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Petitioner: INAMUR REHMAN VS Respondent: FEDERATION OF PAKISTAN AND 3 OTHERS
Court Name: Sindh High Court Judge(s): Naimuddin Ahmed, Z. A. Channa Title: INAMUR REHMAN vs FEDERATION OF PAKISTAN AND 3 OTHERS Case No.: Constitutional Petition No, 780 of 1973 Date of Judgment:1977-04-06 Reported As: PLD 1977 Karachi 524 Result: Petition dismissed
JUDGMENT
JUDGMENT ' Z. A. CHANNA , J.-This petition calls in question the legality of the directions of the State Bank of Pakistan, respondent No, 2, issued to the respondents Nos. 3 and 4, requiring them to deposit with it the funds held by the petitioner in his respective accounts with them, and the action of respondents Nos. 3 and 4 in complying with the said directions. 2. The relevant facts for the purpose of this petition, shortly stated, are that on the promulgation by the Chief Martial Law Administrator, on 13-1-1972, of the foreign exchange repatriation regulation (1972 M. L. R 104) the petitioner declared and repatriated foreign exchange amounting to 170,000, through the Standard Bank, respondent No, 4, of which he was at that time the Managing Director. In consequence, respondent No, 4 received on behalf of the petitioner a sum of Rs, 20,90,496.77, being the rupee equivalent of the foreign exchange repatriated by the petitioner. Additionally, respondent No, 4 received on behalf of the petitioner a further sum of Rs, 19,55,197.45, being the bonus amount to which the petitioner was entitled under paragraph 3(3) of the said Regulation. This amount was transferred, under instructions from the petitioner, by two separate entries, one dated 21-4-1972 and the other dated 29-6-1972, to the account of the Rawalpindi Engineering Company, a private Company owned and controlled by the petitioner and his family. So far as the first amount of Rs, 20,90,486.77 is concerned, the petitioner withdrew the said amount from respondent No, 4 on 21-4-1972 and deposited it with respondent No, 3. The petitioner thereafter drew some cheques on respondent No, 3, but the same could not be cashed, and the persons presenting the cheques were verbally informed that respondent No, 3 had been instructed by respondent No, 2 not to allow operation of the petitioner's account. Respondent No, 3 subsequently,
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by its letter dated 30-6-1972, informed the petitioner that they had acted upon the advice of respondent No, 2. 3. On 3-8-1972, the President promulgated the Foreign Exchange (Prevention of Payments) Ordinance, 1972, which inter alio authorized the State Bank to direct any authorized dealer in foreign exchange through whom any person had repatriated any foreign exehange uncle! M L it 104 to deposit with the State Bank the rupee equivalent of the amount repatriated and any other amount payable because of such repatriation. In purported exercise of the above power, respondent No, 2 wrote a letter, on 28-8-1972, directing respondent No, 4 to deposit with it the aggregate rupee proceeds of the bonus vouchers issued to the petitioner on repatriation of his foreign exchange holding. A similar letter was also issued to respondent No, 3 in respect of the rupee equivalent of the foreign exchange repatriated by the petitioner. In consequence of these letters, respondent No, 3 deposited with respondent No, 2 the amounts of Rs, 20,90,486.77 lying in the account of the petitioner with it. Similarly, respondent No, 4, on 4-9-1972, reversed the entries in favor of the Rawalpindi Engineering Company, and deposited the amount of Rs, 19,55,197.49 with respondent No, 2. It may be mentioned here that the entries in favor of the said company were reversed at the request of the petitioner himself, who had obtained permission from respondent No, 2 in this behalf. 4. On 25-9-1972, the Federal Legislature enacted the Foreign Exchange (Prevention of Payments) Act, 1972, which replaced the Ordinance promulgated on 3-8-1972 and authorized the State Bank to direct not only an authorised dealer through whom any repatriated amount was received, but also any other person with whom such amount or any part thereof, and any other amounts payable in respect of such repatriation, had been deposited, to deposit the same with the State Bank. Subsequently, on 10-10-1973, the Foreign Exchange (Prevention of Payments) Ordinance, 1973, was passed, which amended the aforesaid Act and gave it retrospective effect from 10-3-1972. The aforesaid Ordinance, in turn, was replaced on 8-2-1974 by the Foreign Exchange (Prevention of Payments) (Amendment) Act, 1974, which contained a new section validating all directions or instructions issued by the State Bank, from the date of the commencement of the Act first named till 29-9-1972, to any person or authorised dealer in foreign exchange. The present petition was filed on 9-7-1973, but after the promulgation of the amending Ordinance of 1973 and the amending Act of 1974, an amended petition was filed on 25-2-1975. 5. Since the main contentions of the learned counsel for the parties involve the interpretation of sections 2 and 6-A of the Foreign Exchange (Prevention of Payments), Act, 1972 (hereinafter referred to as the said Act), which sections, as already stated, were given retrospective effect from 10-3-1973, by the Foreign Exchange (Prevention of Payments) Ordinance, 1973, and the Foreign Exchange (Prevention of Payments) (Amendment) Act, 1974, it would be convenient to set forth the said two sections. They read as follows:- "2.(1) Notwithstanding anything contained in the Foreign Exchange Repatriation Regulation, 1972 (M. L. R. 104), as continued in force by Article 280 of the Interim Constitution of the Islamic Republic of Pakistan, the State Bank of Pakistan may, and if so required by the Federal Government by order in writing shall, direct- (a) an authorized dealer in foreign exchange through whom any person has repatriated any amount of foreign exchange to Pakistan in pursuance of the said Regulation; or (8) any other person with whom the whole or part of the rupee equivalent of the amount so repatriated and other amount payable in respect of such repatriation is or has been deposited, to deposit with the State Bank, within the time specified by it, the amount representing the aggregate of the rupee equivalent of the amount so repatriated and any other amount payable in respect of such repatriation or, as the case may be, the party thereof so deposited. (2)Any person or authority to whom any amount of money is payable by the person repatriating the amount of foreign exchange or who has against such person any claim the value of which can
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be expressed in terms of money may, within such time and in such manner as the Federal Government may, by notification in the official Gazette specify, apply to the Federal Government for payment of the amount so payable or, as the case may be, of the amount representing the value of such claim. (3)Upon the receipt of an application under subsection (2), an officer authorized by the Federal Government in this behalf may, after making such inquiries as he may consider necessary, make such order as he may deem fit: ' Provided that, while making such an order, the officer shall have due regard to an order of the Federal Government, if any, specifying the person or authority whose claim against the person repatriating the amount of foreign exchange shall be paid in priority to all other debts and claims: ' Provided further that no order for the payment of money to any person or authority shall be so made unless the person repatriating the amount of foreign exchange has had an opportunity of showing cause against it. (4)The officer making an order under subsection (3) shall forward a copy thereof to the State Bank who shall make to the person or authority specified in the order the payment required by the order, if any. (5)The deposit by an authorized dealer of foreign exchange or any other person referred to in subsection (1) of any amount of money he is required to deposit with the State Bank under subsection (1), and the payment by the State Bank of any amount of money in pursuance of an order under subsection (3), shall be a full discharge of the authorized dealer or that other person or, as the case may be, of the State Bank form all liabilities in respect of the amount deposited or paid. 6-A. Validation.-All directions or instructions issued by the State Bank of Pakistan from the date of the commencement of this Act till the 25th day of September, 1972, to any person or authorised dealer in foreign exchange as specified in clauses (a) and (b) of subsection (1) of section 2 of the said Act to withhold payment to any person of any amount repatriated under the Foreign Exchange (Repatriation) Regulation, 1972, and of any amount payable in respect of such repatriation, shall be deemed to have been validly issued under this Act" 6. Mr. A. K. Brohi has assailed the impugned directions of respondent No, 2 and compliance therewith of respondents Nos. 3 and 4 on various grounds His first ground of attack is that the said Act and the Ordinance and Act amending the same are in derogation of M. L. R. 104, in that while the Martial Law Regulation guaranteed repayment in rupees of the amount of foreign exchange repatriated, the Ordinances and the Acts in question sought not only to confer power on the Government and the State Bank to give directions in respect of that amount, but also conferred powers upon the Federal Government to entertain claims in respect of that amount and to set up authorities for adjudication of such claims, thereby diverting the judicial determination of an issue to a non-judicial forum. The precise argument in respect of the first part of the above contention was that under the Interim Constitution no Martial Law Regulation, which had been saved under that Constitution and specified in the VIlth Schedule thereof, could be amended by any Legislature except with the previous sanction of the President, as provided in Article 280 of that Constitution. When we drew the attention of the learned counsel to the provisions of clause (2) of Article 144 of that Constitution, which inter alia provides that no Act of the Federal Legislature shall be invalid by reason only that some previous sanction or recommendation was not given, if assent to that Act was given by the President, the learned counsel gave up this part of his argument. 7. In support of his contention that the provisions of the said Act and of the Ordinances and Act amending thereto are in derogation of M. L. R. 104, Mr. Brohi submitted that whereas the Martial Law Regulation gave a solemn undertaking that persons declaring and repatriating foreign exchange by the specified dates shall not only be allowed rupee equivalent thereof by the State Bank, but
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shall further be allowed a bonus of 45% on the repatriated foreign exchange, the said Act not only authorises the State Bank to direct an authorized dealer in foreign exchange through whom any person has repatriated an amount of foreign exchange or any other person with whom the whole or any part of the rupee equivalent of the amount so repatriated and any other amount payable in respect of such repatriation has been deposited to deposit the same with the State Bank, but further confers authority on the Federal Government to entertain claims in respect of the amounts payable to the persons repatriating foreign exchange and to refer such claims for adjudication to non-judicial forums. Mn Saeed A. Shaikh attempted to argue that these provisions in the said Act are not inconsistent with the provisions of M. L. R. 104, and in support of his contention he relied upon the provisions of paragraph 6 of the Regulations, which confer powers on the Central Government to make rules and to issue directions as it may consider necessary for the purposes of the Regulation and further lay down that such rules or directions may provide for matters for which no provisions or no sufficient provisions exist in the Regulation. We find ourselves unable to agree with the contention of the learned counsel, for not only are such rules and directions not to be inconsistent with the provisions of the Regulation but further only such rules or directions may be made or issued as are necessary for carrying out the purposes of the Regulation or are in regard to matters in respect of which no provisions or no sufficient provisions exist in the Regulation. In our view, the provisions of the said Act, to which Mr. Brohi has taken exception, are clearly inconsistent wit the provisions of the Regulation. That this was also the view of the Legislature 4 is made clear by the non absente clause in section 2 of the said Act an the need for validating the directions and instructions issued by the State Bank. However, there being no constitutional bar on a Legislature to modify any earlier legislation and thereby express a different intention, so long as such modification is constitutionally within its legislative sphere, no exception on the above score can be taken to the provisions of the said Act. Mr. Saeed A. Shaikh further submitted that in any case the Legislature, acting within the scope of its constitutional authority, was not bound by the acts of its predecessor and in support of his contention he referred us to two decisions of the Supreme Court, reported in PLD 1971 SC 401, and PLD 1973 SC 563In the latter case, reference was made to the observation of Blackstone to the effect that "Acts of Parliaments, derogatory from the power of subsequent Parliaments, bind not" (vide Cooley's Constitutional Limitations, Vol. I, Eighth Edition, p. 247). 8. In regard to the last part of his contention on this point, namely the purported conferring of powers under the said Act upon the Federal Government to refer claims against non-judicial forums and thereby, as he expressed it, ''diverting judicial determination of an issue to a non- judicial forum", Mr. Brohi submitted that the conferment of such powers was hit by the dictum laid down by the Supreme Court in the case of Waris Meah v. The State (1) and that the diversion of such issues for determination of non-judicial forums was in violation of the scheme of tracheotomy of powers, which is an essential feature of a Federal form of Government. In Waris Meas case, the Supreme Court held that the amendment effected in the Foreign Exchange Regulation Act, 1947, by Act XXXII of 1956, whereby power was purported to be conferred upon the Central Government or the State Bank to determine whether an offender under the original Act was to be tried under the ordinary law, or an Adjudication Officer or by a Tribunal, each with different power and procedure and entailing in each case punishment of unequal nature and description, was discriminatory being in violation of Article 5 of the 1956 Constitution and was for that reason void. It may, however, be pointed out that the said Act, unlike the impugned legislation in Waris Meah's case, neither provides for different forums fo adjudication of identical matters nor does it confer any discretion upon the Federal Government to refer a claim to one or the forum. The object of the said Act appears to be that whenever any claim thereunder is made to the Federal Government against a person repatriating foreign exchange under M. L. R. 104, such claim is to be referred by it to an
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officer appointed by it. In East & West Steamships Co. v. Pakistan (2), Muhammad Munir, C. J. (as be then was), reiterated the statement of law made in Tibendra Kishore's case that equality is not violated by the mere conference of unguided power but only by its arbitrary exercise by those upon whom it is conferred, and that "if a statute declares a definite policy, there is a sufficiently definite standard for the rule against the delegation of Legislative Power, and also for equality if the standard is reasonable", and "if no standard is set up to avoid the violation of equality, those exercising the power must act as though they were administering a valid standard". In the instant case, the law declares a definite policy and also a definite standard, which, in C our humble opinion, is reasonable, and hence it is our view that the said Act is not hit by the dictum laid down in Waris Meah's case. 9. So far as the objection to the impugned law on the score of tracheotomy of powers is concerned, no doubt, in the case of State v. Zia-urRehman (3), Hamoodur Rehman, C..f. (as he then was), observed tha! In a case of a Government set up under a written Constitution, the functions of the State are distributed amongst the various State functionaries and the normal scheme under such a system is to have a tracheotomy of powers between the executive, the legislative and the judiciary, but in the same case he pointed out that there is a distinction between "judicial power" and "jurisdiction of Courts" and while jurisdiction of Courts may be controlled laid down by the Legislature, except as otherwise provided by the (1) PLD 1957 SC (Pak.) 157 (2) PLD 1958 SC (Pak.) 44 (3) PLD 1973 SC 49 ' Constitution, 'judicial power', which includes "what the existing law is in relation to something already done or happened is the function of the judiciary while the pre-determination of what the law shall be for all future cases falling under its provisions is the function of the Legislature. " Item 55 of the Federal Legislative List in the Interim Constitution brings within the scope of the Federal Legislature the jurisdiction and powers of all Courts, except the Supreme Court, in respect of matters within its legislative field, and even in respect of the Supreme Court, it conferred powers upon the Central Legislature to enlarge its jurisdiction and confer supplemental powers therein. So far the Permanent Constitution is concerned, Article 175(2) thereof expressly provides that "no Court shall have jurisdiction save as is or may be conferred on it by the Constitution or by or under any law. It is thus permissible for the appropriate Legislature, acting within the scope of its Constitutional powers, to take away or enlarge the jurisdiction of any Court or enact that a particular matter shall not be determined by normal Courts, except that the Legislature cannot abridge the Constitutional jurisdiction and powers of the superior Courts save by way of amendment of the Constitution. 10. The next contention of Mr. Brohi, and one on which he laid considerable stress, was that on deposit by the petitioner with respondent No, 3 the proceeds of his repatriated foreign exchange, the amount to his credit with the said respondent ceased to have the character of rupees equivalent of the repatriated foreign exchange and, therefore, it was out of reach of the Central Government or respondent No, 2 and hence could not be touched. His precise argument was that what could possibly be touched or ordered to be deposited with the respondent No, 2 was the rupee equivalent of repatriated foreign exchange, in specie, and since this characteristic of specie was lost the moment the money was deposited with respondent No, 3, when it became merged with the general funds of the said respondent, the attempt by the Impugned legislation to reach at that money was an exercise in futility. In support of this contention of his, the learned counsel relied upon the following passage appearing in 'Law of Banking' by Paget, Seventh Edition - "It is this purely debtor and creditor position which excludes any element or suggestion of trusteeship or fiduciary relation in the banker with regard to current account, the real point settled in Foley v. Hill (1848) 2 H L Cas.
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28. The banker is free to use and does use the money as his own, like any other borrower; the customer has partied with control over it, like any other lender, retaining only his right to repayment. And as a consequence the banker is not as a general use concerned to enquire into the sources whence his customer derived the money, or to pay heed to the claims of third parties seeking to reach It in his hands as being by right theirs [Cf. Bodenham v. Hoskins (1852) 21 L J Ch. 864, Thomson v. Clydesdale Bank Ltd. (1893) A C 282; on the first point. Calland v. Loyd (1840) 6 M & W 26, Gray v. Johnston (1868) L R 3 H L I, on the second and see also Shaw (John) (Ranver's Lane) Ltd. v. Lloyds Bank 1845), Legal Decisions Affecting Bankers, Vol. V, 396, Journal of the Institute of Bankers, Vol. LXVI, 148J. ' On this ground Courts have refused to interfere by injunction restrain the banker from parting with moneys in his hands by honouring the customer's cheques, through such moneys were alleged to be the direct produce of a theft [Foantaine-Besson v. Parr's Bunking Co. And Alliance Bank Ltd. (1895) 12 T L R 12]. In that case the customer was not before the Court, but Kay, L. J., intimated that, in any event, the oily injunction they could make was one restraining the customer from drawing, not the hank from paying cheques previously drawn." 11. We regret that we are unable to agree with the above submission of the learned counsel, for what the law empowers the State Bank to stop payment and the deposit of it is not the amount in specie obtained on repatriation of foreign exchange but "the amount representing the aggregate of the rupee equivalent of the amount so repatriated and any other amount payable in respect of such repatriation ..... .". 12. The rupee equivalent received by the petitioner for repatriating his foreign exchange holding of 1,7u,000 was an amount of Rs, 20,90,486.72. This amount was received by him in the Karachi Office of respondent No, 4 on 21-41972. On the same date, he withdrew this entire amount and deposited it that very day with respondent No, 3. The amount thus deposited, in our opinion, clearly was the amount representing the aggregate of the rupee equivalent of the amount so reoatriated", and consequently came within the ambit of section 2 of the said Act. 13. It was next contended by Mr. Brohi that the Central Legislature was not competent to enact the impugned legislation inasmuch as the proceeds of repatriated foreign exchange do not fall within any of the items of the Federal or Concurrent Legislative Lists under the Interim or the Permanent Constitution. v1r. Saeed A. Shaikh, on the other hand, contended that the impugned legislation falls within items 28, 55 and 66 of the Federal Legislative List under the Interim Constitution, which correspond to items 9, 55 and 59 of the Federal Legislative List to the Permanent Constitution. We are not inclined to agree with the view that the impugned legislation is covered by item 28 of the Federal Legislative List in the Interim Constitution, which item relates to "foreign exchange", cheques, bills of exchange, Promissory Notes and other like instruments". In our opininn, however, the impugned legislation would be coveted by item 66 of the Federal Legislative to the Interim Constitution, which relates to "matters incidental or supplemental to any manner enumerated" in the Federal Legislative List. p The impugned legislation is clearly in respect of the amount received by a person for repatriating foreign exchange and the claims of other persons in respect of the amounts so repatriated. In the case of Haider Automobile Ltd. v. Pakistan (1), Hamoodur Rehman, C. J. (as he then was) observed as follows t- "The items in the legislative list, as was observed in the case of the United Provinces v. Mst. Atique Begum and others AIR 1941 P C 16 aro not to be read in any narrow or pedantic sense. Each general word therein should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably se said to be comprehended within it. These items describe only comprehensive categories of legislation by a word of broad and general meaning. Thus, by being given the authority to legislate in respect of the Constitution, organisation, jurisdiction and powers of the Supreme Court, the Central Legislature, in my view, acquired the jurisdiction also to legislate
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(1) P L D_1969 SC 623 ' with regard to the number of Judges to be appointed, the salaries to be paid to them and the terms and conditions upon which they were to serve in the Supreme Court." 14. In Ghulam All Shah v. State (1), M. .R. Khan, J., laid down the following text for determining the real field of legislation within which subject-matter of any particular statute, lies: "The rule is that where a Constitution Act distributes legislative powers between different law- making bodies, a statute enacted by any such body should be examined to ascertain its 'pith and substance', or its 'true nature and character' for the purpose of determining the real field of legislation within which the subject-matter of the statute lies. Placing reliance on a number of decisions of the Privy Council, Sir Maurice Gwyer, C. J., stated the rule in Subrahmanyan v. Muttuswa nd Goundan, s940 P C R 188, as…
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