Full Judgment Text & Judicial Ruling

2012 P L C (C.S.) 1370

[Lahore High Court]

Before Umer Ata Bandial and Ayesha A. Malik, JJ

ADDITIONAL ACCOUNTANT GENERAL PAKISTAN REVENUE, SUB OFFICE, LAHORE

Versus

M.M. MALIK and others

Intra-Court Appeal No.508 of 2011 in Writ Petition No.3463 of 2011, heard on 8th May, 2012.

(a) Civil service---

----Government of Pakistan, Finance Division Office Memorandum dated 4-9-2001, para. 16(f)---Pension---Part of pension surrendered at time of retirement---Periodic increase in pension---Whether such increase applied to surrendered portion of pension---Locus poenitentiae, doctrine of---Applicability---Accrued and vested right---Scope---Pensioner (respondent) had surrendered portion of his pension at time of retirement in the year 1994, owing to an offer by Federal Government---Federal Government withheld increase in pension given by it on surrendered portion of pension, until restoration of said portion---Single Judge of High Court found that Federal Government was in error in withholding the increase on surrendered portion---Federal Government (appellant) through Deputy Attorney General contended that paragraph 16(f) of Office Memorandum dated 4-9-2001, permitted the pensioner, to receive periodic increases on un-commuted portion of pension but denied such increase on the surrendered portion of the pension, and that paragraph 16(f) of the Office Memorandum applied to both existing pensioners and serving employees---Validity---Pensioner at the time of his retirement in 1994, availed a lawful offer by the Federal Government to commute 50% of his pension on specified terms including, inter alia, the accrual of periodic increases in pension to both recurring and commuted portions of his pension---Such assurance was to remain in effect throughout the commutation period---Pensioner had taken a decisive step by acting on the commutation terms in 1994 and thereby acquired a vested right which could not be denied or destroyed subsequently by the Federal Government, as a legal bar came into existence under the doctrine of locus poenitentiae---Revocation of terms of commutation by Office Memorandum dated 4-9-2001 operated prospectively, and it could not impair the time bound vested or accrued rights of pensioner that were created in 1994---Curtailment of pensioner's right to receive periodic increases on surrendered portion of his pension was illegal because Office Memorandum in question lacked express deprivation of right of an existing pensioner to the periodic increases given by Federal Government, and because executive prerogative of Federal Government could not clothe it with a power it did not possess, namely to deprive the pensioner of an accrued and vested right enjoyed since the year 1994---Such an accrued right could not be taken away by an executive action without compensation, except through legislation---Paragraph 16(f) of Office Memorandum in question, revealed that the expression "net pension" used therein had not been assigned any meaning in the Memorandum itself or anywhere else in the official documentation of Federal Government, which left it to the discretion of the executive functionaries to pick and choose what fell within the ambit of the expression---Such discretion did not authorize the executive to adopt a meaning which curtailed accrued and vested rights of existing pensioners without compensation---Intra-court appeal was dismissed, in circumstances.

Akram-ul-Haq Alvi v. Joint Secretary (R-II), Government of Pakistan, Finance Division Islamabad and others 2012 SCMR 106; Secretary Finance, Government of Pakistan v. Roshan Ali Mangi Civil Appeals Nos.1305 to 1327 of 2003; Federation of Pakistan v. Ghulam Mustafa and others Civil Petitions Nos.549 to 559 of 2012 and I.A. Sherwani v. Government of Pakistan 1991 SCMR 1041 ref.

Muhammad Nawaz v. Federation of Pakistan and 61 others 1992 SCMR 1420; Messrs Army Welfare Sugar Mills Ltd. v. Federation of Pakistan and others 1992 SCMR 1652 at 1696 and Messrs M.Y. Electronics Industries (Pvt.) Ltd. through Manager and others v. Government of Pakistan through Secretary Finance, Islamabad and others 1998 SCMR 1404 rel.

(b) Vested right---

----Executive action creating a vested right---Revocation of such a right---Scope-- Where a lawful dispensation was issued by a competent authority that was duly acted upon by its beneficiary created valuable rights---Such vested rights although created under an executive instrument could not be revoked without compensation except through legislation.

Muhammad Nawaz v. Federation of Pakistan and 61 others 1992 SCMR 1420; Messrs Army Welfare Sugar Mills Ltd. v. Federation of Pakistan and others 1992 SCMR 1652 at 1696 and Messrs M.Y. Electronics Industries (Pvt.) Ltd. through Manager and others Government of Pakistan through Secretary Finance, Islamabad and others 1998 SCMR 1404 rel.

Naseem Kashmiri, Dy. A.-G. and Muhammad Ashraf Khan, Dy. A.-G. for Pakistan for Appellant.

Syed Abrar Hussain Naqvi, Khawar Ikram Bhatti, Addl. A.-G. and Mian Masood Ahmad for Respondents.

Date of hearing: 8th May, 2012.

JUDGMENT

UMAR ATA BANDIAL, J.--- This Intra-Court Appeal is filed against the judgment dated 1-8-2011 given in W.P.No.3463 of 2011 by the learned Single Judge in Chambers holding that the Federal Government ("Appellant") was in error to withhold increases given by it on the surrendered portion of the pension of respondent No.1 ("Respondent Pensioner") until restoration of the said portion, in terms of paragraph 16 (f) of the Office Memorandum dated 4-9-2001 ("OM") issued by the Finance Division of the appellant.

2. Learned Deputy Attorney-General for Pakistan relies on the judgment of the Hon'ble Supreme Court of Pakistan given in case titled Akram-ul-Haq Alvi v. Joint Secretary (R-II), Government of Pakistan, Finance Division Islamabad and others (2012 SCMR 106) to rebut the impugned judgment. This precedent adopts the rule laid down by the Hon'ble Supreme Court of Pakistan in its judgment dated 28-11-2005 given in Civil Appeals Nos.1305 to 1327 of 2003 titled Secretary Finance, Government of Pakistan v. Roshan Ali Mangi holding to the effect that it is the executive prerogative of the Federal Government to decide its financial commitments including increases in the amount of pension payable to retired government servants. There is no law hindering the government's discretion in these matters which are determined in the light of the government's finance policy and depend upon factors like inflation and financial constraints of the government.

3. Based on the said principle, learned Deputy Attorney General for Pakistan contends that paragraph No.16(f) of the OM effective from 1-12-2001 permits the respondent pensioner, who retired on 24-2-1994 a right to receive periodic increases on the un-commuted portion of pension paid each month but denies such increases on the surrendered portion of his pension.

4. On the above point, learned counsel for the respondent pensioner has referred to the judgment dated 24-4-2012 of Hon'ble Supreme Court of Pakistan passed in Civil Petitions Nos.549 to 559 of 2012 titled Federation of Pakistan v. Ghulam Mustafa and others wherein a pensioner's entitlement after 1-12-2001 to receive periodic increases also on the surrendered portion of his pension has been affirmed. Such entitlement is founded upon the principle of equal treatment under law as laid down in Article 25 of the Constitution. However, it may be noticed that the said judgment does not consider in detail the applicability of the rule laid down in the Akram-ul-Haq Alvi case (supra) and therefore, does not address the point presently raised by the learned Deputy Attorney General for Pakistan. Although for our purposes, the judgment in Federation of Pakistan v. Ghulam Mustafa (supra), is on all fours with the facts in the present case and must be applied herein, nevertheless in order to comprehensively deal with the appellant's stand, it is endeavored to presently attend the objection raised by the learned Deputy Attorney General.

5. The significant feature of the pensionery scheme introduced by the Federal Government in its office memorandum of 4-9-2001 is that paragraph 17 thereof provides an option to existing civil employees of the Federal Government to choose whether to receive their future pension or its commutation under the newly introduced scheme under the OM of 2001 or under the previously in force scheme of 1994. The said option is, however, not offered by the OM to retired persons/existing pensioners. In case the said option is exercised to avail the new pensionery scheme, then the contents of paragraph No.16(f) of the OM having prospective effect provide as follows:---

"In future, the increase in pension to the pensioners shall be allowed on net pension instead of gross pension."

6. The learned Deputy Attorney General for the appellant has urged that the foregoing provision of paragraph 16 of the OM applies to both existing pensioners and serving employees, who would become pensioners at a future date. In answer to the Court's observation that by granting an option only to prospective pensioners and not existing pensioners, the new scheme under the OM does not contemplate the curtailment of accrued rights of existing pensioners, the learned Deputy Attorney-General for Pakistan explains that abridgment of such rights is envisaged by Para 16(f) of OM which effect is lawful under the executive prerogative of the Federal Government as held in Akram-ul-Haq Alvi v. Joint Secretary (R-II), Government of Pakistan, Finance Division, Islamabad and others (2012 SCMR 106) and in I.A. Sherwani v. Government of Pakistan (1991 SCMR 1041).

7. The explanation given by the learned Deputy Attorney-General fails to address the proposition that upon the event of his retirement in 1994, the respondent pensioner availed a lawful offer by the appellant to commute 50% of his pension on specified terms including, inter alia, the accrual of periodic increases in pension to both the recurring and the commuted portions of his pension. This assurance was to remain in effect throughout the commutation period. By acting on the terms of commutation in 1994, the respondent pensioner took a decisive step in reliance upon the specified time bound terms of commutation and thereby acquired a vested right which cannot be denied or destroyed subsequently by the appellant. Such a legal bar comes into existence under the doctrine of locus poenitentiae. Reliance is placed on Muhammad Nawaz v. Federation of Pakistan and 61 others (1992 SCMR 1420) for the rule that a lawful dispensation, herein the commutation scheme, issued by a competent authority that is duly acted upon by its beneficiary creates valuable rights. Such vested rights although created under an executive instrument cannot be revoked without compensation except through legislation. Reliance is placed on Messrs Army Welfare Sugar Mills Ltd. v. Federation of Pakistan and others (1992 SCMR 1652 at 1696) and Messrs M.Y. Electronics Industries (Pvt.) Ltd. through Manager and others v. Government of Pakistan through Secretary Finance, Islamabad and others (1998 SCMR 1404). In the present case, the revocation of the terms of commutation by the OM dated 4-9-2001 operates prospectively, but it cannot impair the time bound vested or accrued rights of the respondent pensioner that were created in 1994.

8. It is thus plausible that the OM dated 4-9-2001 fails to expressly deal with existing pensioners in its para 16. Accordingly, the impugned action exceeds the terms of the said OM. In the result the curtailment of the respondent pensioner's right to receive periodic increases on the surrendered portion of his pension during the balance commutation period is illegal firstly because the OM lacks express deprivation of right of an existing pensioner to the periodic increases given by the Federal Government. Secondly, the executive prerogative, urged by the learned Deputy Attorney-General, cannot clothe the executive with a power it does not possess, namely to deprive the respondent pensioner of an accrued and vested right enjoyed since 24-2-1994. Such an accrued right cannot be taken away by executive action without compensation except through legislation.

9. There is yet another reason that refutes the argument adopted by the learned D.A.-G.. A perusal of paragraph No.16(f) of the OM reveals that the expression "net pension" has not been assigned any meaning in the OM or anywhere else in the official documentation of the Federal Government. Merely, the fact that in the Akram-ul-Haq Alvi's case, the Hon'ble apex Court in the context of paragraph No.16(g) of the OM made reference to but did not decide the meaning of the expression "net pension" does not mean that in the present case, the appellant is authorized to adopt a self styled meaning of that expression. By not defining the term "net pension" the OM leaves it to the discretion of the executive functionaries to pick and choose what falls within the ambit of the expression. That power does not authorize the executive to adopt a meaning which curtails accrued and vested rights of existing pensioners without compensation. Such a result is disapproved by the law. In the present case pensionary rights of the respondent pensioner are adversely affected by the terms of Para 16(f) of the OM.

10. For the foregoing reasons, there is no merit in this I.C.A. and the same is dismissed.

MWA/A-134/L Appeal dismissed.

Related Legal Research & Directories

• Browse all judgments from Lahore High Court
• Search Pakistani statutes: Constitution of Pakistan 1973, PPC, CrPC, CPC & Family Laws
• Analyze this case with Al Wakeelo AI Legal Assistant