April 14, 1999
Sharif family told to return
$32.5m to Al-Towfeek Co
By Nasir Malick
LONDON, April 14: The London High Court has ordered Punjab
Chief Minister Shahbaz Sharif, his brother Abbas Sharif and
father Mian Mohammad Sharif to jointly pay a sum of $32.5 million
(around Rs1.7 billion) to Al-Towfeek Company for Funds Ltd, the
investment company from which they had taken a loan for Hudabiya
Paper Mills Ltd.
The Queen's Division Bench of the London High Court passed the
ex-parte order on March 19, 1999 as the defendants -- Hudabiya
Paper Mills Ltd, Mian Mohammad Shahbaz Sharif, Mian Mohammad
Sharif and Mian Mohammad Abbas Sharif -- had not defended
themselves in the court.
The defendants have also been ordered to pay the costs of the
case.
The court on Sept 7, 1998 had issued writ of summons to the
defendants and given 23 days after the service of writ to return
the loan as claimed by the plaintiff company or give their
intention to contest the case.
The writ of summons had clearly stated that: "If you
(defendants) fail to satisfy the claim or return the
acknowledgement within the time stated, or if you return the
acknowledgement without stating therein an intention to contest
the proceedings, the plaintiff may proceed with the action and
judgment may be entered against you forthwith without further
notices."
In its one-page short order issued on March 16, 1999, a copy of
which has been obtained officially by the Dawn, the Queen's
Division Bench said: "No Notice of Intention to Defend
having been given by the Second, Third and Fourth Defendants
herein, it is this day adjudged that the Second Defendant Mian
Mohammad Shahbaz Sharif do pay the Plaintiff:
"US $16,889,152.06 and US $830,163.20 contractual interest
at the rate of 9.5 % being the contractual rate per annum from
the date of issue of the writ to the date hereof making a total
of US $17,719,315.26 or its sterling equivalent with costs.
"And it is this day adjudged that the Third Defendant Mian
Mohammad Sharif and the Fourth Defendant, Mian Mohammad Abbas
Sharif do pay the Plaintiff:
"US $14,019,613.39 and US $693,298.79 contractual interest,
at a rate of 9.5 % per annum being the contractual rate of
interest from the date of issue of the writ to the date hereof
making a total of $14,712,912.18 or its sterling equivalent with
costs (of case) £ 666.75".
Al-Towfeeq Investment Funds Ltd, a company incorporated under the
laws of the Cayman Island, which provides banking facilities and
finance for industrial development in Pakistan, had entered into
a lease agreement with Hudabiya Paper Mills Ltd, one of the
companies owned by Sharif family, on February 15, 1995 under
which the plaintiff leased certain machinery to Hudabiya Mills
for the manufacture of paper and paper board for six months.
The leasing price of the machinery was US $12,046,803 with profit
calculated at 3.5 per cent above six months LIBOR at a minimum of
9.5 per cent payable every six months.
At the time of the lease contract, Mian Mohammad Shahbaz Sharif,
his father Mian Mohammad Sharif and his brother Abbas Sharif, had
given written guarantees to pay to Al-Towfeek Investment all
loans taken up to $10 million by Hudabiya Paper Mills together
with all profits, charges and other related expenses.
While the actual loan is $12 million, almost $20 million has been
accrued as interest.
Mr Shahbaz Sharif further provided another separate guarantee to
the plaintiff to pay on demand any sum due to Al-Towfeek by
Hudabiya Paper Mills to a maximum of $12 million together with
all profit, charges and other related expenses.
Hudabiya Paper Mills, under the agreement was to return the loan
in instalments on the due dates but it did not make the first
instalment or on any date thereafter.
When the Sharif's company failed to return the loan, Al-Towfeek
served notices to the guarantors namely Punjab Chief Minister
Shahbaz Sharif, his brother Abbas Sharif and father Mohammad
Sharif to repay the loan but they failed to honour their
guarantees and make payment to the plaintiff.
Finally the investment company went to the London High Court to
recover the loan from the Sharif family. Sources close to the PML
said that Punjab Chief Minister Shahbaz Sharif during his last
visit to London had tried to make an out of court settlement but
did not succeed.