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Petitioner: Suo motu action regarding non-payment of retirement benefits by the relevant departments VS Respondent: Secretary Privatization Commission and Others
Court Name: Supreme Court of Pakistan Judge(s): Ijaz-ul-Ahsan, Mian Saqib Nisar, Umar Ata Bandial Title:Suo motu action regarding non-payment of retirement benefits by the
relevant departments vs Secretary Privatization Commission and Others Case No.:SUO MOTU CASE NO.20 OF 2016 AND HUMAN RIGHTS CASES NO.7094-P, 26591-P, 15518-P/2015, 25917-S AND 26252 S/2016 AND 3910-K, 3911-S, 3912- P, 3913-G AND 3914-P/2018 AND CONSTITUTION PETITION NO.45/2016 AND C.M.APPEAL NO.203/2016 IN CONST.P.NO.NIL/2016 AND CIVIL MISC. APPLICATIONS NO.7394 & 7484/2016 AND 141, 288, 3772, 3374, 892, 1496, 2076, 2655, 2656, 3797, 3912, 3913, 4252, 4253, 4254, 4291, 8234, 9172, 9312, 9313 & 9314/2017 AND 57, 45, 301, 381, 454, 577, 511, 592, 593, 652, 653, 654, 727 Date of Judgment:2018-02-27 Reported As: 2018 PLC (C.S.) 692, 2018 PSC 576, 2018 SCMR 736, 2018 SCP 1095 Result: stands disposed of Judgment MIAN SAQIB NISAR, CJ.- These Suo Motu proceedings initially arose when a large number of complaints were submitted to the Human Rights Cell of this Court, wherein retired employees of various departments complained about non-payment of their pensionary benefits. We took notice of the same and the case was first heard as SMC No.20/2016 on 14.1 1.2016. 2. On the said date some of the present applicants/petitioners, retirees of United Bank Limited (hereinafter the "UBL") and Allied Bank Limited (hereinafter the "ABL") also approached this Court with the grievance that they were receiving meagre amounts by way of pension from the banks and the latter were not granting increases in the pensionary benefits for many years. On the very next date of hearing they were joined by applicants/pensioners of Habib Bank Limited (hereinafter the "HBL"); they cited similar grievances. Whilst a whole gamut of grievances to do with pensionary benefits were dealt with separately, we heard the matters relating to the pensioners of the aforesaid three banks together as the facts are so similar as to be almost interchangeable and in all material particulars the three banks and their respective pensioners are similarly placed. Nevertheless, we will give a brief synopsis of the admitted facts pertaining to the three banks. UBL
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3. The UBL was originally a private bank . It was nationalized in 1974 pursuant to the Banks (Nationalization) Act, 1974 (hereinafter the "Act 1974 "), and came to be wholly owned by the Government of Pakistan. The pensioners of the UBL may be broadly divided into three categories; namely , the 'original retirees', the 'recently retired' and the 'retrenched employees'. The 'original retirees' may be typified by the petitioner in CMA No.1686/2017 who joined UBL on 11.10.1973 and served for 25 years, 1 month, 17 days before retiring on 28.11.1998. His basic pay drawn as on 28.11.1998 was Rs.4,530/- per month. Fifty percent of the gross pension was commuted and paid to him at the time of retirement whereas Rs.1,32 1/- was held to be payable to him on monthly basis as his pension. Thereafter , 18 years later his monthly pension remains Rs.1,321/-. The pension of 'original retirees' (in clerical cadres) of the bank was calculated on the basis of Memorandum # F:6(1)-REV -I/75, dated 07.01.1977, issued by the Finance Division, Government of Pakistan. It provided that the liberalized pension rules for civil servants were also applicable to employees of nationaliz ed banks. UBL informed its employees in clerical and non-clerical cadres through Staff Circular No.158 dated 25.02.1977 that the aforesaid Memorandum dated 7.1.1977 would be applicable to them. The grievance of these petitioners is that the UBL has illegally withheld increases in their pensionary benefits which ought to have been granted in parity with those given to civil servants over the years. 4. The 'recently retired' category of pensioners may be represented by the likes of petitioners in CMA No.2825/2017 wherein the petitioner No. 1 joined UBL on 09.08.1976, and after thirty-seven (37) years in service retired on 31.10.2013 as Vice President. His last drawn basic pay on 31.10.2013 was Rs. 93,207/-. However the monthly pension being paid to him in the sum of Rs. 3,823/- has been calculated on the basis of his basic salary as on 30.06.2001 (11 years earlier) in the sum of Rs. 9,930/- . The other five petitioners whose service history with UBL is presented in the said CMA also variously served the bank for 36, 40, 38, 41 and 38 years and all retired when they were drawing handsome salaries between 2011 and 2014. They are however receiving pensions which are linked to the salaries drawn on 30.06.2001. For the 'recently retired' category the pensionary benefits were governed by the Notification No. 17 (9)-IF, XI/77 dated 30.11.1977 addressed to the Chairman, Pakistan Banking Council, the Government of Pakistan, Finance Division (Internal Finance Wing) whereby a scheme of pensions and retirement benefits for bank employees similar to that applicable to civil servants was introduced. In order to give effect to the instructions of the Federal Government, UBL issued Staff Circular No. 192 dated 24.12.1977, informing its officers and executives of the change in the scheme of pension and retirement benefits applicable to them; pursuant to paragraph 3(f) of the Circular No. 192/1977, the pension payable to a retired employee of UBL was to be calculated on the basis of the "average monthly basic pay plus dearness allowances drawn ... during the last three years of service" (hereinafter the "Original Pension Scheme"). On 18.07.2001, the Human Resource Development department of UBL issued Staff Circular No. 943/2001, to notify the management of an across the board 40% average increase in the gross salaries as on 30.06.2001. At the same time the pensionary benefits were curtailed and it was ordained that henceforth for those employees continuing with the Original pension scheme, "In such cases, on retirement/death, they will get their pension benefits calculated on the basis of their frozen basic pay admissible to them as on 30th June 2001.". The grievance of these petitioners is two-fold; firstly that UBL could not have illegally pegged their pensionary benefits to the 'frozen' pay as on 30.06.2001 and secondly, that they have received no increases in the pension since 2001. 5. The category of 'retrenched employees' are typified by the petitioners in CMA No.2424/2017. Petitioner No.1 in the said CMA joined UBL on 5.06.1982. Vide Letter Ref: LOR/375128/97 dated 10.10.1997 (hereinafter "UBL's Retrenchment letter ") UBL terminated his services with immediate effect, after he had served the bank for 15 years. He was paid a total amount of Rs.4,42,682/- as benefits under the Retrenchment Scheme. He was paid no pension. In this category those retrenche es who had served more than 30 years were also given pension. The grievance of these petitioners is two-fold; firstly that the UBL could not have illegally withheld their pensionary benefits once they had qualified for the same upon ten years' service and seco ndly, in case of those who did receive one, that they did not receive any increases in the said pensions. ABL
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6. At that time of enactment of Act, 1974, four (4) banks namely Australasia Bank, Sarhad Bank, Pak Bank and Lahore Commercial Bank were merged into one entity. It was renamed initially as the Allied Bank of Pakistan Ltd. (hereinafter the "ABL"). ABL came to be wholly owned by the Government of Pakistan. It was subsequently privatized on 09.09.1991. ABL through Circular no.P INST-77/47 dated 15.04.1977 informed all employees that Memorandum # F:6(1)-REV-I/75, dated 07.01.1977 and # F.6(1) REV-I/75 dated 25.01.1977, issued by the Finance Division, Government of Pakistan, which set out the liberalized pension rules for civil servants were also applicable to employees of nationalized banks. The 'original retirees' of ABL are typified by the petitioner in CMA No.8404/2016 [Farrokh Niaz] who joined ABL on 21.05.1971 and after serving for 26 years, 7 months retired on 28.12.1997. His basic pay drawn on 28.12.1997 was Rs.13,935/- per month. Fifty percent of the gross pension was commuted and paid to him at the time of retirement. Thereafter Rs.5,500/- was held to be payable to him on monthly basis as his pension. In 1991 it was increased to Rs.6,054.75 on the basis of a letter of the President of ABL, 18 years later his monthly pension is still Rs.6,054.75 per month. The grievance of ABL pensioners is the same as that of UBL pensioners. HBL 7. HBL was nationalized in 1974 pursuant to the Act 1974 and came to be wholly owned by the Government of Pakistan. The Finance Division' s Circular # 17(9)-F .XI/77 dated 30.11.1997 introduced a new scheme of pension and retirement benefits for the officers and executives of nationalized banks and financial institutions along the same lines as those pertaining to civil servants. Letter/circular # GN/280 dated 22.02.1978 the Finance Division 1977 Circular ibid was circulated to the employees of the HBL. In terms thereof, at the time of retirement the pension of the employees of the HBL was to be calculated @ 70% of the average emoluments on completion of 30 years of qualifying service. However , vide Bank' s Circular # STF/98/90 dated 30.12.1998 [hereinafter "HBL 1998 Circular "] the Board of HBL introduced a new pension regime whereby the aforesaid pensionary benefits were reduced from 70% to 33% whereas gratuity and Provident Fund contribution (own plus bank) was also reduced by almost 50% of the basic pay. Thereafter vide Circular # STF/2005/16 dated 04.03.2005 [hereinafter "HBL 2005 Circular"] the Board of HBL once again curtailed the pensionary benefits and ordained that pension would be henceforth calculated on the basis of the salary of the employees as on 31.03.2005. In addition, the option of commutation of the pension was discontinued and medical facilities were curtailed. Thereafter vide Circular # STF/20/2/30 dated 31.03.2012 [hereinafter "HBL 2012 Circular"] the Board of HBL once again revised the pensionary benefits such that the gross pension would again be calculated on the basis of the last drawn basic salary. Vide Circular # STF/2014/063 dated 26.09.2014 [hereinafter "HBL 2014 Circular"] the Board of HBL again revised the basis for calculating pensionary benefits such that they would be calculated on the basis of last drawn salary as on 31.03.2014 and the number of years of service for the purposes of calculation would be till 31.03.2005. The pensioners of the HBL who were originally governed by the terms of the Finance Division's 1977 Circular ibid and subsequently found their pensionary benefits curtailed under successive HBL circulars joined common cause with the 'original retirees' and the 'recently retired' categories of pensioners of UBL. 8. Ms. Ayesha Hamid, ASC represented the first three categories of UBL pensioners set out hereinabove. She argued that Notification No. 17 (9)-IF, XI/77 dated 30.11.1977 issued by the Government of Pakistan, Finance Division (Internal Finance Wing) [hereinafter the "1977 Notification"] introduced a scheme of pensions and retirement benefits for bank employees similar to that introduced for civil servants. It was given effect by the UBL Staff Circular No. 192 dated 24.12.1977, informing its officers and executives of the change in the scheme of pension and retirement benefits applicable to them. This 1977 Notification pertained to the officers/executives of the bank. With respect to the bank employees in clerical and non-clerical cadres a similar regime obtained whereby Memorandum # F:6(1)-REV-I/75, dated 07.01.1977, issued by the Finance Division, Government of Pakistan was given effect by the UBL Staff Circular No. 158 dated 25.02.1977, informing its clerical and non- clerical staff of the change in the scheme of pension and retirement benefits applicable to them. Circular Nos. 158 & 192/1977 were therefore statutory instruments with the backing of the 1977 Notifications which were also statutory. In this regard she relied on a recent judgment rendered by this Court in the case of Bahadur Khan and others Vs. Federation of Pakistan through Secretary M/o Finance, Islamabad and others (2017 SCMR1
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2066) in which this Court held that the 1977 Notification is a statutory instrument. She stated that the pensioners devoted the best years of their lives in the service of the banks. The purpose of pension is, in consideration of their past services, to enable employees who are past their working lives to be maintained in a dignified and a comfortable manner. A pension therefore is an instrument of socio-economic justice and economic security. It is self-evident that the pensioners cannot possibly maintain themselves on the pensions of e.g. Rs.1321/- per month which are illusory and offend against the dignity of man promised to them in terms of Article 14 of the Constitution of the Islamic Republic of Pakistan (Constitution). She argued that whilst a right to pension may not be a fundamental right per se, once an employee has worked for a number of years and fulfilled the requisite criteria for obtaining pension then the right to a reasonable pension becomes perfected and such right once having accrued becomes a vested right and cannot be abridged by UBL as later done through decisions that set at naught the pensionary benefits earned under the 1977 Notification. She argued that pensioners are entitled to pension which ought to have been increased in terms of the cost of living to ensure that they received a minimum living wage; to deny them increases in their pension is to deny them a right to a livelihood which constitutes denial of their right to life in terms of Article 9 of the Constitution. She stated that vide Declaration of Trust dated 13.06.1995 (hereinafter the "Trust") the UBL established a trust for the purposes of managing and distributing the Pension Fund created by UBL for the benefit and welfare of its employees. Clauses 3 and 14 of the Trust provided that, the privatization of the UBL would not in any way affect the objects of the Trust, and entitlement of employees to receive pensionary benefits from the Fund. The pensioners, according to her, are entitled to the monies held in the Pension Fund. Despite the fact that the UBL was privatized through Agreement for Sale dated 19.10.2002 ["Privatization Agreement "] whereby the Privatization Commission and State Bank of Pakistan agreed to sell, and the Bestway Group agreed to purchase the shareholding of 51% of the total issued and paid up capital of UBL, for the total sum of Rs.12.35 billion, upon the terms and conditions stipulated in the Agreement; UBL remained liable for the pensions due to the pensioners. They (the private owners) bought UBL after a process of due diligence and on "as is, where is" basis. Therefore UBL cannot be allowed to walk away from its responsibilities to the pensioners. With respect to 'retrenched employees' she stated that there was no element of voluntariness to their retrenchment which was simply imposed on the 5416 employees who were retrenched. This was an unconscionable contract imposed upon them by an all-powerful employer and was liable to be set aside on this count too. She relied on Ora Lee Williams v Walker Thomas Furniture Company [350 F .2d 445 (1965)] , Marybeth Armandariz v Foundation Health Psychcare [99 Cal.Rptr .2d 745 (2000), Suprem e Court of California] , Cresswell v Potter [(1978) 1 WLR 255 (note)] , The Port Caledonia and The Anna [(1903) P 184 Probate Division ], Fry v Lane [(1888) 40 Ch D 312, 322], Portman Building Society v Dusangh [(2000) 2 All ER (Comm) 221, Court of Appeal] and Boustany v Pigott [(1995) 69 P & CR 298 Privy Council] . When questioned about maintainability of the petitions she argued that a writ could issue to UBL in terms of Article 199(1) (c) of the Constitution as it was a matter of enforcement of fundamental rights but that her primary argument was that the increase in the pensionary benefits of the pensioners was the bank' s liability in terms of the Privatization Agreement whereby they stepped into the shoes of the Federal Government. And the question of public importance arose out of the fact that the Federal Government had made a sovereign commitment to the pensioners in the form of the 1977 Notification and this Court was liable to enforce the same. In this regard she relied upon Dewan Salman Fibre Ltd. and others Vs. Federation of Pakistan, through Secretary , M/O Finance and others (2015 PTD 2304 ). 9. Mr. Ahmed Awais, ASC also appeared for pensioners of UBL in Constitutional Petition No.45/2016. He stated that he had appended with his petition the complete list of those employees of the 'recently retired' category whose pensions were pegged to their salaries as frozen on 30.06.2001. Petitioner No.1 (in CP 45/2016) retired when he was earning Rs.150,000/- per month but his pension per month today is only Rs.4,400/; which is below even the minimum wage. The 40% increase in salaries given at the same time as the 'freezing' of the pension was not unusually generous as it was given after a period of 8.5 years and was the result of a bank-wide strike in 2001. At the time of the privatization it was the Government which failed to protect the rights of the employees.2
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10. Mr. Hashmat Ali Habib, ASC appeared on behalf of some of the HBL Retired Executive Officers Association in CMA No.288/2017. He stated that pension was a right of the persons who had rendered services in banks and that the 1977 Notification was still in force. As the petitioners retired before privatization of HBL in 2004, the bank was liable to honour commitments made by it under the 1977 Notification. He adopted the arguments of Ms. Ayesha Hamid, ASC. 11. Rai M. Nawaz Kharal, ASC appearing in CMA No.9172/2017 on behalf of Mr. Barla s, pensioner of HBL adopted the arguments of Ms. Ayesha Hamid, ASC. 12. Mr. Abdul Rahim Bhatti, ASC appeared in CMA No.1496/2017 on behalf of HBL pensioners. He apprised us of the family pension being paid to one Khushal Bibi in the sum of Rs.243.72/- per month. Another pensioner Mst. Manzoor Fatima was being paid the "handsome" amount of Rs.360/- per month by way of pension. He stated that as per the provisions of the 1977 Notification an employee became eligible for pension after service of 10 years in the bank. As per this Notification a valid contract existed between the employees and the then nationalized HBL. On 30.12.1998 HBL arbitrarily and unilaterally changed the terms and conditions provided under the statutory 1977 Notification. This was illegal and could not have been done to the detriment of the employees. He referred to I.A. Sharwani and others Vs. Government of Pakistan through Secretary , Finance Division, Islamaba d and others (1991 SCMR 1041 ), and Ms. Shehla Zia and others Vs. W APDA (PLD 1994 SC 693 ). 13. Mr. Mahboob Ahmad Soomro, petitioner in person in CMA No.7484/2016 stated that a different criterion for calculation of pensions of officers and clerical staff was being used which was discriminatory. [However, on reading his CMA it appears that the petitioner had not even retired at the time of filing the same and therefore he does not fall the category of pensioners that we are considering. As and when he retires, his pensionary benefits will be determined and affected by this judgment, in terms of his class wise entitlement and not on the basis of his individual petition]. 14. Mr. Tariq Mehmood Khokar , ASC appeared for the pensioners of ABL in CMAs No.8234, 9312, 9313 and 9314/2017. He made three allegations against the bank, that it failed to grant increases in pension, the pension fund was worth Rs.5.6 billion at the time of privatization and the bank has 'reversed' this amount and illegally misappropriated this money and, lastly , when ABL was privatized in 2004 it was required to make contributions to pension fund but it did not do so. 15. Mr. Salman Butt, ASC appeared on behalf of the UBL. He stated that UBL was established in 1959 as a private bank and a Trust Deed was executed to set up a Provident Fund on 27.8.1960. The Staff as well as UBL were to contribute to this Provident Fund. He referred to Article 260 of the Constitution and the definition of "pension" given therein to argue that this was the definition which would apply in this case. He argued that as certain pensioners had taken a major portion of their pension in commuted form this too would count as pension and it would be simplistic to say that the UBL was only paying, for example only a sum of Rs.4000/- per month to a pensioner. Coming to the 1977 Notification he stated that it was NOT a statutory instrument as it was never notified in the official gazette: at best it was a policy guideline. In this regard he relied on Saghir Ahmed through Legal Heirs Vs. Province of Punjab through Secretary, Housing and Physical Planning Lahore and others (PLD 2004 SC 261 @ 266), Muhammad Suleman etc. Vs. Abdul Ghani (PLD 1978 SC 190), Government of Sindh through Secretary Agriculture and Livestock Department and others Vs. Messrs Khan Ginners (Private) Limited and 57 others (PLD 2011 SC 347) and Chief Administrator Auqaf Vs. Mst. Amna Bibi (2008 SCMR 1717). He also submitted a comparative chart and stated that the 1977 Notification in the case of UBL was slightly different in its terms and conditions. The Notification upheld as statutory in the Bahadur Khan's case (supra) was different. He argued that all banks were nationalized in terms of the Act 1974 which was to have overriding effect in terms of Section 16 thereof. He categorically stated that privatization also took place under the same Act 1974. The Act 1974 was amended in 1991 and Sections 5A and 5B were added. In terms whereof once UBL was privatized the Act 1974 ceased to apply to it and no obligations under the said law would continue to operate against UBL. The Act 1974 was amended through Banks (Nationalization) (Amendment) Act XVIII 1997 and the Pakistan Banking Council stood dissolved. Thereafter the Board of the UBL was authorized to take decisions with respect to the pensionary benefits of the pensioners. It validly did so in the form of Staff Circular 943 dated 18.07.2001 (when UBL had not yet been privatized) whereby the employees were given an unprecedented 40% increase in gross salary as on 30.06.2001 which they accepted and benefited from, that the revision of pensionary benefits was a part of this overall package. With respect to pension, the
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employees could have opted for 'Option II' i.e. joining the Provident Fund and the Gratuity Scheme and opting out of the Original Pension Scheme altogether. But as the employees/pensioners did not do so they were deemed to have opted for 'Option I' whereby they remained in the Original Pension Scheme but their pensionary benefits were to be calculated on the basis of the 'frozen' pay due to them as on 30.06.2001. The UBL's pensioners were therefore estopped from claiming additional benefits. At this juncture it is also pertinent to mention that the learned counsel also mentioned a number a petitioners who had originally opted to remain in the 1960 Provident Fund scheme and on that count were not liable to be treated under the 1977 Notification in any event. He also cited the principles of waiver and acquiescence as operating against the aggrieved petitioners. He made submissions with respect to lack of maintainability of the petitions, and stated that Article 184(3) would be regulated by Article 175(2) of the Constitution. The learned counsel stated that the UBL being a private bank was not amenable to issuance of a writ. It did not even remotely pass the function test to qualify as a person performing functions in connection with the affairs of the Federation or the Provincial Government and therefore no action against UBL could be taken in exercise of constitutional jurisdiction. He relied on the case of Abdul Wahab & others Vs. HBL & others (2013 SCMR 1383) to state that this Court had already held that a matter involving the benefits of 310 employees of HBL was not a matter of public importance. Theirs was a private grievance and the bank being a private entity was not amenable to writ jurisdiction. In this case the relationship inter se the pensioners and the UBL was one of master and servant and our entire jurisprudence has developed to hold that the petitioners cannot invoke the jurisdiction of this Court. He provided a detailed chart to aid a comparison of Articles 184 and 199 with similar provisions of the Indian Constitution. He also relied on Muhammad Ashraf and others Vs. United Bank Limited and others (2015 SCMR 911), The Commissioner of Income-Tax, Rawalpindi Zone, Rawalpindi Vs. Messrs Haji Maula Bux Corporation Limited Sargodha (PLD 1990 SC 990 @ pg. 1006 & 1024), Regarding Pensionary…
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