SC quashes NAB case against global oil firm

The Supreme Court has ruled that where there was no entrustment of property, there could be no criminal breach of trust.

“If the property belongs to and is owned by the accused in his own right, it cannot be said that he was entrusted with that property and that by using or disposing of that property he committed the offence of criminal breach of trust,” read a 10-page judgment authored by Justice Syed Mansoor Ali Shah while quashing the reference of the National Accountability Bureau (NAB) against Shell Petroleum Limited (SPL), which was accused of illegal sale of jet fuel by the anti-graft body.

“'Entrustment’ is an essential ingredient of the offence of criminal breach of trust as defined in Section 405, PPC; therefore, where there is no entrustment of property, there can be no criminal breach of trust,” it added.

A three-judge bench of the apex court led by Chief Justice of Pakistan Umar Ata Bandial heard the matter. Makhdoom Ali Khan appeared on behalf of the petitioners.

Senior lawyers say that this judgment will go a long way in protecting commercial entities from the excesses of NAB when their conduct is not contrary to any specific law.

Justice Shah in his ruling wrote that in a welfare state, the legislature enacted laws in public interest for the regulation of some trades or businesses by statutory bodies or government functionaries.

“Such regulation may involve obtaining of licences and permits to conduct a certain trade or business impose reasonable terms and conditions as to how that trade or business is to be conducted; and control the production, distribution and consumption of any commodity during the conduct of that trade or business.”

The judge further noted in his order that the control on the production, distribution and consumption of some commodity, however, neither affected any change in the legal relationship between the contracting parties, nor did it alter the legal character, substance and consequence of the commercial transactions. Such regulation does not change the private nature of the trade or business.

The court held that no offence under Section 9(a)(x)&(xi) of the NAB Ordinance was thus made out of the petitioners’ alleged act of illegally selling JP-I in the open market, even if it was taken to be true on its face value.

Also read: SC quashes NAB reference against oil firm

“The findings of the Accountability Court and the High Court, having been made without examining the essential ingredients of the offence under Sections 405 and 409 of the PPC and of the offence under Section 9(a)(x)&(xi) of the NAB Ordinance, are found legally incorrect.”

The court noted that in the present matter, it was not the case of the prosecution – NAB -- that the oil allegedly sold by the petitioners in the open market illegally, was entrusted to them or their employer company by members of the public at large or entrusted to the firm by oil refinery companies in the capacity as a banker, merchant, factor, broker, attorney or agent.

"There was no ‘entrustment’ of property in the present case at all that could have made the case against the petitioners fall within the scope of the provisions of Section 405, PPC and consequently constituted an offence under Section 9(a)(x)&(xi) of the NAB Ordinance,” the order read.

“Although the ‘entrustment’ of property within the meaning of Section 405, PPC does not envisage the creation of a formal trust with all the technicalities of the law of trust, it does contemplate that to constitute entrustment the accused must have held the property in a fiduciary capacity.”

The court noted that the word “trust” had been used in Section 405 in the ordinary sensr, and covered not only the relationship of trustee and beneficiary but also that of bailer and bailee, master and servant, pledger and pledgee, guardian and ward, and all other relations that postulated the existence of a fiduciary relationship between the complainant and the accused.

The order read that in the present case, the employer company of the petitioners, purchased JP-I from the oil refinery companies, in its own right.

The order read that NAB had, however, in disregard of the scope and extent of Sections 405 and 409 of the PPC, based its case against the petitioners on the minutes of a product review meeting on August 4, 2010, wherein the director (L&M) of the petroleum and natural resources ministry reiterated the “directives/priority of JP-I supplies” and instructed the oil marketing companies to follow that “directives/priority” and to make the supply of JP-I to defence, local carriers (PIA, Shaheen, etc) and scheduled carriers.

"The prosecution (NAB) has referred to Rule 43C of the Pakistan Petroleum (Refining, Blending and Marketing) Rules 1971 (“1971 Rule”). This Rule provides that the Authority may, if it is of the opinion that public interest so requires, by order in writing, direct any refinery, marketing company or its agent or dealer, or a blending plant (or reclamation plant) to supply such quantity of any petroleum product to such person as may be specified in the order. As per Rule 2(b) of the 1971 Rules, the “Authority” referred to in Rule 43C means the Director General of Oil, and not the Director (L&M). As the Director (L&M) is mentioned to have reiterated the “directives/priority of JP-I supplies”, in the minutes of a Product Review Meeting, dated 04.08.2010, and not to have issued the said “directives/priority” by himself, any such “directives/priority” issued by the Director General (Oil), is neither available on the record of the case nor has it been otherwise produced before us. Irrespective of the said “directives/priority”, if any, it will not make the case against the Petitioners to fall within the definition of the offence of criminal breach of trust under Sections 405 and 409 of the PPC, or of the offence of corruption and corrupt practices under Section 9(a)(x)&(xi) of the NAB Ordinance.”