Why Imran’s case is different from Sharif’s

Judgment further endorses Sharif's disqualification; both judgments silent over period of disqualification

ISLAMABAD: The Supreme Court’s decision to dismiss the petition seeking disqualification of Pakistan Tehreek-e-Insaf chief Imran Khan has raised eyebrows.

A question as to why Khan’s disqualification case was dealt with differently than the one in which Nawaz Sharif was disqualified as the prime minister is doing the rounds.

This question has been addressed in the judgment itself by Justice Faisal Arab, one of the three judges in the bench that dismissed PML-N’s petition against the PTI chief.

Justice Arab in his additional note attached with 143-page detailed decision elaborated applicability of Article 62 (1) (f) of the Constitution and how the term “honesty” should be applied when it comes to cases related to public representatives.

“A person’s honesty prior to his becoming a member of the national or a provincial assembly can be called in question only if he has accumulated wealth through fraud, embezzlement, bribery or tax evasion and has been so declared by a competent court of law,” he wrote.

“Insofar, as his dishonesty with regard to the assets acquired after becoming a member of the National Assembly or a provincial assembly are concerned, the same can be scrutinised by the court in the proceedings in the nature of quo warranto which will determine whether a case for acquisition of assets beyond known sources of income is made out,” the judge further said.

How analogy of the two cases cannot be drawn:

Justice Arab said in this case, reliance was placed on the case of Imran Ahmed Khan Niazi versus Mian Muhammad Nawaz Sharif (PLD 2017 SC 265) popularly known as Panama Case in order to draw parity between the two cases.



“The factual controversy in that case is drastically different from the facts of the present case. In that case serious allegations of money laundering, corruption and possession of assets beyond known means were made against Mian Muhammad Nawaz Sharif after he held public office. In fact he held high public offices several times in the past 30 years in his capacity as finance minister, chief minister and prime minister. It was observed in that case that for such a person, honesty, transparency, clean reputation and unquestionable integrity and financial probity were necessary in order to clear his position. The sources of acquiring several assets were not satisfactorily explained by him and his family members, which included purchase of four flats in London, setting up of Azizia Steel Factory in Saudi Arabia, Gulf Steel Mills in Dubai and receiving Rs840 million on regular basis over a period of four years from 2011 to 2015 as gifts from an entity called Hill Metals established in Jeddah by Mian Muhammad Nawaz Sharif’s son,” Justice Arab wrote.

He said none of these assets were acquired prior to his holding of high public offices. There was either total or very little explanation as to how these assets were built, who its shareholders are, what the source of funds was and how funds were generated and routed.

He mentioned that in Sharif’s case there was a company located in Jebel Ali Free Zone, United Arab Emirates in the name of Capital FZE of which Mian Muhammad Nawaz Sharif was chairman with a monthly salary of 10,000 dirhams, through which certain funds were also routed.

This company remained operational from 2003 to 2014. The existence of Capital FZE came to light in the report of the Joint Investigation Team, which was not disclosed by the accused but when confronted with this fact, he admitted his entitlement to the salary but took the stance that he did not draw it from his accounts. This court held that such a stance stood belied by the Wage Protection System in operation under Jebel Ali Free Zone Rules, which requires payment of salaries into the accounts of all the employees electronically. Considering the high public office which Mian Muhammad Nawaz Sharif held over the years, accumulation of his monthly salaries from Capital FZE was considered as concealment of an asset which led this court in the Panama case to hold that it was a dishonest act on his part, falling within the ambit of Section 99 (1) (f) of RoPA read with Article 62 (1) (f) of the Constitution.



Under the income tax law, salary income falling in a particular tax year has to be treated as income of that year and if taxable is liable to be assessed in that tax year. No one can avoid tax liability on his salary income accrued in a particular tax year on the ground that he has not yet collected it from his employer. So tax liability on a salary income accrued in a particular tax year if not collected voluntarily by an employee would still be liable to tax and has to be treated as an asset of the employee generated in that particular year and correspondingly it becomes the liability of the employer in the same tax year. Therefore, not to collect either whole or any part of it from the employer in a tax year in which it accrued is of no legal consequence.

Non-disclosure of unspent salary income which had been accumulating for a period of time was treated as concealment of asset in the Panama case, Justice Arab wrote.

He further said dishonesty has to contain elements of deceitfulness shown in one’s character or behaviour.

“Dishonesty is not simply bad judgment or negligence but is a question of intention. There can be many examples where it can be said that an omission on the face of it is not dishonest,” he said, quoting a judgment from Supreme Court of Philippines.

In Imran Khan’s case, the judge wrote that ownership of London flat was disclosed by him in his nomination form filed for 2002 general elections.

Khan had availed the benefit of an amnesty scheme launched in the year 2000 under the Tax Amnesty Scheme. He said the London flat was not something purchased from hidden, undisclosed, tax-evaded income but was purchased from tax-paid clean income earned from playing years of professional cricket abroad.

“So it was not a case of taking advantage of the amnesty scheme in order to convert black money into white. In any case, with the declaration of the London flat and the payment of requisite tax under the amnesty scheme, the cause of action for its non-disclosure under the tax laws of Pakistan also died with it,” the judge said.



On the question that Imran Khan did not disclose the ownership of Niazi Services Limited (NSL), an offshore company, in his nomination forms filed in 2002 and 2013 general elections, the judge wrote that the documents filed by the petitioner show that Imran Khan did not hold a single share in the said company.

He only hired services of companies that act as trustees and hold assets in trust for the benefit of the real owner. He incorporated NSL in the Channel Island whose shareholders were three trust companies. After its incorporation he purchased a one-bedroom flat in London in the year 1983 in the name of NSL. This was done primarily to derive tax benefits such as to avoid capital gains tax upon its sale under the laws of England prevalent at that time.

For rendering their services as trustees and to keep the company operational, the shareholders of NSL charged periodical fees from Khan.

Imran Khan being the real owner had the exclusive right to use, occupy, rent out and sell it whenever he so wished without prior approval of the shareholders of NSL. Hence, they were legally bound to convey the London flat in the name of the new purchaser, which they eventually did in the year 2003, when he sold that flat.

“Neither NSL held any proprietary interest in the London flat nor did respondent No 1 possess any proprietary interest in NSL, so it was the London flat and not NSL of which respondent No 1 was the real owner, hence he was only obligated to disclose the London flat as his asset, which he did in his nomination form that was filed in the 2002 general elections,” the judge further wrote.



The judge further said throughout his cricketing career spanning over a period of 21 years, Imran did not hold public office, so any amount that went into NSL was the income he earned either from playing cricket or rental earnings and proceeds of sale from the London flat.

After the 2013 general elections, Imran Khan’s party formed government in the province of Khyber-Pakhtunkhwa. He dissolved NSL in 2014. Those who come to power with the intention to indulge in financial corruption would want such offshore companies to remain operational in order to secretively park their ill-gotten wealth. In the present case, the offshore company was not incorporated to park assets acquired from wealth accumulated through embezzlement or bribery or through tax evasion to keep it hidden from public eye. It is a case of acquisition of an asset from legitimate tax-paid income earned abroad and that too at a time when respondent No 1 was a non-resident Pakistani holding no public office cannot be perceived with the same suspicion.

He further wrote Imran Khan also proved money trail and sources of finance to purchase 300 kanal of land in Bani Gala.

The third allegation that Imran Khan did not disclose residential flat in Grand Hyatt building, Islamabad in his yearly statement of assets and liabilities filed in 2014, could not be substantiated as well. The judges wrote that he had only booked that flat in that building and mentioned it in his tax statements. Unless the full payment was made and apartment was transferred to his name, it cannot become his asset.

The judgment touched on many legal questions, however this judgment, like the one in Panamagate case, did not address another important question: for how long a person stands disqualified if hit by Article 62-1-f?