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Petitioner: SULEMAN and others VS Respondent: MANAGER, DOMESTIC BANKING, HABIB BANK LTD. and JUDGMENT
Court Name: Sindh High Court Judge(s): Zia Pervez, Sabihuddin Ahmed Title:SULEMAN and others vs MANAGER, DOMESTIC BANKING, HABIB BANK LTD. and
JUDGMENT
Reported As: 2003 CLD 1797 Result: Petition allowed Judgment JUDGMENT SABIHUDDIN AHMED, J.---The petitioner who is the settler and founding trustee of a registered trust operating under the name and style of Al-Rasheed Trust appears to be aggrieved by the freezing of the funds of a Trust by the respondent No,1 pursuant to the directions of the respondent No,2 in the purported exercise of powers under section 41 of the Banking Companies Ordinance, 1962. The admitted facts seem to be that the Trust was maintaining three current accounts in Rupees, US $ and Pound Sterling respectively in the respondent No,1 Bank. While cheques from any of the said account have been duly honoured in the past by the respondent No,1, a cheque for Rs,400,000 presented on 25-9-2001 was dishonoured with the endorsement "stop your account by Government of Pakistan". 2. The petitioner attempted to find the reason for such dishonour whereupon he was informed by the respondent No,1 vide letter dated 6-10-2001 (Annexure E) that in terms of the State Bank of Pakistan letter dated 25th September, 2001, under section 41 of the Banking Companies Ordinance, 1962, the funds in the Trust account were frozen and as such the cheque was returned unpaid. Aggrieved by the aforesaid refusal a petition was filed in the name of the Trust by the petitioner calling in question validity of the order of the respondent No,2 and seeking a direction to the respondent No,1 to honour the cheque. Since the Trust in our view was not a legal person but keeping in view the fact that it had been filed by one of the trustees in whom the prosperities of the Trust vested, we allowed filing of an amended petition by an order dated 15-1-2002. 3. Basically the petitioner's case as was argued, earlier by Raja Muhammad Irshad and subsequently upon his appointment as Deputy Attorney-General by Mr. Zafar Iqbal, appeared to be
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that the dishonour of the cheque on the part of the respondent No,1 was violative of the petitioner's right to hold property under Article 23 of the Constitution and protection against acquisition of property without compensation guaranteed by Article 24 of the Constitution. 4. The petition was admitted and upon notice to the respondents both of them filed detailed counter-affidavits supported by a substantial amount of data/material in justification of the impugned action. Elaborate arguments were also addressed by Mr. Qazi Faez Issa and Mr. Zahid Jamil respectively on behalf of the said respondents. Since question of interpretation of the Constitution were involved, we issued notice to the learned Attorney-General of Pakistan under Order 27-A, C.P.C. Who, after going through the contents of the petition requested that the Federation of Pakistan be also formally joined as a party. We granted his request and the case of the Federal Governm'ent was initially argued by learned Attorney-General himself and Mr. Amir Hani Muslim (before his lordship's elevation to the Bench) in his capacity as Deputy Attorney- General. 5. After hearing separate arguments, we had reserved judgment but it could not be pronounced within 90 days for unavoidable reasons. Accordingly the matter was posted for rehearing and this time Mr. Zafar Iqbal argued the petitioner's case while the same learned counsel addressed us on behalf of respondents Nos, 1 and 2. The Federal Government this time was represented by Mr. Nadeem Azhar Siddiqui, Deputy Attorney-General. Learned counsel were also kind enough to provide us their written notes, we also requested Messrs 'Mushtaq Ahmed Memon and Mr. Kazim Hassan, Advocates to assist us as amicus curiae and valuable contributions were made by both these learned counsel, the former supporting the petition and the latter arguing against it. 6. On behalf of the respondent No,1 a number of preliminary objections to the maintainability of the petition were raised, inter alia:-- (i) A petition could only be filed by all the trustees of Al-Rasheed Trust and the present petition being filed by only one of them, particularly when the account itself was required to be operated by two trustees was thus not maintainable. (ii) That no relief had been sought against the respondent No,2 and respondent No,1 was not a person, performing functions in connection with affairs of the Federation, a Province or a local authority and as such not amenable to the jurisdiction of this Court under Article 199 of the Constitution. (iii) That the accounts of the petitioners were frozen because of the petitioner's alleged involvement in acts of terrorism and the question whether such allegation was true or otherwise was a question of fact which could not be determined in these proceedings. 7. It may be appropriate at this stage to consider the preliminary objections. As to the plea that the petition should have been filed by all trustees, Faez Issa relied upon the judgment of the Court of Appeal in Luke v. South Kensington Hotel (1874) 80 AER 1293. In this case the trustees had invested a certain part of the Trust property into a company which ran into the difficulty and the defendant trustees entered into a composition accepting lesser amount by way of mortgaged debt and extending the period of repayment. The plaintiff trustee declined to accept the composition and filed a suit for foreclosure on the original mortgage. The trial Court held that the plaintiff was not bound by the deed executed by two of the four trustees, but dismissed the suit on the ground that all trustees should have been arrayed as plaintiffs. Reversing the judgment, the Court of appeals upheld the finding of the trial Court to the extent that the plaintiff was not bound by deed executed by the defendant trustees 'but went on to hold that since the defendant trustees were arrayed as defendants and did not oppose a decree for foreclosure therefore, the decree should have been granted. 8. Having carefully gone through the aforesaid judgment, we are afraid that it does not really help Mr. Faez Issa. It seems to acknowledge that when a trustee is not willing to join as a plaintiff he
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could always be arrayed as efendant and acknowledges that an interested party could not be bound by a composition operating to his detriment made in his absence. In the instant case there seems to be no conflict of interest amongst the trustees D and the outcome is not likely to have any prejudicial effect on the interest of any one of them. 9. Moreover even if we assume that the suit involving Trust Property must be filed by all the trustees, or all of them should be joined as party thereto, we are of the view that the same conditions of procedural law would not necessarily apply to petition under Article 199 of the Constitution. It might be possible to urge that a strict legal right in respect of Trust Properties could only vest in the Trustees acting jointly. On the other hand it is well-settled, ever since the pronouncement of the Honourable Supreme Court in Fazal Din. v. Lahore Improvement Trust PLD 1969 SC 223, it has been repeatedly held by the superior Courts that for the purposes of maintaining a petition under Article 199 of the Constitution, a strict legal right need not be shown and a sufficient legal interest in the subject-matter was enough to confer locus standi upon the petitioneRs, Admittedly the petitioner being one of the trustees in whom the Trust Properties vest and entitled to operate the account alongwith another co-trustee does appear to have sufficient interest. 10. The second objection appears to be that no relief has been sought against the respondent No,2 and all that has been prayed for is a declaration that the letter of the respondent No,1 dated 6-10- 2001 be declared illegal and the said respondent be directed to honour the petitioner's cheque. It is contended that both these reliefs are beyond the purview of the Constitutional jurisdiction of this Court. Indeed Mr. Faez Issa is correct to the extent that the petitioner has only sought relief against the respondent No, 1. Nevertheless, we can always take judicial notice of the fact that the respondent No,1 is a company operating under the Banks Nationalization Act, 1975 and is substantially, owned and controlled by the Federal Government. It could therefore, be classified as a person performing functions in connection with the affairs of the Federation and amenable to the Constitutional jurisdiction of this Court. Indeed there is a dearth of recent case-law in support of this view, though it must be stated that the contrary view has also been taken in certain cases. 11. Nevertheless without pursuing this controversy further it needs to be kept in view that the petitioner has sought enforcement of fundamental right guaranteed under Articles 23 and 24 of the Constitution. In this context it needs to be kept in view that the language of Article 199 contains a special distinction in respect of orders relating to enforcement of fundamental rights. It may be seen that under clause (a) of Article 199 (1) a direction or declaration in the nature of prohibition, mandamus and certiorari can only be issued to persons performing functions in connection with the affairs of Federation, a Province or a local authority. On the other hand clause (c) contemplates that a direction which may be appropriate for enforcement of fundamental rights can be given to any person or authority including any Government (Underlining ours). In view of the above we are clearly of the opinion that in cases like the present one it is not necessary that the person to whom directions are given, must necessarily be one performing function in connection with the affairs of the Federation, a Province or a local authority. 12. In any event the respondent No,1 has urged, and rightly so that they are bound by any direction of the respondent No, 2 issued in the exercise of statutory powers under section 41 of the Banking Companies Ordinance, 1962 and have themselves placed on record the direction dated 25-9-2001, which is reproduced as follows:-- "Sanctions Imposed by U.N. Security Council against Afghanistan:-- In exercise of the power vested in State Bank of Pakistan under section 41 of the. Banking Companies Ordinance, 1962, it has been decided to freeze the , accounts of individuals/entities mentioned in the enclosed list with immediate effect. You are, therefore, advised to take necessary action to freeze the funds/assets immediately, if any, of the individuals/entities mentioned in the list. You are also advised to furnish a statement of the
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frozen funds in the proforma given below, so as to reach us by 1st October, 2001 positively. Rs, in Million Name of Bank/ NBFITitle of Account Amount frozen Please acknowledge receipt. Yours faithfully, (Sd.) (Aziz A. Lakhani)" 13. Indeed there could be no doubt that the respondent No,2 is amenable to the jurisdiction of this Court under Article 199 of the Constitution and the legality or otherwise of its directions issued in the purported exercise of statutory powers could always be examined in these proceedings. In case such directions are found to be unlawful the respondent No,1 would be bound to perform its obligations towards his customers in accordance with law. 14. Mr. Faez Issa is right in contending that no particular relief has been sought against respondent No,2 in the prayer clause. However, it cannot be overlooked that the direction in question has been clearly mentioned and on that ground the respondent No,2 has been joined as party. Moreover, it is well-settled that the Court can always modify relief or grant some relief which has not been prayed for provided it has jurisdiction to do so, as inter alia, held by Seven-Member Full Bench of this Court in Sharaf Faridi v. Province of Sindh PLD 1989 Kar. 404. Accordingly we consider the objection too technical to merit any serious consideration. 15. Another objection raised was that the petition involves determination of facts to the extent whether the amounts held in the account of the Trust were used in respect of any terrorist activity or against the public interest, which cannot be determined in these proceedings. In this context we need to make it explicitly clear that we do not intend to record any finding of fact whatsoever particularly. With regard to such sensitive allegations having international impact and would subscribe to the contention of learned counsel to that extent. At the same time however, it needs to be clarified that we are only concerned with the legality of the impugned action and would be required to examine whether section 41 of the Banking Companies Ordinance enables the respondent No,2 to pass the order dated 25-9-2001 on the basis of material brought to its notice and placed on record. 16. Qazi Faez Issa then argued that as far as the respondent No,1 is concerned the law casts a mandatory obligation upon it to comply with the directions of the respondent No,2. To this extent we entirely agree and would hold that for all practical purposes the validity of the direction of the respondent No,2 in the purported exercise of powers under section 41 of the Banking Companies Ordinance will have to be examined, which reads as follows:-- "41. Powers of the State Bank to give direction.---(1) Where the State Bank is satisfied that--- (a) in the public interest; or (b) to prevent the affairs of any banking company being conducted in a manner detrimental to the interests of the depositors or in a manner prejudicial to the interests of the Banking Company; or (c) to secure the proper management of any Banking Company generally; it is necessary to issue directions to Banking Company in particular, it may, from time to time, issue such directions as it deems fit, and the Banking Companies or the Banking Company, as the case may be, shall be bound to comply with such directions." 17. Before doing so however, it may be proper to consider, an objection to the maintainability of the petition raised on behalf of the respondent No,2, Mr. Zahid Jamil, learned counsel for the respondent No,2 in a well prepared and elaborate address argued that the petitioner would not seek enforcement of fundamental rights guaranteed under Articles 23 and 24 of the Constitution
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on the ground that the money deposited by the petitioner in their accounts with the respondent No,1 could not be described as their property. Referring to Thompson's dictionary and Bnking Law and the House of Lords decisions in Foley v. Fletcher 1843-1860 AER 953 and London Joint Stock Bank v. McMillan and another 1918-19 AER 330. Learned counsel argued that deposits in a bank account only created lender and borrower relationship between the customer and the Bank and the money deposited ceased to remain the property of the depositor. Without going into detail it may be stated that there could be no cavil with the first part of the contention but the second does not necessarily flow therefrom. In fact in Federation of Pakistan v. Mushtaq Ali Mian PLD 1999 SC 1026 cited by Mushtaq A. Memon amicus curiae, the Honourable Supreme Court struck down a few circular of the respondent No,2 relating to foreign currency account on the ground that they violated the depositor's fundamental right regarding property under Articles 23 and 24 of the Constitution. In view of the above, authoritative pronouncement, we are afraid, we cannot accept this rather ingenious contention. 18. On behalf of respondent No,2 detailed comments were filed accompanied by a number of documents spread over more than 80 pages to justify the direction given by respondent No,1 to freeze the petitioner's account. This material, inter alia, contained the executive order of the President of U.S.A. Directing freezing of accounts of a large number of organizations suspected to be financing terrorism, subsequent directions given by Banking Regulator in U.S.A. Communicated to the respondent No,2 and the Federal Government, resolution passed by the U.N. Security Council and other international bodies supporting sanctions against allegedly terrorists organization including the petitioner's Trust, and a great deal published material including some publications of the petitioner Trust purporting to support the allegations. 19. With respect to the direction of the Banking Regulators in U.S.A. Mr. Zahid Jamil referred to a letter dated 25-9-2001 from the respondent No,1 addressed to the Secretariat Ministry of Finance and Ministry of Foreign Affairs with a copy enclosed to the Deputy Governor of the respondent No, 2 which reads as follows:- "Dear Sirs: We have been advised by our New York Branch early this morning that our US Banking Regulators (Federal Reserve Bank of New York and the State Banking Commission of New York) have asked us to immediately freeze following accounts:-- A/C Title Location/Branch USD A/C No, Al-Rasheed Trust HBL Forex Branch, Habib Square, Karachi.055017-41 Taliban of AfghanistanHBL Civic Centre Branch, Islamabad.80835-17 In compliance with these instructions we have, as of this morning, taken the necessary action and advised the State Bank of Pakistan too. We were also advised by US Banking Regulators that in case we fail to take immediate action, then action against our Branch in New York would be taken. In addition, the US Regulators also want the Account Statements pertaining to the aforesaid accounts on an urgent basis for the period commencing January 1, 2000 todate. In this regard, we have requested State Bank of Pakistan to grant us the necessary permission to provide this information to the US Banking Regulatory Authorities. Further, we have also been provided a list of 27 individuals/organizations whose assets have been frozen by the US Government. We are in the process of ascertaining if these individuals/organizations have any banking relationship with us and once this information is available and subject to State Bank of Pakistan's permission, the same will be conveyed to our New York Branch for onward transmission to the US Banking Regulatory Authorities.
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Considering the sensitivity of the matter, we are bringing 'this matter to your immediate attention and in case you wish us to take any specific action, the same may be communicated to us at the earliest. Assuring you of our preferred attention at all times. Yours truly, (Sd.) 25/9/2001. Copy to Mr. R.A. Chughtai, Deputy Governor, State Bank of Pakistan, this refers to our telephone conversation with your Mr. Mansoor-ur-Rehman." 20 Learned counsel then pointed out that the Security Council of the UN in its Resolution No,1267 of 1999 dated 15th October, 1999 had resolved to:-- "4(c) Freeze funds and other financial resources, including funds derived or generated from property owned or controlled directly or indirectly by the Taliban, or by any undertaking owned or controlled by the Taliban, as designated by the Committee established by paragraph 6 below and ensure that neither they nor any other funds or financial resources so designated are made available by their nationals or by any persons within their territory, to or for the benefit of the Taliban or any undertaking owned or controlled, directly or indirectly, by the Taliban, except as may be authorized by the Committee on a case-by-case basis on the grounds of humanitarian need." 21. As regards the justification for specifying the petitioner Trust as an organization involved in financing terrorist activities learned counsel argued that listing of the Trust name in the Executive Order of the President of USA was not arbitrary and referred to the its drawn up by the UN Security Council Committee concerning Afghanistan issues dated 8th October, 2001 pursuant to the Security Council Resolution No,1333 of 2000 dated 19th December, 2000. It was argued that the list had been prepared in accordance with para.8-C of the Resolution. 22. In addition to the above learned counsel also referred to the European Commission Regulation No,1996 of 2001, dated 11th October, 2001 whereas sanctions were imposed against 27 organizations including the Trust. He further brought to our attention some material published in the local and international process indicating the trust's support or Taliban including material published by the Trust itself. 23. Both Mr. Qazi Faez Issa and Mr. Zahid Jamil argued that once it was shown from the material placed on record that some nexus between the petitioner's Trust and terrorist activities of Taliban and Organizations supporting them existed, this Court was not entitled to review the findings of facts arrived at by the Authorities competent to take action or to evaluate the material and record its independent findings of facts in these proceedings. In this context, reliance was inter alia palced upon a reported Division Bench Judgment of this Court in C.P.D. No,1786 of 1998 Muhammad Hussain and others v. State Bank of Pakistan and another, decided on 10-5-1999. In this case a direction of the State Bank restricting the operation of the Karachi Branch of the respondent No,1 and consequent failure of the respondent No,2 to honour a pay order was questioned. It was alleged by the State Bank that the petitioner had fraudulently attempted to withdraw the amount but the allegations were denied by the petitioner. The Court observed that the question of fraud required deeper enquiry and such enquiry could not be undertaken in a petition under Article 199 of the Constitution. The petition was accordingly dismissed in limine. 24. Indeed we have no cavil with the above proposition to the extent that it is neither possible nor proper for us to form an independent opinion as regards the alleged complicity of the Trust in terrorist activities. Nevertheless, it is our duty to examine whether the respondent No,2 is competent, in terms of section 41 of the Banking Companies Ordinance to form such opinion and whether it had been so formed in accordance with law before the impugned directive dated 25-9- 2001 had been issued.
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25. Mr. Zahid Jamil argued that freezing of the petitioner's accounts was permissible under the Anti-Terrorism Act, 1997 and meticulously referred to several provisions of the Act particularly those inserted through the Anti-Terrorism (Amendment) Ordinance, 2001. Indeed apart from providing for trial of offences of terrorism section 11-B of the Act also enables the Federal Government to prescribe certain organizations upon reasons to believe that they were involved in terrorism. Under section 11-E the accounts of such organizations could be frozen. However, section 11-C confers a right to seek review of such order and upon refusal a right to appeal to the High Court. Again under sections 11-H, I and J providing money, raising funds or making money or property available to another, reasonably suspected of being involved in terrorism, have also been defined as offences for the purposes of the Act. 26. We requested learned counsel for the respondents as well as the learned Deputy Attorney- General as to whether any action against the petitioner or his co-trustee was taken under the Anti- Terrorism Act, but they were unable to refer to any such action having been taken. At this stage it may be pertinent to recall that when Legislature has made a special law to deal with suppression of terrorism and such law also confers powers to freeze accounts reasonably suspected of being used for promotion of terrorists' activities resort to general provision to issue any directions to the Banking Company in the public interest would be entirely unwarranted. At the same time it ought to be stated that when resort to the general law would deprive the affected party of the right to seek review or appeal to this Court the action has to be treated as mala fide in law. 27. Mr. Makhdoom Ali Khan, learned Attorney-General of Pakistan also brought to our attention the provision of section 2 of the United Nations (Security Council) Act, 1948, which reads as follows:-- "2. If, under Article 41 of the Charter of the United Nations signed at San Francisco on the 26th day of June, 1945, the Security Council of the United Nations calls upon the Central Government to apply any measures, not involving the use of Armed Force, to give effect to any decision of that Council the Central Government may, by order published in the official Gazette, make such provisions (including provisions having extra-territorial operation) as appear to it necessary to expedient for enabling those measures to be effectively applied, and without prejudice to the generality of the foregoing power, provision may be made for the punishment of persons offending against the order." 28. Learned Attorney-General contended that in view of…
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