No.36 of 2016 
 
- 21 - 
 
Clearly, the investigation conducted by the SECP and the 
suggestion of certain irregularities, as alluded to be me in the 
foregoing paragraphs, is a matter that I, as a law-abiding citizen 
and a businessman committed to maintaining the highest 
standards of corporate governance, take very seriously. As a 
practical demonstration of my bona fides, I seek to put all matters 
to rest by the return of any resultant gain that may have accrued 
from the alleged irregularities. Accordingly, in consideration of 
your agreeing to treat all matters referred to in your letter dated 
December 3, 2007 as closed and agreeing not to initiate any 
further legal proceedings (civil or criminal) under the applicable 
provisions of the 1984 Ordinance, the SE Ordinance and/or the 
Takeover Ordinance, 2002, it is hereby offered to return the gain 
of Rs.70.811 million to SECP (in trust for the persons entitled 
thereto), being the maximum amount recoverable under Section 
15B(3) of the SE Ordinance, and to make payment of the sum of 
Rs.1.256 million, being the maximum amount recoverable under 
the various other provisions mentioned in your letter. 
As you will no doubt appreciate, this offer is made in a spirit of 
cooperation and in good faith to avoid protracted proceedings 
and to fully and finally settle all matters highlighted in your letter 
dated December 3, 2007, despite my being advised that there are 
sound legal defences to the alleged violations. This letter may not 
be used as evidence in any legal or quasi legal (civil or criminal) 
proceedings. This letter and the offer stated herein are intended 
to be, and shall be treated as confidential, unless required to be 
disclosed by law or order of any court, authority or other 
competent body. 
(emphasis supplied by us) 
I look forward to receiving your response at the earliest. 
Very truly yours, 
Jahangir Khan Tareen”  
 
From the contents of the above reply it is conspicuously noticed that the 
respondent has not denied the initiation of investigation competently and 
validly under the law by the SECP into the purchase of shares of USML. 
Constitution Petition No.36 of 2016 
 
- 22 - 
 
It is also not denied that M/s Haji Khan and Allah Yar are not his 
employees and that the purchase of shares in their name was on his 
behalf. It is also conceded that the disclosure of the purchase of shares 
was not made by him in the meeting of the Board of Directors of JDW 
Sugar Mills Ltd.. Above all, the gain of Rs.70.811 million is admitted. It is 
admitted that in the purchase of the shares some irregularities might 
have occurred. The amount of fine which the SECP has demanded 
through the letter dated 11.1.2008 was immediately paid within 2/3 
days. However the plea of inadvertence and bona fide was raised. But 
this reply is “without prejudice” and it is clearly mentioned therein that 
“Accordingly, in consideration of your agreeing to treat all matters referred to in your 
letter dated December 3, 2007 as closed and agreeing not to initiate any further legal 
proceedings (civil or criminal) under the applicable provisions of the 1984 Ordinance, 
the SE Ordinance and/or the Takeover Ordinance, 2002, it is hereby offered to return the 
gain of Rs.70.811 million to SECP (in trust for the persons entitled thereto), being the 
maximum amount recoverable under Section 15B(3) of the SE Ordinance, and to make 
payment of the sum of Rs.1.256 million, being the maximum amount recoverable under 
the various other provisions mentioned in your letter”. It is specifically mentioned 
in the reply “this offer is made in a spirit of cooperation and in good faith to avoid 
protracted proceedings and to fully and finally settle all matters highlighted in your letter 
dated December 3, 2007, despite my being advised that there are sound legal defences to 
the alleged violations”. It is also mentioned in the reply “This letter may not be 
used as evidence in any legal or quasi legal (civil or criminal) proceedings”. This 
letter was followed by the final letter of the SECP dated 11.1.2008 which 
reads as below:- 
 “SECURITIES AND EXCHANGE COMMISSION OF 
PAKISTAN 
PRIVATE AND CONFIDENTIAL 
No.CLD/EMD/32/2006/520  
    January 11, 2008 
 
Constitution Petition No.36 of 2016 
 
- 23 - 
 
Mr. Jahangir Khan Tareen, 
Director,  
JDW Sugar Mills Ltd, 
17-Abid Majeed Road, Lahore Cantt., 
Lahore. 
 
Sub: 
Investigation into the acquisition of United Sugar Mills 
Ltd. by JDW Sugar Mills Ltd. 
 
Dear Sir, 
 
This is with reference to your letter dated December 8, 
2007 “Your Letter”) in response to the Commission’s Letter 
dated December 3, 2007 “Commission’s Letter”). 
 
In terms of your letter, we note that you have recognized 
that the violations mentioned in the Commission’s Letter may 
have occurred in the course of the purchase of the shares of 
USML and have offered to surrender the sum of Rs.70.811 
million, being the resultant gain arising out of the transactions 
identified by the Commission. 
 
The Commission considered your Letter in its meeting 
held on January 3, 2007. After due deliberation and taking into 
account all circumstances, including your offer to repay the gain 
made by you, the Commission has accepted your offer to make 
payment of the said gain of Rs.70.811 million, in terms of Section 
15B(3) of the Securities & Exchange Ordinance 1969, in 
admission of your obligation under the law, in addition to 
maximum applicable fines totaling Rs.1.256 million under the 
following relevant provisions of law as detailed below: 
(emphasis supplied by us) 
 
 
 
Section 
Amount 
1. 
Securities & Exchange Ordinance 1969 
15-B(3) 
70,811,000 
2. 
Companies Ordinance 1984 
214 
5,000 
3. 
Companies Ordinance 1984 
216 
5,000 
4. 
Companies Ordinance 1984 
222 
246,000 
5. 
Listed 
Companies 
(Substantial 
Acquisition 
of 
Voting 
Shares 
& 
Takeovers) Ordinance, 2002 
4 
1,000,000 
 
 
 
72,067,000 
 
Additionally, and as agreed by you through your counsel, 
you shall also pay the Commission’s legal costs totaling Rupees 
one million, thereby aggregating to Rs.73.067 million. 
Constitution Petition No.36 of 2016 
 
- 24 - 
 
 
You are accordingly directed to make immediate payment 
of the above-mentioned aggregate amount of Rs.73.067 million 
through bank draft failing which the Commission will be entitled 
to take appropriate action against you as prescribed by law. 
Upon receipt by the Commission of the bank draft the above-
referred matters shall stand disposed off with no further action. 
 
It may be noted that this letter is being issued without any 
determination or acceptance by the Commission of any assertion 
as regards any issue of fact or law pertaining to the merits of the 
investigation into the various transactions to which you were 
party. 
(emphasis supplied by us) 
__________________ 
TAHIR MAHMOOD 
Executive Director Enforcement” 
It is evident from the record and is an admitted position that the entire 
amount as demanded by the SECP, including the fines and the penalties 
and legal charges of Rs.1 million, were paid by the respondent without 
any hesitation vide bank drafts dated 14.1.2008 i.e. within the period of 
2/3 days (which was the immediate compliance sought by the SECP). Moreover in the 
said reply neither the vires of Sections 15-A and 15-B of the Ordinance, 
1969 nor the authority of the SECP to investigate into the matter and 
proceed against and prosecute the respondent were questioned or 
challenged. We fail to understand why, and are indeed dismayed at the 
manner in which the SECP concluded the matter and decided in barely a 
month’s time to accept the offer of the respondent and not to take any 
further action. Obviously this was purposively done and was a deliberate 
attempt on the part of the SECP to save the respondent from the criminal 
action which would have cost him a fortune and an honourable future 
because if truth be told, as mentioned earlier, he had without any 
reservation met the entire demand of the SECP accepting his civil liability 
in toto. However, as has been stated above, the offer of the respondent 
Constitution Petition No.36 of 2016 
 
- 25 - 
 
was accepted in the meeting of the SECP dated 3.1.2008 and after due 
deliberation it was conveyed to the respondent that “Upon receipt by the 
Commission of the bank draft the above-referred matters shall stand disposed off with no 
further action”. Furthermore the last para of the letter clearly states that it 
is being issued “without any determination or acceptance by the Commission of any 
assertion as regards any issue of fact or law pertaining to the merits of the investigation 
into the various transactions to which you were party”. As regards the case of the 
petitioner, it is basically founded upon the admission or confession made 
by the respondent in his letter dated 8.12.2007; suffice it to say that at 
the very top of the letter it is conspicuously stated to be “WITHOUT 
PREJUDICE”. Besides as mentioned at several occasions in the letter the 
respondent stated, that he was not admitting his liability and had agreed 
to pay the amount simply to settle the matter. This kind of an admission 
does not qualify the test of Article 36 of the Qanoon-e-Shahadat Order, 
1984 (Order, 1984) which mandates that for the admission to be used 
against the person it should be unqualified. The question arises as to 
whether a qualified admission in the letter i.e. without prejudice and 
other reservations expressed therein can be used as an admission 
against the respondent in these proceedings. The law is founded upon 
public policy and the “without prejudice rule” and is clear. . The 
term “without prejudice” has been defined in Black’s Law Dictionary, 
Tenth Edition as follows:- 
“Without loss of any right; in a way that does not harm or 
cancel the legal rights or cancel the legal rights or privileges of 
a party.” 
 
“Without prejudice: A phrase that, when incorporated in 
contracts, stipulations, and other written instruments, imports 
that the parties have agreed that, as between themselves, the 
receipt of the money by one, and the enjoyment of the other, 
Constitution Petition No.36 of 2016 
 
- 26 - 
 
shall not, because of the receipt and the payment, have any legal 
effect upon the rights of the parties; that such rights will be as 
open to settlement by negotiation or legal controversy as if the 
money had not been turned over by the one to the other. … … .” 
40 Cyclopedia of law and Procedure 2130-30 (William Mack 
ed., 1912).” 
 
 
In Stroud’s Judicial Dictionary of Words and Phrases, Fifth Edition, 
Volume 5, the term has been defined as:- 
“A letter “without prejudice” cannot be treated “as an 
admission of right”. This, in effect, seems to establish the 
principle that a letter “without prejudice” cannot be read 
without the consent of both parties (see hereon 34 S.J. 56). It 
cannot be used as an acknowledgement of a debt, within the 
Limitation Act, 1623 (c. 16). “From those cases it seems to me 
that the principle which emerges is that the court will protect, 
and ought to protect so far as it can, in the public interest, 
‘without prejudice’ negotiations because they are very helpful in 
the disposal of claims without the necessity for litigating in 
court” (per Ormrod J., in Tomlin v. Standard Telephones and 
Cables 1969 1W.L.R. 1378). 
 
In Wharton’s Law Lexicon following definition of the term ‘without 
prejudice’ has been given: -  
“The words import an understanding that if the negotiation 
fails, nothing that has passed shall be taken advantage of 
thereafter. 
The rule is that nothing written or said ‘without prejudice’ can 
be considered at the trial without the consent of both parties - 
not even by a judge in determining whether or not there is good 
cause for depriving a successful litigant of costs .... The word is 
also frequently used without the foregoing implications in 
statutes and inter parties to exclude or save transactions, acts 
and rights from the consequences of a stated proposition and so 
as to mean ‘not affecting’, ‘saving’ or ‘excepting’.” 
Constitution Petition No.36 of 2016 
 
- 27 - 
 
 
 
The term “without prejudice” has recognition since 19th Century when in 
the case reported as Walker v. Wilsher [(1889) 23 QBD 335 at 337], the 
term was defined as under:- 
“What is the meaning of the words “without prejudice”? I think 
they mean without prejudice to the position of the writer of the 
letter if the terms he proposes are not accepted. If the terms 
proposed in the letter are accepted a complete contract is 
established, and the letter, although written without prejudice, 
operates to alter the old state of things and to establish a new 
one.” 
 
 
In the case of Rush & Tompkins Ltd. Vs. Greater London Council and 
another [(1988) 1 All ER 549] it was held that:- 
“The rule which gives the protection of privilege to ‘without 
prejudice’ correspondence ‘depends partly on public policy’, 
namely the need to facilitate compromise, and partly on ‘implied 
agreement’ as Parker LJ stated in South Shropshire DC v Amos 
(1987) 1 All ER 340 at 343: (1986) 1 WLR 1271 at 1277. The 
nature of the implied agreement must depend on the meaning 
which is conventionally attached to the phrase ‘without 
prejudice’. … …  
 
In our judgment, it may be taken as an accurate statement of the 
meaning of ‘without prejudice’, if that phrase be used without 
more. It is open to the parties to the correspondence to give the 
phrase a somewhat different meaning, e.g. where they reserve 
the right to bring an offer made ‘without prejudice’ to the 
attention of the court on the question of costs if the offer be not 
accepted (See Cutts v. Head) but subject to any such 
modification as may be agreed between the parties, that is the 
meaning of the phrase. In particular, subject to any such 
modification, the parties must be taken to have intended and 
agreed that the privilege will cease if and when the negotiations 
‘without prejudice’ come to fruition in a concluded agreement.” 
Constitution Petition No.36 of 2016 
 
- 28 - 
 
 
Recently, a 6-Member Bench of the Supreme Court of UK, in the case 
reported as Oceanbulk Shipping and Trading SA Vs. TMT Asia Ltd. 
and others (2012 SCMR 1112) = ([2010] UKSC 44) = ([2010] 4 All 
ER 1011) has dilated upon the rule of “without prejudice” and its 
effect on the transactions. After considering the case-law starting from 
the case of Walker v. Wilsher (supra) the Court held as under:- 
“19. 
The approach to without prejudice negotiations and 
their effect has undergone significant development over the 
years……The essential purpose of the original rule was that, 
if the negotiations failed and the dispute proceeded, neither 
party should be able to rely upon admissions made by the 
other in the course of the negotiations. The underlying 
rationale of the rule was that the parties would be more likely 
to speak frankly if nothing they said could subsequently be 
relied upon and that, as a result, they would be more likely to 
settle their dispute…… 
 
27. 
The without prejudice rule is thus now very much 
wider than it was historically. Moreover, its importance has 
been judicially stressed on many occasions, most recently 
perhaps in Ofulue’s case [2009] 3 All ER 93, [2009] AC 990, 
where the House of Lords identified the two bases of the rule 
and held that communications in the course of negotiations 
should not be admissible in evidence……” 
 
In the case of Madhavrao Ganeshpani v. Gulabbhai Lallubhai [(1899) 
23 Bom. 177] it has been held that the use of the word “without 
prejudice” in a letter or document means that for the purpose of a 
discussion and the possibility for coming to a settlement, the writer 
would be frank but that what is said with that object in view shall not be 
used in evidence, if the object with which it was written fails and the 
dispute goes to a Court.  In [(1869) 10 Cal. WN 1 (25)] it was held that 
an admission made in a letter written “without prejudice” is not a 
Constitution Petition No.36 of 2016 
 
- 29 - 
 
binding admission. (see: The AIR Manual, Civil and Criminal, 6th Edition Vol.22). In the 
case of State Life Insurance Corporation of Pakistan Vs. Wali 
Muhammad Akbarji and others (1985 CLC 2870) it was observed as 
under:- 
“Any letter marked without prejudice during offers or 
propositions between litigating parties is excluded from 
consideration and cannot be treated as evidence.” 
 
In the judgment reported as Oceanbulk Shipping and Trading SA Vs. 
TMT Asia Ltd. (2012 SCMR 1112), it has been held as follows:- 
“In particular, in the Unilever case Robert Walker LJ (with 
whom Simon Brown LJ and Wilson J agreed) set out the general 
position with great clarity ([2001] 1 All ER 783 at 789-791 and 
796-797, [2000] 1 WLR 2436 at 2441-2444 and 2448-2449]. He 
first quoted from Lord Griffiths’s speech in Rush and Tompkins 
Ltd. v. Greater London Council, with which the other members of 
the appellate committee agreed. Rush and Tompkins Ltd. v. 
Greater London Council is important because it shows that the 
without prejudice rule is not limited to two-party situations or to 
cases where the negotiations do not produce a settlement 
agreement. It was held that in general the rule makes 
inadmissible in any subsequent litigation connected with the 
same subject-matter proof of any admissions made with a 
genuine intention to reach a settlement and that admissions made 
to reach a settlement with a different party within the same 
litigation are also inadmissible, whether or not settlement is 
reached with that party.” 
 
The same principal has been reiterated and fortified in various dicta of 
foreign as well as Pakistani jurisdiction reported as Superintendent 
(Tech.I) Central Excise, I.D.D.Jabalpur and others Vs. Pratap Rai 
(AIR 1978 SC 1244), M/s Tarapore & Company Vs. Cochin Shipyard 
Ltd., Cochin and another (AIR 1984 SC 1072), Chairman & M.D., 
Constitution Petition No.36 of 2016 
 
- 30 - 
 
N.T.P.C. Ltd vs MS. Reshmi Constructions, Builders & Contractors 
(AIR 2004 SC 1330), Pakistan Vs. Messrs Gulf Steamships Ltd. (PLD 
1961 (W. P.) Karachi 502), Pakistan Refinery Ltd. Vs. Mst. Shahida 
Sultan (1988 MLD 1150) and Qaid Jauhar Vs. Mst. Hajiani Hajra Bai 
(2002 CLC 551). 
 
Therefore in view of the above referred law, the admission on which 
much stress has been laid by the petitioner being inadmissible in 
evidence, cannot be used against the respondent even in these 
proceedings. Leaving aside the “without prejudice” aspect of the 
respondent’s letter, even otherwise it cannot be said that the respondent 
has made an unqualified admission of the violation of any provision of 
the said laws or commission of any offence or that the contents of the 
SECP’s letter dated 3.12.2007 were unequivocally admitted. It is settled 
law, that an admission has to be considered in the context in which it is 
made and read as a whole. It should not be bifurcated into parts with the 
‘admitting portions’ going against the party being taken into account 
whilst the parts qualifying the admission are ignored or disregarded. 
Reference in this regard may be made to the following passages from 
some renowned authors on the subject or the case law:- 
1. 
The whole statement containing the admissions must be 
taken together; for though some part of it may be favourable to 
the party, and the object is only to ascertain what he has 
conceded against himself, and what may therefore be presumed 
to be true, yet, unless the whole is received, the true meaning of 
the part, which is evidence against him, cannot be ascertained1. 
2. 
It is a general rule that the whole of the account which a 
party gives of a transaction must be taken together; and his 
admission of a fact disadvantageous to himself shall not be 
received, 
without 
receiving 
at 
the 
same 
time 
his 
                                       
1 Taylor puts it in his Law of Evidence (11th edition) Art. 725 at page 502 
Constitution Petition No.36 of 2016 
 
- 31 - 
 
contemporaneous assertion of a fact favourable to him, not 
merely as evidence that had made such assertion, but admissible 
evidence of the matter thus alleged by him in his discharge2.  
3. 
The admission must be taken as a whole and it is not 
permissible to rely on a part of the admission ignoring the other3. 
4. 
If an admission is in writing and if an opposite party 
wants to make use of that statement as an admission then the 
whole statement containing the admission must be taken together 
to ascertain what the party has conceded against himself. Unless 
the whole is received the true meaning of the part which is 
evidence against him cannot be ascertained. An admission unless 
it is separable has to be taken as a whole or not at all. If a 
statement is not capable of dissection because that particular 
part is inextricably connected with the other part then it must be 
read as a whole4.  
5. 
The statement made by an accused must be read as a 
whole and it is not open to the Court to dissect the statement and 
pick up a part of the statement which is incriminating and reject 
the part which is exculpatory5. 
 
Moreover there is no determination by the SECP holding the respondent 
guilty of violating the said laws; the SECP never prosecuted the 
respondent under Section 25 of the Ordinance, 1969 which reads as 
“Cognizance of offence.- No court shall take cognizance of any offence punishable 
under this ordinance except on a report in writing of the facts constituting the offence by 
an officer authorized in this behalf by the Commission; and no court inferior to that of a 
court of Session shall try any such offence” and obviously he has not been tried 
or convicted or punished for the commission of an offence of insider 
                                       
2 Archbold's Criminal Pleading, Evidence and Practice (Thirty-sixth Edition, page 423) 
3 Dudh Nath Pandey (Dead) By Lrs vs Suresh Chandra Bhattasali (Dead)  (AIR 1986 SC 1509) 
and  Nishi Kant Jha vs State Of Blihar (AIR 1969 SC 422) 
4 K.S. Venkatesh S/O K. Swamy Rao vs N.G. Lakshminarayana [ILR 2007 KAR 2894] = [2008 
(2) KarLJ 342] 
5 Koli Trikam Jivraj And Anr. vs The State Of Gujarat (AIR 1969 Guj 69) 
 
Constitution Petition No.36 of 2016 
 
- 32 - 
 
trading by the court of competent jurisdiction. (Note:- Section 15-E to which 
reference has been made by the petitioner in his petition was introduced by way of an amendment 
through Finance Act, 2008 dated 27.6.2008 meaning thereby that this cannot be retrospectively 
applied and the action would have been restricted to the provisions of Section 15-A and 15-B of 
the Ordinance, 1969). (Note:- If we otherwise hold that law to be a valid law). On account 
of the above, we are of the candid view that as the respondent was never 
proceeded against under the relevant provisions, adjudged or determined 
to be guilty of insider trading; prosecuted, convicted or punished, rather 
it seems that a settlement between the respondent and the SECP was 
effected to save the respondent, whereby the matter was closed by the 
latter against the former; thus to attribute dishonesty to the respondent 
on account of insider trading, after the lapse of around a decade, cannot 
be made the ground for his disqualification under Article 62(1)(f) of the 
Constitution. In the above circumstances the rule of past and closed 
transactions would come into play. We would also like to mention here 
that if a person has violated any law, especially a fiscal law and has 
made a misdeclaration or concealment to evade his tax liability or has 
committed the violation of any other law for which conviction and penalty 
in the nature of imprisonment or fine has been provided, the action 
should be strictly taken against such person in accordance with the 
provisions of that law, by the forum created and having jurisdiction 
thereunder; because Article 4 of the Constitution mandates “To enjoy the 
protection of law and to be treated in accordance with law is the inalienable right of 
every citizen”. It is also the foundational principle of jurisprudence that 
where a law requires an act to be done in a particular manner it has to 
be done accordingly. Therefore when a person is alleged (and not proven) to 
have violated some law in the past and is elected subsequently as a 
member of the Parliament, he cannot be held to be dishonest under 
Article 62(1)(f) (ibid) in quo-warranto proceeding. However if during the 
Constitution Petition No.36 of 2016 
 
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term of his office a member of the Parliament is declared by a forum of 
competent jurisdiction of having incurred a disqualification envisaged by 
the Article (ibid) he can be removed from the office by the superior Courts 
in the exercise of their quo-warranto jurisdiction. 
6. 
 
Coming to the question about the vires of Sections 15-A and 
15-B of the Ordinance, 1969 as introduced by the Finance Act, 1995 and 
the argument of the learned counsel for the respondent that being 
violative of the provisions of Article 70(2) of the Constitution the said 
sections are void ab initio and non-est, it may be held that the respondent 
has never challenged the said provisions through any independent 
proceedings at any stage. No challenge was made when the SECP issued 
the letter to the respondent, instead he promptly made the payment as 
demanded by the SECP. Even in the first concise statement filed by the 
respondent in these proceedings there was no challenge to the sections. 
It was only in the second concise statement that the vires of the law were 
challenged and at the time of oral submissions, the same was reiterated. 
We are conscious of the principle that there is no estoppel against law 
and that the point of law can be allowed to be raised at any stage of the 
proceeding and no valid structure can be built upon a foundation of the 
law which is void ab initio. No rights and liabilities can be created on the 
basis of such law. Even accepting the argument of the respondent’s 
counsel that the vires of law as held in the Sindh High Court Bar 
Association’s case (supra) can be challenged in collateral proceedings, yet 
it cannot be accepted that a person can be allowed to challenge a law 
which stands repealed and no longer exists on the statute book. Such an 
eventuality shall be covered and protected by the rule of past and closed 
transactions. Therefore, we are not inclined to declare the repealed law 
as ultra vires particularly on the touchstone of Article 70(2) and falling 
outside the purview of Article 73(2) of the Constitution when the 
Constitution Petition No.36 of 2016 
 
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provisions of Ordinance, 1969 and all the actions taken and the orders 
passed thereunder have been protected and validated and saved 
respectively by the Sections 177(13) and 178 of the Securities Act, 2015 
(Act, 2015) which read as under:- 
“177(13). 
Anything done, actions taken, orders passed, 
instruments made, notifications issued, proceedings initiated and 
instituted, prosecutions filed, processes or communications issued 
and powers conferred, assumed or exercised by the Commission 
under the Securities and Exchange Ordinance, 1969 (XVII of 
1969) and the Listed Companies (Substantial Acquisition of Voting 
Shares and Take-Overs) Ordinance, 2002 (CIII of 2002), shall, on 
the coming into operation of any provision of this Act, be deemed 
to have been validly done, made, issued, taken, initiated, 
conferred, assumed and exercised and every action, prosecution or 
proceeding instituted and every order, directive, notification, 
circular, code, guidelines etc. issued by the Commission shall be 
deemed to have been initiated, instituted or issued under this Act 
and shall be proceeded with to completion and be enforced and 
have effect accordingly. 
178. Repeal and savings. --- (1) The enactments specified in the 
Schedule to this Act are hereby repealed to the extent mentioned in 
the fourth column thereof.  
 
(2) 
Notwithstanding the repeal of any enactments by 
this section,  
 
(a) 
any notifications, rules, regulations, bye-laws, 
orders or exemption issued, made or granted under any such 
enactment shall have effect as if had been issued, made or granted 
under the corresponding provision of this Act;  
 
(b) 
any official appointed and anybody elected or 
constituted under any such law shall continue and shall be deemed 
to have been appointed, elected or constituted, as the case may be, 
under the corresponding provision of this Act;  
 
(c) 
any document referring to any enactment hereby 
repealed shall be construed as referring, as far as may be, to this 
Act, or to the corresponding provision of this Act;  
Constitution Petition No.36 of 2016 
 
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(d) 
mortgages recorded in any register book maintained 
at any office under any enactment hereby repealed shall be deemed 
to have been recorded in the register book maintained under the 
corresponding provision of this Act;  
 
(e) 
any licence, certificate or document issued made or 
granted under any enactment hereby repealed shall be deemed to 
have been issued, made or granted under this Act and shall, unless 
cancelled in pursuance of the provision of this Act, continue in 
force till the date specified in the certificate or document.” 
 
This is the Act of the Parliament on which no objection of invalidity has 
been raised for any reason whatsoever, thus to our clear understanding 
the Act, 2015 has not only saved the action(s) and order(s) passed under 
the Ordinance, 1969 but has also validated the defects of incorporation 
of Sections 15-A to 15-E of the Ordinance, 1969 through Finance Acts on 
the touchstone of Article 70(2) (ibid). If these provisions are declared to be 
void in these proceedings, it shall mean that all actions taken and orders 
passed against any person shall stand invalidated, with the consequence 
that the respondent shall also be able to wriggle out of his offer and 
demand back the money which he has paid to the SECP. But, as the 
insider trading is prohibited under the Act, 2015, constituting an offence, 
we can always direct the SECP to reopen the matter against the 
respondent and to proceed against him afresh. This is where the rule of 
past and closed transactions shall not come to his rescue. In light of the 
above the plea of the respondent with respect to the ultra vires of the 
assailed provisions is dismissed. However in view of the above 
discussion, we do not find that the respondent can be declared to be 
dishonest in terms of Article 62(1)(f) of the Constitution. 
OFF-SHORE COMPANY - TRUST (Proposition No.2): 
(That Respondent No. 1 has publically admitted that his children own off-shore 
company for conducting business and holding properties in United Kingdom coupled 
with fact that he receives huge sums of money from his children thus demonstratively 
making him the beneficial owner of the business and properties in United Kingdom 
Constitution Petition No.36 of 2016 
 
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which he has failed to disclose in his tax returns or in the statements of assets and 
liabilities before Election Commission of Pakistan thus making him not qualified to 
contest the election of, or being a member of Parliament by virtue of the provisions of 
Article 62(1)(f) of the Constitution of Islamic Republic of Pakistan.) 
 
7. 
 
In brief it is the case of the petitioner that the respondent 
has established an off-shore company(ies), which has assets. The 
company(ies) and the assets have not been disclosed/ declared by him in 
the statement of assets and liabilities filed with his nomination papers 
and/or in his tax returns (wealth statements). This is violative of Section 12(2) 
of ROPA and the provisions of the Income Tax Ordinance, 2001 (Ordinance, 
2001); reference in this regard is made to Section 192 of the Ordinance 
ibid which provided for an offence, prosecution, conviction and 
punishment. The reason for not mentioning the name of such company 
or the asset(s)/property(ies) owned by it in the petition is that the 
petitioner was/is not aware of the particulars in this behalf; as these 
facts  were exclusively in the knowledge of the respondent. It was not a 
publicly known fact and given the secretive manner and the object for 
which such companies are created it is almost impossible for a common 
man in Pakistan to attain knowledge of the same. However, from the 
contents of the petition and the documents attached thereto, it seems 
that the petitioner took up this plea on the basis of the media report 
titled “PTI’s Tareen finally admits owning off-shore company in children’s name” (see 
pages 11 to 14 of the petition). In his concise statement, the respondent did not 
specifically deny this allegation. Instead, he made an evasive reply in 
certain respects, which in law can always be considered as an admission 
of fact made in the written statement. Whereas the extent to which the 
respondent made an unequivocal and unqualified admission shall be 
highlighted below. The contents of the reply (concise statement) of the 
respondent are quite striking, thus it is advantageous to reproduce 
paragraph No.2(v) thereof “the Answering Respondent voluntarily and in good faith 
Constitution Petition No.36 of 2016 
 
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disclosed to the public that: (a) his independent children are the beneficiaries under a 
trust arrangement in an off-shore company; (b) all of the funds, constituting statutory 
income tax paid income in Pakistan, for settlement and establishment of the said trust 
were duly remitted through official banking channels in accordance with applicable law; 
(c) the Answering Respondent himself has no beneficial interest therein and is simply the 
settlor of the trust in question; (d) there is no legal or mandatory requirement for a 
settlor to make any disclosure in any nomination form, or income tax return or wealth 
statement under applicable law since, inter alia, the same do not constitute any asset or 
liability of the Answering Respondent personally; and (e) the independent children of the 
Answering Respondent have at all material times been disclosing the beneficial interest 
in the trust in their statutory wealth statements submitted under Section 116 of the 
Income Tax Ordinance, 2001 (“2001 Ordinance”) regarding which the tax authorities 
have never raised any question or dispute whatsoever to date” (emphasis supplied by us). 
From the above, it is clear that the respondent admitted to the existence 
of an off-shore company; its disclosure to the public; but with the note of 
caution that it is his children who are the beneficiaries of the company 
through some trust arrangement, the funds to create and finance the 
company are acknowledged to have been provided by the respondent, on 
which according to him, income tax was paid and the same were sent 
through official banking channels. Most importantly it is categorically 
and unequivocally stated that “the Answering Respondent himself has no 
beneficial interest therein and is simply a settlor of the trust in question” (emphasis 
supplied by us). However, most significantly, certain information was 
withheld: the name of the company; how and when it was created, who 
established the same, where it was incorporated, who are the 
shareholders, what is the management setup thereof; what properties 
(assets) are owned by such company; and what is the nature of the trust 
arrangement. This vital information remained behind a fug of obscurity. 
However, as the proposition was crucial in nature and once the initial 
Constitution Petition No.36 of 2016 
 
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information was laid before the Court by the petitioner and in view of the 
reply of the respondent (described above), this Court on its own, while 
exercising its inquisitorial authority, pressed the respondent to provide 
the particulars about the (off-shore) company with full details in all 
respects. As in the circumstances of this case, according to the 
provisions of Article 122 of the Order, 1984 which mandates that “Burden 
of proving fact especially within knowledge: When any fact is especially within the 
knowledge of any person the burden of proving that fact is upon him”, the burden to 
prove the above fact was upon the shoulders of the respondent. In this 
context it is to be noted that in the judgment reported as Abdul Karim 
Nausherwani and another Vs. The State through Chief Ehtesab 
Commissioner (2015 SCMR 397) it was held that the burden of proving 
a circumstance/fact that is especially within the knowledge of a person is 
for him to establish and failing to do so the absence of the same is to be 
presumed (Articles 119, 121 and 122 of the Order, 1984). The ratio of the 
judgment Saeed Ahmed Vs. The State (2015 SCMR 710) is that Article 
122 of the Order, 1984 stipulates that if a particular fact is especially 
within the knowledge of any person the burden of proving that fact is 
upon him. In the judgment reported as Mst. Kamina and another Vs. 
Al-Amin Goods Transport Agency through L.Rs and 2 others (1992 
SCMR 1715) it was enunciated that Article 122 of the Order, 1984 
envisages that when any fact is especially within the knowledge of any 
person the burden of proving that fact is upon that person. In State of 
Rajasthan vs. Kashi Ram [(2006) 12 SCC 254] it was held that the 
principle is well settled; the provisions of Section 106 of the Evidence 
Act, 1872 (pari materia with Article 122 of the Order, 1984) itself are 
unambiguous and categoric in laying down that when any fact is 
especially within the knowledge of a person, the burden of proving that 
fact is upon him. This case was relied upon with approval in the case of 
Constitution Petition No.36 of 2016 
 
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Sathya Narayanan vs State rep. by Inspector of Police [(2012) 12 
SCC 627]. Consequently when required by the court to discharge that 
burden it is for the first time that the respondent filed CMA 
No.5574/2017 on 8.8.2017 (after 8/9 months of his filing the concise statement to the 
petition) through which he simply placed on the record certain documents 
(which shall be discussed later). Even at this stage he did not clarify his stance 
through a written version/statement, as required by the law, (Note:- except 
in the course of oral submissions and the written arguments submitted at the conclusion of the 
case where some explanations were tendered). Be that as it may, from these 
documents it transpired that the name of the off-shore company is Shiny 
View Limited (SVL) incorporated in British Virgin Islands (Jersey) on 
27.4.2011. It is not clear again as to who created it, who is (are) the 
shareholder(s), what is the management structure of the company. 
However, along with this CMA a self-prepared statement of accounts has 
been filed showing that an amount of £2,295,000 was remitted by the 
respondent through eleven cheques from his foreign currency account 
No.1242-0000-1899-12 maintained with HBL (Pakistan) to his own Payee 
Account (HBL) in the UK. This was done during the period from 
15.12.2010 to 5.5.2011. However no corresponding credit entry for such 
amounts has been proved through the bank statement of the 
respondent’s bank account abroad. And its further utilization and 
disbursement has not been established through any document by the 
respondent. One of such cheques dated 15.12.2010 is scanned as 
under:-  
 
 
 
 
 
Constitution Petition No.36 of 2016 
 
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(Note:- All other cheques from pages 90 to 100 of CMA 
No.5574/2017 of a similar nature perhaps having different amounts 
have been placed on the record). 
 
Another cheque dated 25.5.2011 (at page 100 of the CMA) amounting to 
£250,000 is the remittance by the respondent to SVL. From the record it 
appears that the same was sent after the purchase price of £2,100,000 of 
the 12 acres of land (with old structure) named Hyde House situated at Hyde 
Lane, Ecchinswell, Hampshire RG20 4UN was made over to the owner on 
10.5.2011. The sale was registered in HM Land Registry on 15.8.2011 in 
the name of SVL as proprietor. It has not been established till this point 
that SVL or its property is held under any trust arrangement. The cheque 
is scanned as below:- 
 
 
 
 
 
 
 
Another amount of £500,000 was remitted by the respondent to SVL and 
to prove this remittance reliance has been placed upon respondent’s 
bank statement and the cheque of the said amount dated 12.3.2012 
which is scanned as under:- 
 
 
Furthermore, amounts of $400,000, $300,000 and $400,000 were 
remitted by the respondent to SVL vide cheques dated 8.11.2013, 
Constitution Petition No.36 of 2016 
 
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11.12.2013 and 26.3.2014 respectively from his US dollar account 
maintained with HBL (Pakistan). One of the cheques dated 8.11.2013 is 
scanned as under:- 
 
 
 
 
 
 
It is not clear as to who had opened or was operating the bank account of 
SVL abroad. As mentioned earlier SVL was incorporated on 27.4.2012 
and the incorporation certificate (which appears on page 111 of CMA No.5574/2017), 
is scanned as under:- 
 
 
 
 
 
 
 
 
 
From this certificate of incorporation it is not possible to establish the 
identity of the shareholder(s) or the Director(s) of the SVL, but at page 
112 of the noted CMA, an unattested copy of SVL Register of Members as 
on 26.7.2017 has been placed, showing the authorized capital of the 
Company as £50,000, issued share as 1 (one) with par value of 0 (zero) 
and the shareholder as EFG Nominees Limited. Statedly the share was 
issued on 17.11.2014. Though the par value of the share is shown to be 
Constitution Petition No.36 of 2016 
 
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0 (zero), but if it is considered to be for the full value of the authorized 
capital of the company and it was purchased by EFG Nominees Limited 
for the same value; the unanswered question remains, who originally 
paid this amount, when and how? The copy of the above document is 
reproduced below:- 
 
Before proceeding further it may be pointed out that the entire amount 
which has been remitted by the respondent from time to time to his own 
account abroad is £2,295,000; to SVL £750,000 and $1,100,000 as per 
the exchange rate prevalent at that time this was equivalent to a total of 
around Rs.532,354,000/- (fifty three crores, twenty three lacs and fifty four 
thousand only). According to the learned counsel this is the money (money 
trail) with which Hyde House (with old structure) was purchased and part of 
the construction cost and other ancillary charges were met. The price of 
the land was £2,100,000; stamp duty £105,000; registration fee £920 
and £18,539.99 were paid as handling charges to Thomas Eggar (perhaps 
an estate agent), the total amount for the purposes of Hyde House (old 
structure) being £2,224,459.99. For the new construction and development 
of Hyde House by SVL c/o EFG Trust Company Limited (see page 121 of CMA 
No.5574/2017) £2,525,018.73 were spent in addition.  In this regard a self-
prepared statement has been placed on the record. According to this, a 
loan was arranged from EFG Private Bank Limited by creating a charge 
dated 23.7.2015 over the property, but the amount of loan has not been 
Constitution Petition No.36 of 2016 
 
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disclosed. It is also not established when the loan was procured or 
granted. (Note:- It is also not clear if the loan was procured by the EFG Nominees Limited, 
SVL or the respondent). It is argued by the learned counsel for the respondent, 
that the current shareholder [one share of par value 0 (zero)] and Directors of 
the SVL are “EFG Nominees Limited” and according to HM Land Registry, 
the Hyde House is legally owned by SVL. (In this behalf reliance has been placed 
upon documents i.e. official copy of register of title at pages 115 to 119 of CMA No.5574/2017). 
It is also submitted that the above company (EFG Nominees Limited) is 
held/nominated by “EFG Trust Company Limited”. The entire amount 
for the purchase of the property was borne by the respondent in the 
manner stated above which amount was sent through proper banking 
channels either to his own account (subsequently transferred to the SVL or to the 
seller of the property or the alleged trust. This aspect remains absolutely unexplained and 
unclear) or the account of SVL. It may be relevant to mention here that in 
this CMA a copy of Register of Directors of SVL dated 26.7.2017 has been 
filed (Client Register of Directors EFG Offshore on page 113 of CMA No.5574/2017) which 
has three vertical columns; according to the first column the current 
Director of SVL is EFG Nominees Limited, the date of appointment being 
17.11.2014. The former name of the above entity was “EFG Reads 
Nominees Limited” and prior thereto its name was “Pelican Limited”. In 
the second column the name of the Director of SVL is “EFG Trust 
Company Limited”, the date of appointment again being 17.11.2014, the 
former name/previous name was “EFG Reads Trust Limited”, the 
previous name whereof was “Reads Trustees Limited” and prior thereto 
the name was “Pelican Trustees Limited”. This document is scanned as 
follows:- 
 
Constitution Petition No.36 of 2016 
 
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It may be expedient to mention here that the name of no trust or trustees 
particularly “HSBC GUYERZELLER TRUST COMPANY” finds mention in 
the above document. Despite the repeated verbal directions of the Court 
on many occasions the “arrangement of trust” as mentioned in the 
concise statement of the respondent was not filed (not with this CMA 
No.5574/2017). It was only on the clear command of this Court apprising the 
respondent’s counsel about the consequences of the failure to do so, that 
the needful was belatedly done; and through CMA No.8187/2017 dated 
2.11.2017 a copy of the document (the settlement) attested by some 
Constitution Petition No.36 of 2016 
 
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“Authorized Signatory” of EFG Wealth Solutions (Jersey) Limited was 
submitted. And on the basis thereof, which is purportedly executed on 
5.5.2011 between the respondent (settlor) and HSBC GUYERZELLER 
TRUST COMPANY (the original trustee) (hereinafter referred to as HSBC) the counsel 
for the respondent has argued that this is the “Trust Arrangement” under 
which SVL and the Hyde House is held by the afore-named trustee i.e. 
“EFG Nominees Limited” which is the nominee of the “EFG Trust 
Company Limited” the present trustee of SVL and its property, and this 
is an irrevocable discretionary trust created by the respondent. The 
discretionary lifetime beneficiaries (i.e. the respondent and his spouse) or the 
beneficiaries (hereinafter discretionary beneficiaries) under the trust are the 
persons specified in Schedule III and IV thereof (the settlement), who have no 
legal or beneficial ownership or interest in the assets held by the trust 
through SVL (i.e. Hyde House). According to the English law and the law in 
force in Cayman Islands (which is the governing law of the Settlement as per clause 14) 
and the British Virgin Islands (where SVL was incorporated) in the matter of a 
discretionary trust, no person shall have any outright beneficial 
ownership so long as the trust property remains under the absolute 
discretionary control and powers of the trustee in such trust. And the 
individuals who are listed as discretionary beneficiaries, do not have any 
formal, legal or beneficial ownership of any assets in such trust. Instead, 
according to the trust of this nature, the discretionary beneficiaries have 
a mere hope of being considered for receiving benefits from the trustees 
in the exercise of their discretion whenever such benefit accrues. Even if 
a settlor is a discretionary beneficiary of such a trust, he cannot be said 
to have any defined beneficial interest or the ownership in the trust 
assets/property, for so long as he remains only one of a class of the 
discretionary beneficiaries. In this regard reliance has been placed upon 
a judgment from the House of Lords reported as Gartside Vs. Inland 
Constitution Petition No.36 of 2016 
 
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Revenue Commissioners (1968 AC 553). The relevant part whereof is 
reproduced as under:- 
“No doubt in a certain sense a beneficiary under a discretionary 
trust has an “interest”: the nature of it may, sufficiently for the 
purpose, be spelt out by saying that he has a right to be 
considered as a potential recipient of benefit by the trustees and 
a right to have his interest protected by a Court of Equity. 
Certainly that is so, and when it is said that he has a right to have 
the trustees exercise their discretion “fairly” or “reasonably” or 
“properly” that indicates clearly enough that some objective 
consideration (not stated explicitly in declaring the discretionary 
trust, but latent in it) must be applied by the trustees and that the 
right is more than a mere spes. But that does not mean that he 
has an interest which is capable of being taxed by reference to its 
extent in the trust fund’s income: it may be a right, with some 
degree of concreteness or solidity, one which attracts the 
protection of a Court of Equity, yet it may still lack the necessary 
quality of definable extent which must exist before it can be 
taxed.” (per Lord Reid). 
As has been stated above, for the purposes of laying down the foundation 
of his stance/defence in relation to the trust and off-shore company SVL, 
no written version in the form of a reply (pleadings) was ever filed by the 
respondent which was expedient, however the learned counsel for the 
respondent made oral submissions explaining and attempting to connect 
the documents with respondent’s plea that SVL and its asset, Hyde 
House, is held in trust by EFG Nominees Limited, which is the nominee 
of EFG Trust Company Limited. In addition, he has given to the Court 
his written submissions and we find it expedient to reproduce the same, 
to better comprehend the stance of the respondent in this regard:- 
“1(a) Legal & Factual Background: 
(i) 
There is a residential property in England (Hyde House) 
which, in substance, is held under a trust arrangement 
Constitution Petition No.36 of 2016 
 
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through an “Irrevocable Discretionary Trust”. (The deed 
of “Settlement” is at page2-38 of CMA 8187). 
(emphasis supplied by us) 
(ii) 
Legally, the residential property is owned by Shiny View 
Limited (SVL), a company incorporated in the British 
Virgin Islands on 27-4-2011 under the BVI Business 
Companies Act, 2004. Therefore, SVL is not an ‘asset’ of 
Respondent No.1. 
(emphasis supplied by us) 
(iii) 
The one and only issued share of SVL is held by and in 
the name of EFG Nominees Limited (of Jersey) which is 
the nominee of the Trustee for the Trust. (This is 
established by the Register of Members of SVL @ page 
112 of CMA 5574). The Trustee is EFG Trust Company 
Limited which itself sits on the Board of Directors of the 
SVL as a Director along with its nominee EFG Nominees 
Limited. (This is established by the Register of Directors 
of SVL @ page 113 of CMA 5574/2017). Accordingly, the 
entire share capital of SVL is owned and controlled by or 
on behalf of the Trustee and the SVL (which is the 
registered proprietor of the Hyde House) is owned, 
managed and controlled by the Trustee as it occupies the 
Board of Directors and the issued share capital of SVL is 
held by the nominee of the Trustee. In the entire scheme 
of ownership and management of SVL as shown above 
the Respondent No. 1 is neither named nor has any other 
reportable ownership or nexus. The ownership and 
management of SVL vests in the Trustee and not 
Respondent No.1. ……………………… 
1(b) 
Consequence and Legal Submission 
(i) 
Accordingly, applying the above to the Respondent No. 1, 
since he has no legal or defined beneficial interest in the 
asset in question (i.e. the residential property) nor the 
share of SVL (which is held by the nominee of the 
Trustee), there is no “asset” to be reported or disclosed 
in his nomination papers, tax returns or returns filed with 
the ECP. Hence, there has been no violation of Section 
Constitution Petition No.36 of 2016 
 
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12(2) or 42A of the 1976 Act nor any other concealment 
under Article 62(1)(f) or otherwise is warranted against 
the Respondent No. 1. 
(ii) 
On the contrary, even though strictly not required to, the 
“share in the trust” equivalent to the remittances sent to 
fund SVL/the Trust is being disclosed in Pakistan in the 
Wealth Statements of the four children of the Respondent 
No.1, the ultimate intended beneficiaries. 
(iii) 
Moreover, the entire money trail of the monies which 
funded the Trust (which is the legitimate and disclosed 
income and wealth of the Respondent No.1) has been 
furnished in CMA 5574. 
(iv) 
There is no issue or even pleaded allegation of ‘assets 
beyond disclosed or known means’ and the acquisition of 
the property is funded through monies remitted through 
official banking channels from Pakistan by the 
Respondent No. 1 as Settlor. 
(v) 
Discretionary Trusts are well recognized in English law 
and the conceptually the same is also consistent with the 
(Pakistan) Trusts Act, 1882.” 
8. 
 
This is the sum total of the respondent’s case in relation to 
the off-shore company (SVL); that it is held by the trustee. Nowhere in the 
above written submissions has any reference been made to HSBC. 
Rather a clear impression has sought to be created that “EFG Trust 
Company Limited” is the trustee of SVL and the Hyde House despite the 
fact that the deed of settlement attached with CMA No.8187/2017 is 
between the respondent (settlor) and HSBC (the original trustee). But from the 
documents referred to above as also the arguments made by the 
respondent’s counsel it is absolutely unclear that amounts which were 
sent by the respondent through banking channels to his own account 
were ever transferred to the SVL or the trustees for the purchase of Hyde 
House. Nor was it clarified who opened and operated the account of SVL 
Constitution Petition No.36 of 2016 
 
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and how the amounts sent to the account of SVL were utilized (Note:- as 
mentioned above this was the exclusive burden of the respondent) apart from a vague 
statement made by him stating that he assumes that the SVL account is 
with EFG Trust Company Limited, although he categorically added that 
he could not confirm such statement. However, it is the unequivocal case 
of the respondent that SVL and the said trust were created by him. No 
document was placed on the record to show that at the time of the 
creation and incorporation of SVL who were the shareholder(s) and 
Director(s) of the company. Again, it remains unproved that the purchase 
price of the Hyde House and construction costs thereof were borne by the 
respondent or SVL with the monies sent by him. Be that as it may, there 
is no dispute with respect to the fact that it was the respondent who 
selected and took the decision to purchase Hyde House; the respondent 
had the absolute and exclusive power and authority to take all decisions 
about the nature of construction; the approval of the design, besides the 
architect and the builder were of the respondent’s choice. All the 
decisions and the actions regarding SVL and Hyde House in all respects 
were the absolute and exclusive privilege and prerogative of the 
respondent. It is emphatically argued on respondent’s behalf that SVL is 
the legal owner of the Hyde House but when specifically asked who in 
this situation is the beneficial owner, the respondent’s counsel was 
unable  to convince us that even in these peculiar circumstances the 
beneficial ownership vests in SVL. However he then went on to argue 
that as SVL is held by the trust i.e. EFG Nominees Limited which is the 
nominee of EFG Trust Company Limited, therefore, the respondent has 
lost his beneficial ownership and interest, rather despite the fact that the 
respondent is the beneficiary of the trust along with his status as a 
settlor he cannot be held to be the beneficial owner of Hyde House. In 
this regard the contents of the respondent’s written arguments are 
Constitution Petition No.36 of 2016 
 
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reproduced “Legally, the residential property is owned by Shiny View Limited (SVL), a 
company incorporated in the British Virgin Islands on 27-4-2011 under the BVI Business 
Companies Act, 2004. Therefore, SVL is not an ‘asset’ of Respondent No.1.”. It is also 
mentioned therein “There is a residential property in England (Hyde House) which, 
in substance, is held under a trust arrangement through an “Irrevocable Discretionary 
Trust”. (The deed of “Settlement” is at page2-38 of CMA 8187)”. It is thus clear 
that from the respondent’s point of view that EFG Nominees Limited (who 
are the nominees of EFG Trust Company Limited) have exclusive shareholding of SVL 
and being the nominee of the latter, SVL and its property Hyde House, 
being a trust property for all intents and purposes, EFG Trust Company 
Limited is the ultimate trustee of the trust in which SVL and the Hyde 
House vests. The learned counsel for the respondent did not contend 
that EFG Nominees Limited or EFG Trust Company Limited had the 
power and the authority vested in the alleged shareholder and Directors 
of SVL to create a trust for SVL or its property; or that a trust of the SVL 
and of Hyde House had in fact has been created by the said company or 
the trustees or that this was legally permissible in the given facts and 
circumstances of the case. Instead he unequivocally avowed that the 
trust was created by the respondent and he is the exclusive settlor 
thereof. We have no reasons to discard this assertion; however the 
consequence of the above has to be taken into consideration. As 
mentioned above, if the respondent claims to be neither the legal nor the 
beneficial owner of SVL and its property, then by the same token, how 
come and under what authority, power and right, could the respondent 
be a settlor of that property and create a trust with regard to which he 
has no right or interest of any nature at all. In other words the question 
is, whether he could give SVL and its property to a trust, the answer is in 
the negative, because when the respondent as mentioned earlier 
according to the respondent’s own case was not the owner of the 
Constitution Petition No.36 of 2016 
 
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property either legally or beneficially, therefore he could not transfer as 
settlor the property to the trust and, therefore, no valid trust of Hyde 
House was created by him. And if EFG Trust Company Limited is 
removed from this scenario, then obviously the SVL as per the record of 
HM Land Registry of the UK is the legal owner of the property. And in 
such circumstances the respondent for all intents and purposes was/is 
the actual, real, true and beneficial owner. It may be pertinent to 
mention here that when specifically questioned by the Court, the 
respondent’s counsel responded that the trustee is EFG, which is a 
private bank and a corporate entity which was nominated as trustee. But 
he never clarified exactly who nominated EFG. In his oral submissions at 
one point of time the respondent’s counsel made particular reference to 
“The Settlement” and stated that trust arrangement was held under 
HSBC Bank which was then transferred to the EFG. But this is all verbal 
jugglery. No foundation for this stance was laid down in the pleadings. 
No document was filed though repeatedly so required by the Court. 
Interestingly at one point during his arguments the respondent’s counsel 
asserted “the trust bought a plot with a house” which was demolished and a 
loan was obtained from EFG Private Bank Limited to fund the 
construction cost. He admitted that the mortgage payments were made 
by SVL but were funded by the respondent as he could send funds to 
SVL to pay off the said mortgage. Again no proof exists on the record of 
the following; of the mortgage, when it was made, with whom, what was 
the amount of the loan, when the loan amount was sent by the 
respondent for the redemption of mortgage, whether the mortgage was 
created before as is recorded in the land register and the amount was 
paid afterwards, because according to the record placed before us the 
last payment sent by the respondent was on 26.3.2014 whereas the 
charge over Hyde House was created on 23.7.2015. It may not be out of 
Constitution Petition No.36 of 2016 
 
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place to mention here even at the cost of repetition that it is not denied 
that the respondent selected the Hyde House and took the decision to 
purchase the same. The physical possession of the Hyde House before 
and after its construction remains with the respondent. The usufruct 
also has been and remains with the respondent. It is not the 
respondent’s case that refurbishing and furnishing of the house has been 
undertaken by the trust. It is not controverted that the Hyde House was 
never rented out by the respondent or even by the so-called trustee. It is 
being maintained and all the utility charges and other charges and the 
taxes etc. are being borne by the respondent. It is also mentioned in 
clause 19 of “The Settlement” that the fee of the trustees shall be paid by 
the respondent (settlor) which means that the alleged trustees are not 
working free of cost, but for consideration perhaps as agents or in a 
status akin thereto at the behest and on behalf of the respondent. 
Therefore without going into the question of whether the trust 
arrangement made through “The Settlement” is discretionary or otherwise 
in nature and even if we accept that it has been executed between the 
persons named in “The Settlement” (it bears mention that this is not a registered 
document), yet the question still remains whether according to the settled 
principles of the trust law from the foreign jurisdiction and under Trust 
Act, 1882 of Pakistan (on which the learned counsel for the respondent has placed 
reliance in his written arguments) it is unequivocal that for the purposes of a 
valid trust, three conditions are essential and must co-exist and in the 
absence of any one condition, no valid trust would come into existence. 
These conditions are also known as THREE CERTAINTIES OF THE 
TRUST and are as follows (i) it is necessary that the settlor demonstrates 
that a trust was intended and its purpose; (ii) demarcates the property 
that is to be the subject of that trust and (iii) identifies who are the 
beneficiaries of the trust.  
Constitution Petition No.36 of 2016 
 
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9. 
 
As regards the first condition, we do not intend to go into the 
question of whether the respondent intended to create a trust by virtue of 
“The Settlement” as it is argued by his counsel that the intention behind 
the creation of the trust was to keep the “trust property” (Note:- whatever that 
property was) intact and for the future enjoyment of his progeny after the 
demise of the respondent. In other words, a clog on the disposal of the 
property was put during the period of trust i.e. 150 years in this case. 
Suffice it to say that it is not a charitable or a religious trust or a trust 
meant for the benefit of a class such as orphans; disabled persons; the 
old, sick or infirm; meant for any hospital or medical purposes; poor 
workers; affectees of any calamity such as a flood or earthquake. For all 
intents and purposes “The Settlement” relied upon by the respondent is a 
private trust of which the respondent and his spouse are the 
“discretionary lifetime beneficiaries” and after respondent’s lifetime (i.e. 
settlor’s), his spouse and progeny are the discretionary beneficiaries during 
the trust period. In such a situation it can always be considered by the 
court whether the intention is/was fictitious; although the express 
declaration of trust should be taken as conclusive. However, this rule 
gives way where the intention to create the trust is palpably false i.e. 
where a sham trust has been created. When it is regarded as a sham the 
trust must fail, and the property should revert to the settlor. This might 
occur, for example, where an individual attempts to siphon off and hide 
his money in an off-shore trust based in the Channel Islands while 
maintaining control and beneficial ownership of those funds6, for 
instance in Rahman v. Chase Bank Trust Co. Ltd.7 it was held that the 
settlor retained total control over the trust funds and, therefore, could 
never have genuinely intended to set up a trust. The court, in such 
                                       
6 Michael Haley and Lara McMurtry, “Equity and Trusts” 2nd Edition 2009, Section 2.09 of Chapter 2 on 
page 37. 
7 [1991] J.L.R. 103 (a Jersey case) 
Constitution Petition No.36 of 2016 
 
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circumstances, will look at the reality and substance of the purported 
transaction and a trust that at face value appears perfectly valid may be 
set aside if it is a sham trust or an illusory trust, i.e. if the settlor in 
essence retained the full beneficial interest and did not pass any interest 
in the property to the proclaimed trustee, the “trust” is a mere fiction and 
a pretence. In this case, as this point was not agitated by the petitioner 
and we were unable to get adequate assistance, we would not express 
our opinion any further. 
10. 
 
The second essential of the trust is the subject (subject matter) 
of the trust which in the present case could either be SVL which is the 
legal title holder of the Hyde House as claimed by the respondent’s 
counsel or the property itself (i.e. Hyde House). Learned counsel for the 
respondent in his written submissions has stated that the one and the 
only issued share of SVL is held by, and in the name of EFG Nominees 
Limited (of Jersey) which is the nominee of the “trustee of the trust”. This, 
according to the learned counsel is established from the Register of 
Members of SVL (at page 112 of CMA No.5574/2017). The trustee is EFG Trust 
Company Ltd. which itself sits on the Board of Directors of SVL as 
Director along with its nominee EFG Nominees Limited. This he urged is 
fortified by the Register of Directors of SVL (at page 113 of CMA No.5574/2017). 
Accordingly, the entire share capital of SVL is owned and controlled by or 
on behalf of the trustee and SVL which is the registered proprietor of 
Hyde House, which is in turn owned, managed and controlled by the 
trustee of SVL i.e. held by the nominees of the trustee. It is pertinent to 
mention here that the word “trustee” appearing in the written arguments 
has not been elaborated, rather from the syntax of these submissions the 
trustee is “EFG Trust Company Limited” and its nominee is “EFG 
Nominees Limited”. It may be mentioned that in his oral submissions in 
this regard and also in the written arguments the respondent’s counsel, 
Constitution Petition No.36 of 2016 
 
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he made reference to “The Settlement” dated 5.5.2011. Therefore it is 
necessary to ascertain as to who is the trustee in this case and whether 
SVL or the Hyde House has been entrusted to that trust or trustee and 
by whom and when and through which mechanism this was done. “The 
settlement” for this purpose as mentioned above has been relied upon by 
the respondent. It is named “THE RANDOM TRUST”. Respondent is the 
settlor and HSBC GUYERZELLER TRUST COMPANY of West Bay Road, 
Grand Cayman, Cayman Islands is the trustee. The most important 
aspect in this regard is that the trust property or the trust fund is Pound 
Sterling 100. This is clearly mentioned in “The Settlement” that “(A) The 
Settlor covenants on the execution of this deed to pay the trustee the sum of Pound 
Sterling 100 to be held by the trustees upon the following trusts and with and subject to 
the following terms and conditions ……… (B) It is contemplated that further property 
may be transferred to be placed under the control of the trustees by way of additions to 
the trust funds”. 
11. 
 
We have gone through “The Settlement” and failed to find 
when or how under this document SVL or “Hyde House” were ever 
transferred to HSBC GUYERZELLER TRUST COMPANY (Note:- the respondent 
was not the shareholder of the SVL so he could not be a settlor for such share which he does/did 
not own in order to create a trust:- He as a beneficial owner has not transferred the Hyde House 
to any trust. It is not the case of the respondent that the shareholder of SVL i.e. or the Director of 
the trust or for that matter the EFG Trust Private Limited has given the trust to itself). The 
respondent has also not provided/shown to us, as repeatedly mentioned 
above, in his written statements (in the manner of pleadings) if “Hyde House” 
was subsequently transferred or entrusted to the trustee named in “The 
Settlement” by any other document or mechanism. No date of transfer or 
the entrustment and particulars to prove the same have been brought on 
the record in this behalf or even mentioned by the respondent’s counsel. 
It is the case of the respondent that in fact EFG Trust Company Limited 
Constitution Petition No.36 of 2016 
 
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is the trustee of the SVL, the proprietor of the Hyde House (emphasis 
supplied). It is not pleaded, shown, established or proved on the record 
that EFG Trust Company Limited was ever appointed by the respondent 
as the trustee under “The Settlement” or any other trust deed. In fact, it 
is not the stance of the respondent that EFG Trust Company Limited 
legally or factually took over the HSBC, the original trustee, under some 
deed, contract or legal arrangement and the EFG Trust Company Limited 
or EFG Private Bank Limited by operation of law became the trustee of 
SVL and thus the Hyde House. It is not even the case of the respondent 
that HSBC as its nominee or agent under clause 12 of “The Settlement” 
or clauses 19 or 20 or 21 of the document has conferred any power or 
authority on “EFG Private Bank Limited”, “EFG Trust Company Limited” 
or “EFG Nominees Limited”. Despite our repeated queries and probe no 
satisfactory answer was forthcoming from the respondent’s side in this 
behalf. Therefore we are of the firm opinion that neither the SVL nor 
Hyde House were a trust property under “The Settlement” or any other 
document so far on the record. Moreover from the money trail provided to 
us, it is the case of the respondent that the entire amount for the 
purchase and construction of Hyde House was sent by the respondent in 
a legal way through proper banking channels. If that were so, and even if 
SVL was created as a special vehicle for the purposes of holding a 
property for the respondent, it (SVL) was for the purposes of legal title and 
was at most a legal owner of the property as urged by the respondent’s 
counsel 
for 
the 
purposes 
of 
avoiding 
present 
or 
future 
tax 
liability/implication. However, once the veil of incorporation of SVL is 
lifted, the respondent’s face is clearly seen behind it as the true and 
actual owner of Hyde House. Perhaps SVL was created as a repository to 
hide his tax paid money, sent through banking channels and shown to 
have been spent on the creation of SVL and the purchase/construction 
Constitution Petition No.36 of 2016 
 
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of the “Hyde House”; but this was done in a clandestine and dubious 
manner. The object behind this exercise was to hide and stash the said 
money, SVL and the property from the tax authorities and from the 
public eyes; by a person who has even in the past been a holder of a 
public office and presently occupies such an office. It may be pertinent to 
mention here that the respondent has not placed and proof on the record 
that the amounts he transferred to his personal bank account abroad 
were utilized for the purchase etc. of “Hyde House” and those were ever 
transferred to SVL for this purpose. In our view, SVL or Hyde House were 
never transferred, passed on and made a part of the trust property, by, 
under or pursuant to “The Settlement” and for all intents and purposes, 
regardless of the fact that the legal title of the property vested in SVL per 
the record i.e. HM Land Registry record. The respondent was, has been 
and remains to be the true, real and beneficial owner of the property 
enjoying full control and discharging all the obligations of the owner. As 
regards the third essential of a valid trust, the beneficiaries of the trust 
are mentioned in “The Settlement” so therefore we would not like to 
comment further about it. Except we shall discuss and consider the 
stance of the respondent taken in the concise statement that he has no 
beneficial interest in the trust and the consequences thereof in the 
succeeding part of this opinion. There is another interesting aspect of the 
matter which is that though it is the case of the respondent that he had 
sent all the money which was utilized for the purchase and for the 
construction of Hyde House, but he has never declared the said amounts 
in his own tax returns, rather he has shown these (amounts) as gifts to his 
four children, without there being any gift actually made to them, 
because no cross-cheques of the gifted amounts were brought on the 
record envisaging the gift of the said amount in favour of the children. 
Moreover, when such gifts were never made, how could the children in 
Constitution Petition No.36 of 2016 
 
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their tax returns show such amount as their share in the trust (some 
unknown trust?) without mentioning the Hyde House or SVL as an off-shore 
company or mentioning EFG Nominees Limited or EFG Trust Company 
Limited? Because in their tax returns the children have in fact shown 
such amounts to be their share in some (unknown) trust. This all seems 
rather farcical.  
12. 
 
Above all the most important and crucial aspect of the 
matter is: that in his concise statement it is the clear and unequivocal 
stance of the respondent “the Answering Respondent himself has no beneficial 
interest therein and is simply a settlor of the trust in question”. But this assertion 
made in the concise statement has been belied by “The Settlement” relied 
upon by the respondent where he and his spouse are shown to be the 
“discretionary lifetime beneficiaries”. Schedule III of “The Settlement” 
clearly mentions so, whereas spouse, his children and progeny shall only 
be “discretionary beneficiaries” after the demise of the respondent as per 
Schedule IV. Both the Schedules are reproduced as below:- 
SCHEDULE III 
(Discretionary Lifetime Beneficiaries) 
For the purposes of clause 6, the “Discretionary Lifetime 
Beneficiaries” means the following persons or class of persons living 
or in existence at any time before the end of the Trust period: 
Name 
Date of birth 
Relationship to Settlor  
The Settlor  
04/07/1953 
 
The Settlor’s wife 
10/09/1956 
 
 
SCHEDULE IV 
(Trusts after the Settlor’s lifetime) 
1. (a) 
In this Schedule IV, the “Discretionary Beneficiaries” 
means, subject to the following provisions of this 
paragraph, the following persons or class of persons living 
or in existence at any time before the end of the Trust 
Period: 
 
Constitution Petition No.36 of 2016 
 
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Name 
Date of 
birth 
Relationship to 
Settlor  
The Settlor’s wife  
10/09/1956 
 
The Settlor’s children 
 
 
The Settlor’s grandchildren 
and remoter issue. 
 
 
 
This is a blatant and shocking untrue statement on behalf of the 
respondent, which is not expected from an honest person. Perhaps the 
respondent at the time when the concise statement was filed never 
expected that such a deep probe would be conducted into the matter by 
this Court and thought to get away with the camouflage and variety of 
covers, layers and veils of his off-shore company. But at the end he was 
unable to avoid the truth. Thus on account of what has been said above, 
we hold that the respondent for all intents and purposes was the actual, 
real, true and beneficial owner of “Hyde House” and he was required 
under the law to declare such property and the asset in his nomination 
papers filed on 9.9.2015, to contest the by-elections. And on account of 
this concealment that respondent is held not be an “honest” person 
within the contemplation of Article 62(1)(f) of the Constitution and 
Section 99(1)(f) of ROPA, therefore he has incurred the disqualification to 
be the member of the Parliament and ceases to be the member thereof. 
Besides on account of his unequivocal stance in the concise statement 
that he has no beneficial interest in the trust or the property is also an 
untrue statement made by him before the highest judicial forum of the 
country as “The Settlement” relied upon by the respondent belie his 
stance. On this account also he not being “honest” stands disqualified 
under the provisions of the Constitution and the law mentioned above. 
AGRICULTURAL INCOME (Proposition No.3): 
(That Respondent No. 1 in relation to his income has committed following 
misrepresentations; 
 
a) 
For the year 2010 and 2011 disclosed yearly incomes in his tax returns different 
from the statements before Election Commission of Pakistan; 
 
b) 
Inflated his agriculture income for whitening his undisclosed income; 
 
Constitution Petition No.36 of 2016 
 
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c) 
evaded agriculture income tax. 
 
Thus making him not qualified to contest the election of, or being a Member of 
Parliament by virtue of the provisions of Article 62(1)(f) of the Constitution of Islamic 
Republic of Pakistan.) 
 
13. 
 
In the context of this proposition the petitioner has set out a 
case based on the following four pillars: 
 
(A) 
That the respondent willfully misstated less agricultural 
income in his nomination papers dated 27.3.2013 filed with the ECP as 
against the agricultural income declared in his income tax returns with 
the FBR. These are vital and unexplained discrepancies, to highlight 
those, the petitioner has placed a chart in his petition which is 
reproduced as under:- 
 
Tax Year 
Agri income as 
declared 
before 
ECP  
Agri income as 
declared 
before 
FBR 
Discrepancy 
2010 
120,000,000 
545,000,000 
425,000,000 
2011 
160,000,000 
700,282,263 
540,282,263 
 
 
(B) 
The respondent has overstated his agricultural income with 
the FBR with the intent to launder (whiten) his undeclared income from 
unknown sources and to justify income earned through black money. It 
is averred in the petition that the income tax charged on agricultural 
income is less than that charged on other sources. (Note: This seems to be a 
misconception on the part of the petitioner because agricultural income of the tax payer is 
altogether exempted under Section 41 of the Ordinance, 2001). It is alleged that the 
respondent by over-stating his income from agricultural sources 
attempted to unlawfully evade income tax payable under the Ordinance, 
2001 in case he had disclosed the real source of such income. 
 
(C) 
As per the agricultural income declared at the entry at Sr. 
No.14 of the nomination papers submitted before the Election 
Commission of Pakistan for the General Election 2013, the respondent 
has failed to pay the agricultural income tax amount due for the years 
Constitution Petition No.36 of 2016 
 
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2010-11 as required under Section 3 read with the 2nd Schedule of the 
Punjab Agricultural Income Tax Act, 1997 (the Act of 1997). The leviable 
agricultural income tax is Rs.22500 + 15% of the income exceeding 
Rs.300,000/-, hence the respondent is guilty of evasion of more than 
Rs.31,00,852/- for these two years. The details of the agricultural income 
of the respondent for the said years and the tax evaded by him have been 
set out in the chart given in the petition as under:- 
 
 
 
Tax 
Year 
Agricultural 
Income 
Tax 
before ECP  
Agricultural 
Income 
Tax due under Punjab 
Agricultural 
Income 
Tax Act, 1997 
Unpaid Tax 
(in Rupees) 
 
Agri Income 
(as declared) 
before ECP 
Agri Income 
Tax Paid (as 
declared) 
before ECP 
Leviable 
Income 
Tax 
Rs.22500+15% 
of 
income 
exceeding 
Rs.300,000/- 
 
2010 
120,000,000 
3,171,024 
17,977,500 
14,806,976 
2011 
160,000,000 
7,781,124 
23,977,500 
16,196,376 
Total 
31,002,852 
 
 
(D) 
The total agricultural income of the respondent as declared 
by him with the FBR for the tax year 2010 was Rs.545,000,000/- and for 
the tax year 2011 it was Rs.700,282,263/-. The tax leviable on the said 
amounts under Section 3 read with Schedule of the Act of 1997 amounts 
to Rs.81,705,000/- and Rs.104,997,393/- respectively, which the 
respondent knowingly, willfully evaded causing a great loss to the 
national exchequer; at least to the tune of Rs.175,750,245/-. In this 
regard the petitioner has relied upon the following chart in the petition:-  
 
Tax 
Year 
Agricultural 
Income 
before 
FBR as declared 
Agricultural 
Income Tax due  
Unpaid Tax 
2010 
Rs.545,000,000/- 
Rs.81,705,000/- 
Rs.78,533,976/- 
2011 
Rs.700,282,263/- 
Rs.104,997,393/- 
Rs.97,216,269/- 
Total 
Rs.175,750,245/- 
 
14. 
 
On the contrary, the respondent’s learned counsel has 
argued that the respondent was not elected on the basis of the 
Constitution Petition No.36 of 2016 
 
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nomination papers dated 27.3.2013, thus the discrepancies and the 
alleged misdeclaration or misstatement etc. therein cannot be made the 
basis for rejecting his nomination papers filed on 9.9.2015 in the by-
election, which he has won. And such material cannot be used to 
attribute any dishonesty to the respondent. Besides, the respondent had 
two sources of agriculture income (i) from his self-owned holding (ii) from 
his leasehold holding of 18566 acres; for the purposes of the tax paid 
under the Act of 1997 the respondent has correctly declared the income 
which he derived from his personal holding and accordingly paid the 
agriculture income tax thereupon, calculated as per the law. The same 
has never been questioned by competent authorities under the Act of 
1997. Under the law he was not obliged to pay agricultural income tax on 
agricultural income derived from his lease holding. Whereas in the 
income tax returns filed under the Ordinance, 2001 the agricultural 
income derived by the respondent from the entire land cultivated (both 
owned and leasehold) has been mentioned. And this entire agricultural 
income was exempt under Section 41 of the Ordinance, 2001. It is stated 
that there was no concealment of the latter income (i.e. from the leasehold land) 
because along with the nomination papers dated 27.3.2013, the 
respondent has attached his income tax returns for the relevant years 
2010-2011 which reveal the same amount of agricultural income which 
the respondent declared before the FBR; further, no misstatement 
and/or misdeclaration at the time of scrutiny of his nomination papers 
filed on 27.3.2013 was attributed to the respondent, which were duly 
accepted. Same is the position regarding the nomination papers filed to 
contest the by-election in 2015, where no objection was raised by anyone 
on the above account. It is also submitted that the respondent had won 
this election which was not challenged by anyone having locus standi to 
do so under ROPA, on the noted or any other ground. It is urged that 
Constitution Petition No.36 of 2016 
 
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entry at Sr. No.14 of the nomination papers in fact and law requires the 
information regarding agricultural income paid by the candidate for a 
particular year(s) and for this purpose only column No.4 of the said entry 
was relevant and the former two columns were only ancillary and 
incidental thereto and in any case shall not govern or control the clear 
language of the main entry at Sr. No.14, which leaves no room for doubt 
that through the same, specific and particular information is being 
sought regarding the agricultural income tax paid by the candidate for 
the last three years. It is further argued that no action for any alleged 
misdeclaration or short payment of the agricultural income tax has been 
taken against the respondent by the concerned department under the 
provisions of the Act of 1997. And as per Section 4(4) of the Act of 1997 
the limitation to do so has lapsed. Therefore, the alleged misdeclaration 
and the short payment cannot be made a ground for a petition under 
Article 184(3) and imputed as dishonesty to the respondent in terms of 
Article 62(1)(f) of the Constitution. [Any tax law if found not to have been strictly 
followed by a tax payer or any inaccuracy in the required declaration or any omission to 
make a declaration of something required shall not necessarily mean, that the omission 
etc. and consequently less or improper payment of tax is a dishonest act on the part of the 
tax payer to attract the disqualification clause under the Constitution and the law, until 
and unless it has been so held and declared by the forum of competent jurisdiction under 
that particular law. It is the case of the respondent that in his nomination paper(s) he has 
correctly declared the amount of the Punjab agricultural tax, which he has paid in the 
years 2010-11 on the agricultural land which was held by him (his owned holdings) 
whereas, besides, the above holdings, the respondent was also cultivating about 18566 
acres of land on lease and for the income derived from the lease holding land he was not 
obliged to pay the agricultural income tax. And this has never been questioned by the 
concerned authorities under the Act of 1997. And the total income derived by the 
respondent from his owned holding and from the lease holding was accordingly declared 
Constitution Petition No.36 of 2016 
 
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to the FBR and this was exempted under the Income Tax Ordinance, 2001 (see Section 
41)]. It is lastly submitted that the same grounds which have been raised 
in the petition are the subject matter of the two show cause notices, both 
dated 27.5.2016 issued by the income tax department for the year 2010-
2011 and the matter is sub-judice either in the departmental hierarchy 
or the High Court and/or before this Court, therefore any view expressed 
or findings given in this behalf in these proceedings are bound to cause 
serious prejudice to the respondent which is not permissible under the 
law. The details of such pending matters and the orders passed therein 
have been placed on the record (see CMA No.4142/2017). 
15. 
 
Heard. Much emphasis has been laid by both the learned 
counsel for the parties regarding the interpretation of Section 3 of the Act 
of 1997 with specific reference to sub-section (3) of the same which is the 
charging provision. In this context, reliance has also been placed on the 
agricultural income defined in Section 2(a) of the Act ibid. Furthermore, 
according to the petitioner’s counsel there is no distinction between the 
self-owned holding or the leasehold holding of a person and in this 
regard he has placed reliance upon the following dictionary meanings of 
the term “holding”:- 
Handbook of Legal Terms & Phrases, Judicially Defined 
“Holding signifies the nature of the right enjoyed by the tenant 
or occupier of the land. It means land held by an occupier 
under some agreement.” 
Black’s Law Dictionary, Eighth Edition 
“Holding: Legally owned property, esp. land or securities.” 
Excellent Legal Dictionary: Words and Phrases 
“Holding: General term for property, securities, etc. owned by 
person or corporation.” 
 
Concise Oxford English Dictionary 
“Holding: An area of land held by lease. Financial assets.” 
 
21st Century Dictionary 
“Holding: Land held by lease. An amount of land, shares, etc. 
owned by a person or company.” 
Constitution Petition No.36 of 2016 
 
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On account of the above it is argued that the respondent was obliged to 
pay the agricultural income tax on whole of his agricultural income as 
has been defined by the definition clause [Section 2(a)]. Suffice it to say 
that in the present proceedings which are under the provisions of Article 
184(3) of the Constitution and admittedly in the nature of a quo-
warranto petition, we are not expected and required to adjudge the 
honesty or dishonesty of a member of the Parliament on the basis of our 
determination and adjudication whether he has not declared (truthfully); 
misdeclared; or short declared his agricultural income and thus failed to 
discharge his tax liability in the past as has been prescribed by a 
particular tax/fiscal law. This cannot and should not be merely done on 
the basis of our own interpretation of the law for the first time and on the 
basis of our own findings and conclusions to hold that there is a 
misdeclaration or non-declaration etc. and consequently short payment 
of the tax; to thereby declare a Parliamentarian “dishonest”, within the 
purview of Article 62(1)(f) ibid. The mechanism for charging, declaration 
of the amounts/assets subject to the charge of tax etc., the process of 
assessment and the resulting/subsequent adjudication; the liability for 
the failure to comply with such law and the consequences of recoveries, 
fines, penalties have been provided by the law, which are to be 
undertaken by specified forums in a particular form and by adhering to a 
particular procedure. The law provides a person aggrieved of such 
actions/decisions with a complete hierarchy of further remedies before 
higher forums. We have seen that in the instant matter the declaration of 
agricultural income by the respondent and the tax paid thereupon has 
not been questioned by the concerned department. We are also not 
inclined to make such a declaration on the basis of the nomination 
papers of the respondent in the year 2013 which were never challenged 
Constitution Petition No.36 of 2016 
 
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by anyone on that score and he was also not elected in that election. 
Besides, from the nomination papers it is clear that the respondent did 
attach his income tax/wealth tax returns and the agricultural income 
which was different from the nomination papers was clearly mentioned 
therein. Moreover, from the perusal of the record, which is not 
controverted by the petitioner, it stands revealed that two proceedings 
against the respondent have been initiated by the income tax department 
on the basis of the variation and the difference in the agricultural income 
as declared by him in his nomination papers of 2013 for the concerned 
years (2010-2011) and the agricultural income (declared) under the 
Ordinance, 2001. Regarding the income tax return of the respondent for 
the year 2010 (filed on 7.10.2010), Assistant Commissioner, Inland Revenue, 
issued a notice (No. Audit-01/2010/1068) dated 27.5.2016 to him under 
Section 122(9) read with Section 122(5) of the Ordinance, 2001 with 
respect to certain discrepancies inter alia in the said return submitted by 
him and the agricultural income given in the statement of assets and 
liabilities submitted with his nomination papers (dated 27.3.2013) with the 
ECP. The relevant portion of the notice is reproduced as below:- 
“2. DIFFERENCE OF AGRICULTURAL INCOME 
In the Election Commission of Pakistan (hereinafter referred as 
‘ECP’) you filed a statement of Assets, Liabilities & Income which 
does not reconcile with those declared in his Tax Declaration in 
FBR. Cross-matching of Declarations in ECP & FBR for 
Agriculture Income is as follow: 
 
Tax 
Year 
ECP 
FBR 
Discrepancy  
 
Agriculture 
Income 
(as 
declared) 
Agri 
Income Tax 
Paid 
(as 
declared)  
Agriculture 
Income 
(as 
declared) 
(FBR-ECP) 
2010 
120,000,000 
3,171,024 
545,000,000 
425,000,000 
 
Constitution Petition No.36 of 2016 
 
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Above matrix shows that in ECP you declared (under oath) your 
Agriculture Income of Rs. 120,000,000 for the Tax Year 2010 
with the claim of Agriculture Income Tax (Provincial) 
Rs.3,171,024 paid under Punjab Agriculture Income Tax Act 
1997. This declaration (in ECP) renders particulars of Income of 
the taxpayer, declared with FBR for the respective tax year, 
inaccurate warranting action under section 111(1) of the Income 
Tax Ordinance, 2001.” 
 
This notice was replied to by the respondent on 23.6.2016 through his 
authorized representative A.F. Ferguson & Co. (authorized representative) in 
which it was stated:- 
“10. 
It has been confronted that agricultural income of Rs. 545 
million declared by taxpayer in FRTI for subject tax year is not in 
agreement with the amount of Rs. 120 million disclosed as 
agricultural income in ‘nomination form’ submitted by the 
taxpayer with ECP and in such background, taxpayer has been 
required to explain its position, failing which intentions have 
been shown to add the differential amount of Rs. 425 million 
towards taxable income under section 111(1) of the Ordinance. 
11. 
In this connection, it would be appropriate that ‘nature’ 
of agricultural income derived by the taxpayer during the year is 
explained first. During the tax year under consideration, 
taxpayer derived agricultural income from agricultural land 
‘owned’ as well as held by it under ‘lease arrangements’ and 
derived income therefrom in the following manner: 
(i) 
Agricultural income derived from ‘owned land’- 
Rs.120 million; and 
(ii) 
Agricultural income derived from ‘leasehold land’ –
Rs.425 million. 
12. 
In the above background, we now invite your attention 
towards the fact that the nomination form required to be 
furnished with the ECP required the provision of details of 
‘landholding’, ‘agricultural income’ derived and ‘tax’ paid by 
the taxpayer on ‘owned’ lands, a fact readily verifiable from the 
Constitution Petition No.36 of 2016 
 
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relevant form prescribed by ECP. Accordingly, the particulars 
relating to ‘owned lands’ were disclosed in Entry No.14 of 
subject nomination form. Moreover, under the relevant 
provincial legislation i.e. Punjab Agricultural Income Tax Act, 
1997, agriculture Income Tax was only payable in respect of 
‘owned lands’ and thus disclosure in ECP’s nomination form was 
clearly warranted only to the extent of ‘owned lands’. 
Nevertheless, in the income tax return and wealth statement, 
aggregate agricultural income of Rs.545 million was disclosed by 
the taxpayer. It may be appreciated that copies of relevant 
income tax return/wealth statements were also filed with ECP 
that duly evidences the taxpayer’s bona fide that there was no 
attempt, intentional or otherwise, to report lesser amount of 
agricultural income to ECP.” 
 
Pursuant to the above an Amended Assessment Order dated 30.6.2016 
under Section 122(1)/122(5) of the Ordinance, 2001 by the Deputy 
Commissioner, holding therein that “Regarding the matter of difference in 
agricultural income declared in income tax return and that declared before Election 
Commission of Pakistan, the explanation of the taxpayer carries weight. In support, the 
taxpayer filed complete details of agricultural income and bifurcation of income earned 
from owned land and income from leasehold land comprising of 18566 Acres under the 
title of JK Farms. The taxpayer was requested to provide area wise detail of land 
acquired on lease which has also been filed and placed on record. Since, the prescribed 
format of declaration to be filed before the Election Commission of Pakistan does not 
include any column for declaring income earned from leasehold land therefore the same 
was not mentioned therein. Further, the taxpayer has declared correct particulars of 
income before Income Tax Department; therefore, there is no need to add the difference 
again to income already declared by the taxpayer. Regarding the matter of tax on 
agricultural income, the agricultural income enjoys exemption from income tax by virtue 
of Section 41 of the Income Tax Ordinance, 2001. Since, taxation of agricultural income 
is subject of Provincial Government; therefor, no action can be taken in this regard by 
this office being the issue out of jurisdiction. In view of the above, no adverse inference in 
Constitution Petition No.36 of 2016 
 
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this regard is warranted”. Following this, the Additional Commissioner, 
Inland Revenue issued a Show Cause Notice dated 10.8.2016 to the 
Respondent under Section 122(9) read with Section 122(5A)/122(4) of 
the Ordinance, 2001 wherein he stated that the acceptance of 
explanations rendered with regard to discrepancies in agriculture income 
by the Deputy Commissioner, was an erroneous assessment inter alia on 
the basis that 26 lease agreements have proven to be fake on account of 
not being verifiable, and hence  invoking the provisions of Section 
125(5A) read with Section 122(4) of the Ordinance, 2001 he is amending 
the assessment order made by the Deputy Commissioner (ibid). The 
Respondent’s authorized representative responded to this Show Cause 
Notice by submitting preliminary objections to the same vide letter dated 
26.08.2016; however the preliminary objections made by the authorized 
representative were rejected by the Additional Commissioner, Inland 
Revenue on 30.08.2016. A Writ Petition No. 27535/2016 was then filed 
by the Respondent against the said proceedings regarding his income tax 
returns for the year 2010 which was allowed by the learned High Court 
vide its judgment dated 30.12.2016 (see pages 123 to 133 of CMA No.3675/2017). 
The income tax department filed Review Petition No.19/2017 which was 
dismissed on 17.4.2017 (see pages 5 to 9 of CMA No.4142/2017). The department, 
however, has filed Civil Petition No.349-L/2017 against the said order 
which is pending adjudication before this Court. For the income tax 
return of the respondent of the year 2011 (filed on 17.11.2011), Assistant 
Commissioner, Inland Revenue, issued a notice (No. Audit-01/2010/1069) 
dated 27.5.2016 under Section 122(9) read with Section 122(5) of the 
Ordinance, 2001 to the respondent wherein similar discrepancies in the 
income tax returns of 2011 and agricultural income stated in the 
statement of assets and liabilities filed with his nomination papers 
warranting action under Section 111(1) of the Ordinance, 2001 were 
Constitution Petition No.36 of 2016 
 
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brought to his attention. The respondent through his authorized 
representative sought some adjournment to file a reply; which (reply) was 
not filed and therefore the Deputy Commissioner Inland Revenue vide 
order dated 8.8.2016 issued a notice of demand to the respondent in 
respect of tax year of 2011, whereby after appraising him of the manner 
of the proceedings being carried on in the absence of the respondent’s 
reply or participation despite reminders and opportunities, it was decided 
that the respondent had evaded tax amount due by trying to disguise his 
taxable income as agricultural income. The respondent appealed against 
the said assessment order on 8.8.2016 which was decided by the 
Commissioner Inland Revenue (Appeals) on 2.9.2016 whereby the 
assessment order of 8.8.2016 was confirmed. The respondent brought an 
appeal before the Appellate Tribunal, Inland Revenue (ATIR), against this 
decision of the Commissioner Inland Revenue (ibid) which allowed the 
appeal on 24.10.2016. Against said decision of the Appellate Tribunal 
Inland Revenue an income tax reference bearing No. 349/2016 was filed 
by the revenue department before the Lahore High Court as per Section 
133 of the Ordinance, 2001. This income tax reference was allowed by 
judgment dated 16.10.2017, and the most recent update concerning 
these proceedings is that the matter has been remanded to the ATIR on 
account of it being the final forum for undertaking factual inquiry, and in 
the meanwhile an injunctive order has been obtained with respect to the 
recovery of tax from the respondent. The Tribunal, on remand, has 
extended the earlier stay order granted to the respondent on 7.10.2016, 
when his previous appeal was pending before deciding in favour of the 
respondent. The operative part of the said order dated 23.10.2017 reads 
as “The stay granted is extended for a further period of 30 days or till the decision of the 
appeal whichever is earlier”. Such proceedings as are pending shall involve 
not only factual but also the legal issues, such as inter alia the 
Constitution Petition No.36 of 2016 
 
- 71 - 
 
interpretation and application of the provisions of Section 3 of the Act of 
1997; the question with regards to the jurisdiction of the income tax 
authorities under the Ordinance, 2001 and more importantly the factual 
aspect as to whether the respondent has obtained on lease the land 
measuring 18566 acres and thus has derived agricultural income from 
such land, which shall be exempt from the income tax under Section 41 
of the Ordinance, 2001. Thus any view expressed by this Court in the 
proceedings in the nature of quo-warranto (which is a discretionary remedy and 
relief) is likely to cause prejudice to the respondent, and even the FBR; 
because the FBR in its concise statement in the instant matter has taken 
a stance against the respondent. As there exist disputed facts we shall 
not express any view in this regard nor make any interpretation of the 
provisions (Section 3) of Act of 1997 to determine the honesty or otherwise 
of the respondent for the purposes of Article 62(1)(f) of the Constitution. 
It may be reiterated that the authorities under the Act of 1997 have not 
so far initiated any action against the respondent for the alleged 
misdeclaration or the short payment of the “agricultural income tax” 
under the special law. And we are not sure if such action in the light of 
the provisions of Section 4(4) of the Act of 1997 can now be taken by the 
said department. We are also refraining from exercising our discretion in 
favour of the petitioner and against the respondent because of the clear 
mandate of Article 4 of the Constitution which enshrines “To enjoy the 
protection of law and to be treated in accordance with law is the inalienable right of 
every citizen”. In the present situation when no action has thus far been 
taken against the respondent under the law i.e. Act of 1997 and the 
action taken against him by virtue of Ordinance, 2001, the other possibly 
applicable law is as yet pending before various fora and has not reached 
its conclusion: therefore in such circumstances to adjudge the honesty or 
Constitution Petition No.36 of 2016 
 
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otherwise of the respondent would be against the mandate of Article 4 
ibid. 
16. 
 
It may also be mentioned here that despite the above legal 
position in order to satisfy ourselves if prima facie respondent has 
obtained 18566 acres of land on lease, we required the respondent to 
place on record the khasra girdawaris and the jamabandis for the 
relevant period. This has not been done and the explanation given by the 
counsel in this behalf is that as per the prevalent practice in the area the 
lessors are reluctant to show the possession of the lessee in the revenue 
record. But the respondent has placed on the record a number of 
unregistered lease agreements, in an attempt to establish the factum of 
leases; as also the payments of the lease amounts to the lessor which 
according to the respondent have been made through crossed cheques 
and according to the bank certificate required by us, and filed vide CMA 
No.8187/2017, the amounts have been transmitted to the accounts of 
the lessors or the head of the family or the person authorized on their 
behalf. It may further be added that the respondent has also placed on 
the record the documents, regarding the payment of abiana of such 
leased land or a part thereof and also the sale proceeds of the 
agricultural produce attained by the respondent from the land, along 
with certain documents pertaining to the expenses incurred by him for 
the crops sown (CMA No.7013/2017). As against the above no material in 
rebuttal has been placed on the record by the petitioner to establish that 
such lease agreements are fake or forged or the payment to lessors or the 
expenses incurred by the respondent in this regard are incorrect. In 
these circumstances the above controversy being factual in nature and 
despite our authority to hold inquisitorial proceeding which we have 
applied to the maximum, we do not find this to be a fit case for further 
Constitution Petition No.36 of 2016 
 
- 73 - 
 
probe, when the matters as stated earlier are pending adjudication before 
different fora and this is one of the disputed issues. 
17. 
 
As regards the scope and interpretation of entry No.14 of the 
nomination papers which reads as follows:- 
 “14. The agricultural income tax paid by me during the last three 
years is given below: 
 
Tax Year 
Land holding 
Acres   
Agricultural 
income 
Total agricultural 
Income Tax paid 
2012 
295 
165,000,000 
8,654,929 
2011 
507.5 
160,000,000 
7,181,124 
2010 
507.5 
120,000,000 
3,171,024 
 
Note II: Attach copies of agricultural tax returns of the last three 
years mentioned above.” 
 
On the plain reading of the entry which is the main provision, the 
primary question asked and the purpose behind it seems to be requiring 
the candidate to disclose the “agricultural income tax” he has paid 
during the last three years. The predominant requirement is about the 
amount of the “tax paid” and the relevant column in this context is 4 i.e. 
“Total agricultural income tax paid” whereas columns No.2 and 3 of the table 
are the enabling part of the 4th column when considered in the light of 
the language of the entry. Note II reproduced above then requires the 
attachment of the copies of the agricultural tax return. One is not 
required to specify, independent of the return, about the holding of the 
land. It is not the case of the petitioner that false and fake figure of the 
“tax paid” was mentioned in column No.4 or that the copies of the 
returns were either not filed or were bogus etc. Therefore, on the above 
account too we are not persuaded to declare the respondent “dishonest” 
within the purview of Article 62(1)(f) of the Constitution. 
WRITTEN OFF LOAN (Proposition No.4): 
Constitution Petition No.36 of 2016 
 
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(That Respondent No. 1 was Director of the Company which remained under the 
management of his family members and a loan amounting to Rs. 49 Million was written 
off by the banks thus making him disqualified to contest the election of, or from being, a 
member of Parliament by virtue of the provisions of Representation of People Act 1976 
read with Article 63(1)(n) of the Constitution of Islamic Republic of Pakistan.) 
 
18. 
 
It is the case of the petitioner that the respondent was a 
Director of the company [presumably Faruki Pulp Mills Ltd. (FPML)] which 
remained under the management and control of his family members and 
loans amounting to Rs.49.81 million were written off by the banks and 
therefore he was disqualified in terms of Article 63(1)(n) of the 
Constitution to contest and hold the membership of the National 
Assembly. It may be relevant to mention here that no details have been 
provided by the petitioner in the petition as to the period when the 
respondent was the Director of the said company; what was his 
shareholding; who were the family members of the respondent managing 
the affairs of the company; what was the period when such loans were 
written off. Be that as it may, in this regard, a letter of the State Bank of 
Pakistan dated 28.3.2013 has been relied upon, according to which, in 
response to the request by the ECP (SBP Portal) for the scrutiny of the 
nomination papers of Mr. Jehangir Khan Tareen who was contesting 
election from constituency NA-154 Lodhran in 2013, the information 
provided was as under:- 
“Please refer to your request received through ECP (SBP Portal) for 
scrutiny of nomination papers of captioned candidate, the detail of 
overdue/write off amounting to Rs. 2 million and above for last one year 
reported 
by 
the 
member 
financial 
institutions 
against 
the 
candidate/spouse/dependent as on February 28, 2013 is given below:- 
 
CNIC/Name 
Relation 
with 
Candidate 
FI Name 
Overdue 
Writeoff 
------------- No Record Found ------------- 
Further, candidate/spouse/dependent is also director/owner of 
following companies having overdue/write off amounting to Rs. 2 
million and above for last one year:- 
Constitution Petition No.36 of 2016 
 
- 75 - 
 
(Rs. In Million) 
 
CNIC/Name 
Relation 
with 
Name of 
Company 
FI Name 
Overdue 
Writeoff 
35202-2698829-
5/JHANGIR KHAN 
TAREEN 
SELF 
FARUKI PULP 
MILLS LTD. 
UNITED BANK 
LTD. 
0 
19.234 
 
 
35202-2698829-
5/JHANGIR KHAN 
TAREEN 
SELF 
FARUKI PULP 
MILLS LTD. 
MCB BANK 
LTD. 
0 
9.015 
 
 
35202-2698829-
5/JHANGIR KHAN 
TAREEN 
SELF 
FARUQUI 
PULP MILLS 
LTD. 
ROYAL BANK 
OF SCOTLAND 
0 
21.57 
 
 
35202-2698829-
5/JAHANGIR 
KHAN TAREEN 
SELF 
STATE ENGG. 
A/C. HEAVY 
MECHANICAL 
COMPLEX  
INDUSTRIAL 
DEVLEOPMENT 
BANK LIMITED 
(FORMERLY 
IDBP) 
.932 
0 
 
 
35202-2698829-
5/JAHANGIR 
KHAN TAREEN 
SELF 
STATE ENGG. 
A/C. HEAVY 
MECHANICAL 
COMPLEX 
NATIONAL 
BANK OF 
PAKISTAN 
406.818 
0 
 
 
35202-5803969-
1/ALI KHAN 
TAREEN 
SON 
FARUKI PULP 
MILLS LTD. 
UNITED BANK 
LTD. 
0 
19.234 
 
 
35202-5803969-
1/ALI KHAN 
TAREEN 
SON 
FARUKI PULP 
MILLS LTD. 
MCB BANK 
LTD. 
0 
9.015 
 
 
35202-5803969-
1/ALI KHAN 
TAREEN 
SON 
FARUKI PULP 
MILLS LTD. 
ROYAL BANK 
OF SCOTLAND 
0 
21.57 
 
 
 
From the above document alone the necessary details to attract the 
disqualification of Article 63(1)(n) to the respondent are not established. 
It is also not proved that FPML was under the managing control of the 
respondent or his family members when the loans (though the period is not 
specified) were written off. Presumably it was in the year 2007. Whether 
the respondent or his spouse or dependents were the shareholders (or 
indeed the extent of such holding) or directors of the company does not transpire 
from this letter. However, in the letter dated 4.4.2013 placed by the 
respondent on the record addressed by the MCB Bank Ltd. to the Chief 
Election Commissioner and the Returning Officer of NA-154, it is stated 
“We would like to clarify that the loan write-off of Rs.9.015 million on account of Faruki 
Pulp Mills Limited, as reflected in the above letter of State Bank of Pakistan pertains to a 
loan that was availed by Faruki Pulp Mills Limited prior to Mr. Jahangir Khan becoming 
a Director of Faruki Pulp Mills Limited. We would further clarify that the settlement of 
loan, including write-off of Rs.9.015 million, also took place prior to his becoming 
Director of Faruki Pulp Mills Limited. As per our records, Mr. Jahangir Khan Tareen 
Constitution Petition No.36 of 2016 
 
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became a Director of Faruki Pulp Mills Limited on 29-12-2010 and resigned as Director 
on 4-02-2013”. The other letter dated 5.4.2013 has been issued by United 
Bank Ltd. to the Chief Election Commissioner which states “We would like 
to clarify that the loan write-off of Rs.19.234 million on account of Faruki Pulp Mills 
Limited, as reflected in the above letter of State Bank of Pakistan, pertains to a loan that 
was availed by Faruki Pulp Mills Limited prior to Mr. Jahangir Khan Tareen becoming a 
Director of Faruki Pulp Mills Limited. We would further clarify that the settlement of 
loan, including write-off of Rs.19.234 million, also took place prior to his becoming 
Director of Faruki Pulp Mills Limited”. There is another letter of the State 
Bank of Pakistan dated 1.4.2013 in which it has been clarified that M/s 
Heavy Mechanical Complex is a government owned entrepreneur and 
Jahangir Khan Tareen was the ex-officio nominee Director of that 
company. We have been apprised by the learned counsel for the 
respondent, and the same was not controverted by the petitioner’s side, 
that the respondent only held 500 qualifying shares in FPML which he 
acquired in the year 2010 and became a Director of the company. With 
his resignation as a Director of the company on 4.2.2013, these shares 
were also disposed of. It is not the case of the petitioner before us that on 
account of the name of respondent’s son, Ali Khan Tareen, appearing in 
the noted letter of the SBP, the respondent in the context of written off 
loan is disqualified. No submissions in relation to Ali Tareen were made 
before us. Therefore, we are clear in our mind that the aforesaid written 
off loan does not pertain to the respondent or any of his companies or his 
spouse and dependents in which he had the requisite shareholding for 
the purposes of attracting disqualification envisaged under Article 
63(1)(n) of the Constitution. Confronted with the aforesaid material, 
learned counsel for the petitioner also did not rebut the same in his 
rebuttal arguments and to our clear understanding, he virtually gave up 
this ground. 
Constitution Petition No.36 of 2016 
 
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19. 
 
In view of our reasons expressed above in this opinion upon 
the propositions involved in the matter, we have reached to the following 
conclusion:- 
a) 
The preliminary objection of the respondent that the 
present petition being primarily in the nature of quo-
warranto is not maintainable in law, has no force. As 
we on the basis of the material on the record are not 
persuaded to hold that the petition is a counterblast to 
a similar kind of a petition filed by Mr. Imran Khan 
Niazi against Mian Mohammad Nawaz Sharif or this is 
a proxy petition filed for the benefit of someone else, 
and it is tainted with mala fide and has been filed with 
ulterior motives. We hold so especially when the 
maintainability of the petition has not been questioned 
on the ground that this Court lacks jurisdiction under 
Article 184(3) of the Constitution or that the 
respondent is not a holder of a public office. 
b) 
For the proposition that the respondent being the 
Director of JDW Sugar Mills Ltd., knowing fully well 
that the said company has decided to take-over the 
majority shares of USML, on the basis of such 
classified, insider and sensitive information purchased 
the shares of USML in a clandestine manner in the 
name of his Driver and Cook, namely, Haji Khan and 
Allah Yar and thus, violated the provisions of Section 
15-A of the Ordinance, 1969, the Ordinance, 1984 and 
other laws on the subject. And also committed the 
offence of insider trading in terms of Section 15-B of 
the Ordinance (ibid). In this respect, investigation 
against the respondent was conducted by the SECP 
and in reply to the show cause notice/letter of the 
SECP dated 3.12.2007, the respondent through his 
response dated 8.12.2007 admitted to the commission 
of insider trading and, therefore, paid the gained 
amount of Rs.70.811 million along with fines and 
penalties and charges to the SECP as were finally 
demanded. The question, therefore, is whether this 
Constitution Petition No.36 of 2016 
 
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reply of the respondent dated 8.12.2007 and his act of 
paying of the amount as claimed by the SECP 
constitutes an admission on his part and hence is 
disqualified in terms of Article 62(1)(f) of the 
Constitution. We conclude that the letter of the 
respondent dated 8.12.2007 is a qualified offer to the 
SECP and also subject to the “without prejudice” rule, 
therefore, it cannot be treated an admission admissible 
under Article 36 of the Order, 1984 on the basis of 
which the respondent can be adjudged to be dishonest 
in these quo-warranto proceedings, particularly in the 
situation when the SECP accepted the offer of the 
respondent and categorically held “Upon receipt by the 
Commission of the bank draft the above-referred matters shall 
stand disposed off with no further action”. Moreover the 
respondent was not criminally prosecuted by the SECP 
under the provisions of Section 15-B of the Ordinance, 
1969 and thus, for all intents and purposes this is a 
past and closed transaction. We are also not 
persuaded to hold that the provisions of Section 15-A 
and 15-B of the Ordinance, 1969 in the facts and 
circumstances of the case and because of subsequent 
enactment of the Act, 2015 are ultra vires of the 
Constitution. 
c) 
The proposition that the respondent should be 
declared dishonest on account of some alleged 
misdeclaration and short payment of the agricultural 
income tax for the years 2010 and 2011 because there 
are 
vital 
discrepancies 
in 
the 
declaration 
of 
agricultural income in the tax returns filed with the 
FBR for these two years. We are not persuaded to 
make any declaration against the respondent in this 
context because the matter whether inaccurate 
declaration has been made by the respondent, either 
in respect of agricultural income tax before the 
concerned department under the Act of 1997 or before 
the FBR, is a matter which is sub-judice before 
different forums in the income tax hierarchy and even 
before this Court; besides, no action so far for the 
Constitution Petition No.36 of 2016 
 
- 79 - 
 
alleged misdeclaration or short payment has been 
taken against the respondent by the authorities under 
the Act of 1997. 
d) 
We are not convinced and persuaded on the 
proposition that the respondent has got any loans 
written-off from various banks and thus, has incurred 
disqualification 
under 
Article 
63(1)(n) 
of 
the 
Constitution because such loans have been written-off 
with regard to FPML and was prior to the year 2010, 
whereas the respondent at that time was not the 
shareholder or Director of the said company. He 
became the shareholder and Director with effect from 
29.12.2010 to 4.2.2013 and during this period no 
loans were written-off; besides the respondent was ex-
officio Director of the Heavy Mechanical Complex being 
the Federal Minister and resultantly any written-off 
loans with respect to this company cannot be 
attributed to the respondent. 
e) 
We hold that SVL, an off-shore company was 
established by the respondent which has legal title of 
the property measuring 12 acres known as “Hyde 
House” but the actual, true, real and beneficial owner 
of the said property is the respondent. Respondent has 
sent around more than fifty crores of rupees at the 
exchange rate prevalent at that time and claims that 
amount to have been utilized for the purposes of 
purchase and construction of “Hyde House”. SVL or 
Hyde House was never transferred to any trust by the 
respondent, thus, it is his asset which he has failed to 
declare in his nomination papers filed on 9.9.2015 
according to the mandate of the law to contest the by-
elections from NA-154 Lodhran and, therefore, he is 
not honest in terms of Article 62(1)(f) of the 
Constitution read with Section 99(1)(f) of ROPA. 
Besides, in his concise statement the respondent in 
unequivocal, clear and unambiguous terms stated that 
he has no beneficial interest in the trust arrangement 
which holds the SVL and the Hyde House, however 
Constitution Petition No.36 of 2016 
 
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from the trust deed dated 5.5.2011, on which reliance 
has been placed by the respondent himself, he is the 
‘discretionary lifetime beneficiary’ along with his 
spouse and, therefore, this is a blatant misstatement 
on the part of the respondent made before the highest 
judicial forum of the country which is not a trait of an 
honest person. Consequently, on both the counts 
mentioned above, the respondent is declared not to be 
an honest person in terms of the constitutional 
provisions and the provisions of ROPA, therefore, he 
ceases to be the member of the Parliament having 
incurred the disqualification. 
 
Therefore, on account of the above, we hold and declare that in view of 
our findings on the proposition about the off-shore company (in short) 
covered by clause (e) of the conclusion, the respondent is disqualified in 
terms of Article 62(1)(f) of the Constitution read with Section 99(1)(f) of 
ROPA for the non-declaration of his property/asset i.e. “Hyde House” in 
his nomination papers, and in making untrue statement before this 
Court, that he has no beneficial interest in SVL, therefore, he should 
cease to hold the office as the member of the National Assembly with 
immediate effect. This petition is accordingly allowed. 
 
 
 
CHIEF JUSTICE 
 
 
 
JUDGE 
 
 
 
JUDGE 
 
Announced in open Court on 15.12.2017 at Islamabad 
Approved for reporting 
 
 
 
 
 
 
 
 
 
 
CHIEF JUSTICE 
