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H.C.A 336/2024 (D.B.) Sindh High Court, Karachi - Federation of Pakistan & Another (Appellant) — 2024 SHC 8

Official Citation: 2024 SHC 8

Court / Jurisdiction: Sindh High Court

Petitioner: H.C.A 336/2024 (D.B.) Sindh High Court, Karachi - Federation of Pakistan & Another (Appellant)

Legal Principle & Question Decided

Ruling Summary: This decision was rendered by the Sindh High Court, officially reported as 2024 SHC 8. In this matter between H.C.A 336/2024 (D.B.) Sindh High Court, Karachi - Federation of Pakistan & Another (Appellant) and the Respondent, the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.

Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.

Full Judgment Text & Judicial Ruling

COURT: Sindh High Court CASE NO: H.C.A 336/2024 (D.B.) Sindh High Court, Karachi CITATION: 2025 SHC KHI 4 PARTIES: Federation of Pakistan & Another (Appellant) ORDER DATE: 03-FEB-25 BENCH: Hon'ble Chief Justice Mr. Justice Muhammad Shafi Siddiqui, Hon'ble Mr. Justice Jawad Akbar Sarwana(Author) A.F.R: Yes ------------------------------------------------------------ IN THE HIGH COURT OF SINDH AT KARACHI

Present: Mr. Justice Muhammad Shafi Siddiqui Mr. Justice Jawad Akbar Sarwana

High Court Appeal Nos. 336 of 2024 and 91 other connected appeals as per Annexure “A”

Federation of Pakistan & Another

v.

Premium Textile Mills Limited & 24 Others

Dates of Hearing: 13.11.2024, 14.11.2024

Date of Announcement of Judgment: 03.02.2025

Messrs. Ghazi Khan Khalil, Ameer Nausherwan Adil, Abdul Hakeem Junejo, Syed Kumail Abbas, Zeeshan Ahmed, Awais Haroon and Hayat Muhammad Junejo, Zehra Sehar Vayani, Assistant Attorney General, Muhammad Ahmed, Assistant Attorney General, Ammar Saleem Butt, Manager Legal SSGCL, Raja Love Kush, Deputy Manager Legal, SSGC, advocates for Appellants in all Appeals.

Messrs. Ali Almani a/w Mustafa Naqvi for Respondent Nos.1 to 6, 8 to 11, 13 to 18, 21 & 22 in H.C.A. No.336/2024, for Respondent Nos.1, 4 & 5 in H.C.A. No.364/2024, Respondent No.1 in H.C.A. No.365/2024, Respondent No.1 in H.C.A. No.372/2024, Respondent No.1 in H.C.A. No.373/20 24, Respondent No.1 in H.C.A. No.375/2024, Respondent No.13 in H.C.A. No.376/2024, Respondent No.4 in H.C.A. No.379/2024, Respondent No.1 in H.C.A. No.388/2024, Respondent No.71 in H.C.A. No.391/2024, Respondent No.5 in H.C.A. No.421/2024, Respondent No.2 in H.C.A. No.426/2024), (Ameen M. Bandukda a/w Sundar Lal Lohana for Respondent No.24 in H.C.A. Nos.336 of 2024, Respondent No.1 in H.C.A. No.343/2024, Respondent No.1 in H.C.A. No.350/2024, Respondent No.1 in H.C.A. No.358/2024 and Respondent Nos.10 & 11 in H.C.A No.364/2024, Respondent Nos.8, 10 and 29 in H.C.A. No.376/2024, Respondent No.5 in H.C.A. No.379/2024, Respondent No.3 in H.C.A. No.380/2024, Respondent Nos.28, 60, 91, 98, 106 & 116 in H.C.A. No.391/2024, Respondent No.4 in H.C.A. No.398/2024, Respondent No.1, 12, 17, 19, 23, 38, 39, 41, 44, 52 in H.C.A. No.400/2024, Respondent No.1 in H.C.A. No.401/2024, Respondent Nos.33, 35 & 36 in H.C.A. No.404/2024 Respondent Nos.9 & 46 in H.C.A. No.407/2024), (Naeem Suleman for Respondent No.4 in H.C.A. No.343/2024, Respondent No.1 in H.C.A. No.354/2024, Respondent No.1 in H.C.A. No.357/2024, Respondent Nos.8, 12 & 15 in H.C.A. No.364/2024, Respondent No.26 in H.C.A. No.366/2024, Respondent Nos.4, 6 to 11 in H. C.A. No.389/2024, Respondent Nos.2, 5, 7, 9, 12, 13, 21, 23 to 27, 34, 36, 37, 38, 39, 44, 45, 48, 49, 58, 59, 61, 62, 63, 64, 65, 100, 101, 103, 104, 116 in H.C.A. No.389/2024, Respondent Nos.1, 4, 8, 11, 16, 17, 18, 20, 29,

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31, 33, 40, 41, 42, 46, 50, 52, 53, 55, 56, 68, 77, 81, 82, 83, 87, 88, 96, 99, 118, 119 in H.C.A. No.391/2024, Respondent No.7 in H.C.A. No.398/2024, Respondent Nos.3, 4 & 5 in H.C.A. No.403/2024, Respondent Nos.1, 18, 20, 23, 26, 28, 34, 39, 38, 42, in H .C.A. No.404/2024, Respondent Nos.3, 10, 12, 15, 47, 48, in H.C.A. No.407/2024, Respondent Nos.1, 2, 3, 4, 6, 8, 9 in H.C.A. No.409/2024, Respondent No.8 in H.C.A. No.422/2024, Respondent No.16 in H.C.A. No.429/2024), (Adil Khan Abbasi for Respondent No.2 in H.C.A. No.344/2024), (Rana Sajid Rasool for Respondent Nos.1 and 2 in H.C.A. No.347/2024, Respondent No.1 in H.C.A. No.420/2024), (Syed Mohsin Ali for Respondent Nos.2 to 8 in H.C.A No.356/2024, Respondent No.4 in H.C.A. No.380/2024, Respondent No.8 in H.C.A. No.385/2024, Respondent No.1 in H.C.A. No.391/2024, Respondent No.1 in H.C.A. No.399/2024, Respondent No.1 in H.C.A. No.410/2024, Respondent No.6, 20, 24, 34, 37 & 48 in H.C.A No.429/2024), (Junaid M. Siddiqui for Respondent Nos. 2 & 3 in H.C.A. No. 369/2024, Respondent Nos.1, 3 to 5 in H.C.A. No.370/2024), (Muhammad Zeeshan Naeem a/w Abdul Karim Khan for Respondent No.6 in H.C.A. No.376/2024, Respondent No.94 in H.C.A. No.391/2024, Respondent No.25 in H.C.A. No.400/2024), (Jehanzeb Baloch for Respondent Nos.1 to 3 in H.C.A. No.379/2024), (Faiz Durrani a/w Samia Faiz Durrani and Shakeel Akbar for Respondent No.1 in H.C.A. No.413/2024, Respondent No.1 in H.C.A. No.414/2024), (Ali Nawaz Khuhawar for Respondent No.19 & 24 in H.C.A. No.336/2024).

J U D G M E N T

JAWAD AKBAR SARWANA, J.: The two appellants, the Federation of Pakistan through the Ministry of Energy (Petroleum Division), Federal Government of Pakistan (Appellant no.1) and the Sui Southern Gas Company Limited(“SSGCL”)(Appellant no.2), jointly referred to as the “Appellants”, have impugned Judgment dated 06.09.2024 passed by the learned Single Judge in High Court Suit No.129/2017 and 91 other connected suits filed against the appellants. This “impugned Judgment” operating across 92 suits, is impugned in these 92 appeals.

2. The sole question before the trial court in the 92 suits was and, once again, before this Bench, in these appeals is whether the Oil and Gas Regulatory Authority ’s (“OGRA”) Notification dated 30.12.2016 prescribing the gas sales price for various consumers for the Financial Year (“FY”) 2017 (“Notification”) is lawful.

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3. The Appellants have raised the following challenge to the trial Court’s impugned Judgment based on six (6) propositions argued by their Counsel, including the Assistant Attorney-General, summarised as herein below.

(a) Appellant’s Proposition “A” – “Mustafa Impex not violated ”: The manner in which the impugned notification was issued is not violative of the principle as enunciated in the case of Mustafa Impex Karachi & Others Versus the Government of Pakistan through Secretary Finance, Islamabad & Others , PLD 2016 SC 808 , (hereinafter referred to as “the Mustafa Impex Judgment”)

(b) Appellant’s Proposition “B” – “Mustafa Impex applies to fiscal and budgetary matters” and “Karamat Ali applies prospectively” : Without prejudice, Appellant Counsel has argued that it is apparent from a bare reading of the Mustafa Impex Judgement (particularly paragraph 81) that post facto approval was held impermissible only to the extent of fiscal changes and budgetary expenditure.

• It may be noted in terms of paragraph(s) 12, 13, 14 and 15 of the S.M. Kaleem Makki through Attorney Versus Province of Sindh through Chief Secretary and others , 2021 PLC (C.S.) Note 11 (hereinafter referred to as “the SM Kaleem Makki Judgment”) that the scope of the Mustafa Impex Judgement was enlarged by the Karamat Ali & Others Versus Government of Sindh, PLD 2018 Sindh 8 (hereinafter referred to as “the Karamat Ali Judgment”) to the effect that Mustafa Impex would apply to matters other than fiscal and budgetary.

• The Mustafa Impex Judgement was rendered on 16 August 2016. The impugned notification was issued on 30 December 2016; however, the Karamat Ali judgement, which enlarged the scope, was rendered on 6 September 2017.

• Therefore, before the Karamat Ali Judgement, it was understood that Mustafa Impex only applied to fiscal and budgetary matters, the scope was enlarged by the Karamat Ali Judgement, which would only have effect “prospectively” (as per the principle as enunciated in the Pakistan Medical and Dental Council through President and 3 others Versus Muhammad Fahad Malik and 10 others (reported as 2018 SCMR 1956). The Impugned Notification being prior in time to the Karamat Ali Judgement ought to be saved in light of the above;

(c) Appellant’s Proposition “C” – “Notification should take effect from 13.01.2017, i.e. date of Cabinet Decision : The entire case of the Respondent(s)/Plaintiff(s) was premised on the fact that the impugned Notification was issued before ratification by the Federal Cabinet.

• On the basis of the foregoing, had the notification been issued after ratification of the federal cabinet, the Plaintiff(s) would not have any grievance.

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• Therefore, once ratification had in fact been granted by the Cabinet, the defect has invariably been cured. On the said basis, the Notification ought to be given effect from the date of ratification by the cabinet i.e. 13.01.2017.

• The Honorable Supreme Court in the Government of Balochistan through Secretary Mines and Minerals Department and another Versus Attock Cement Pakistan Limited and another, 2024 SCMR 876) (hereinafter referred to as ”the Attock Cement Judgment”) Paragraph(s) 10 and 11 has, in similar circumstances disposed of the matter in similar terms.

• In paragraph 6 of the Attock Cement Judgment the following question of law was raised;

“6. We have heard the learned Law Officer and learned counsel for the respondents and perused the available record with their able assistance. The primary question that arises in the present case is that “whether a notification that has received ex-post facto approval by the cabinet can have a retrospective applicability?””

• Appellant Counsel contended that t he Supreme Court categorically decided the question “based on a principle” of law in paragraph(s) 10 and 11;

“10. The legal validity of the ex -post facto approval of the notifications by the Cabinet was considered by this Court in Mustafa Impex Case supra by holding that same cannot be considered valid under the law; relevant paragraph wherefrom is reproduced herein below: [….]

11. In the present case, the High Court has correctly determined that the impugned notification takes effect from the date of authentication/approval by the cabinet, i.e. 01.02.2022. This interpretation aligns with the principle that if the provincial cabinet provides ex-post facto approval, the validity of the notification is recognized from that date of approval and cannot be applied retrospectively. The rationale for this stems from the fact that, had a cabinet issued a new notification in 2022, its applica tion would have been prospective. Consequently, whether it grants approval or issues a new notification, the resulting impact would remain unchanged.”

• On the basis of the above, Appellants submitted that the Attock Cement Judgment is a binding precedent in terms of Article 189, and the instant appeal may be decided based on the same principles and in the manner employed therein.

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(d) Appellant’s Proposition “ D” – Procedural Irregularity “I” - “Advice rendered by Federal Government in respect of the impugned Notification fulfils the requirement of / Reliance on Rule 17(1)(c) of the Rules of Business, 1973

(e) Appellant’s Proposition “ E” – Procedural Irregularity “II” – Rule 21 to the rescue”

(f) Appellant’s Proposition “ F” – “Procedural Irregularity “III” – “No prejudice or injustice caused”

4. The Respondents/Respondent Counsels have vehemently opposed the arguments submitted by the Appellants. They contend that in accordance with Section 8(3) of the Oil and Gas Regulatory Authority Ordinance, 2002 (“OGRA Ordinance”), OGRA is required to notify the gas sales price based on advice it receives from the Federal Government, i.e., the Federal Cabinet (“Cabinet”). It is undisputed that it had not received such advice before 30.12.2016. Instead, the Notification was allegedly based on a summary approve d by the Economic Coordination Committee of the Cabinet (“ECC”) on 15.12.2016. It is settled law that the Federal Government means the Federal Cabinet. The ECC is not the Federal Cabinet. Any approval by the ECC does not meet the statutory requirement of S ection 8(3) or the constitutional requirement that the Federal Cabinet take all actions by the Federal Government . Therefore, the appeal is liable to be dismissed.

5. Heard Counsel, the Assistant Attorney General, read the impugned Judgment and perused the material available on record. To address the arguments raised by the Appellants, it would be appropriate to state the brief facts of the case. As the issues involve a definite timeline of events (“X”) and an interplay of such timeline with case precedent (“Y”), it may be efficient to set out the two issues in juxtaposition to each other in tabular format as follows:

Relevant Dates

Timeline of Events (“X”) Case Precedent (“Y”) 18.08.2016

- Mustafa Impex v. Government of Pakistan, PLD 2016 SC 808 decided by the Supreme Court of Pakistan.

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06.10.2016 OGRA issued its determination on SSGC’s Petition for Determination of Estimated Revenue Requirement for FY 2016 to 2017. It determined a price for industrial consumers of Rs. 456.87/MMBTU with effect from 01.07.2016 and Rs. 340.52/MMBTU with effect from 16.11.2016.

In accordance with Section 8(2) of the OGRA Ordinance, OGRA must advise the Federal Government of the prices it determines.

In accordance with Section 8(3), within 40 days of receiving OGRA's advice, the Federal Government had to advise OGRA of the sales price for each consumer, based on which OGRA would then notify the gas prices for all consumers.

15.12.2016 On 15.12.2016, the ECC approved a summary for a revision of the prices determined by OGRA (“ECC Decision”).1 This included an increase to Rs. 600/MMBTU for industrial consumers.

30.12.2016 On 30.12.2016, OGRA issued the Notification prescribing the sales prices for all consumers based on the ECC Decision – with retrospective effect from 15.12.2016.2

13.01.2017 On 13.01.2017, the Cabinet approved the ECC Decision (“Cabinet Decision”)3 under Rules 17(1)(b) and 19 of the Federal Government Rules of Business 1973.

18.01.2017

. . .

19.04.2017 -

- Premium Textile Mills Ltd. and Others filed Suit No.336/2017

. . .

1 Page 465. 2 Page 269. 3 Page 487.

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. . .

17.10.2018

-

Swano Enterprises and Others filed Suit No.1027/2017

. . .

Nadeem Power Generation (Pvt.) Ltd. and Others filed Suit No.1955/2018

07.09.2017 - Karamat Ali v. Federation of Pakistan, PLD 2018 Sindh 8 decided by a Division Bench of the High Court of Sindh (Munib Akhtar and Arshad Hussain Khan, JJ.)

05.03.2019

- Mirpurkhas Sugar Mills Ltd. and 16 Others v. Province of Sindh and 7 Others, 2020 CLC 232 (Muhammad Ali Mazhar and Agha Faisal, JJ).

28.10.2019 - S,M. Kaleem Makki v. Province of Sindh, 2021 PLC (C.S.) Note 11 decided by a Division Bench of the High Court of Sindh (Muhammad Shafi Siddiqui and Adnan Iqbal Chaudhry, JJ).

06.09.2024 Impugned Judgment announced in the 92 suits

Impugned Judgment announced in the 92 suits

6. Section 8 of the OGRA Ordinance provides a complete mechanism for OGRA to determine and notify the gas sales price to be charged by SSGC for a financial year. The relevant parts thereof read:

“8. Pricing for retail consumers for natural gas. —(1) The Authority shall determine an estimate of the total revenue requirement of each licensee for natural gas engaged in transmission, distribution and the sale of natural gas to a retail consumer for natural gas, in accordance with the rules, and on that basis advise the Federal Government the prescribed price of natural gas for each category of retail consumer for natural gas.

(2) A licensee for natural gas referred to in sub -section (1), shall submit for review by the Authority its total revenue requirement after incorporating the actual changes in the well -head prices, as notified by the Authority cost of the imported gases and other relevant factors and the Authority shall advise the Federal Government promptly of the revised prescribed prices for the licensee for natural gas.

(3) The Federal Government shall, within forty days of the advice referred to in sub -sections (1) and (2), advise the Authority of the minimum charges and the sale price for each

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category of retail consumer for natural gas for notification in the official Gazette by the Authority of the prescribed price as determined in sub -sections (1) and (2), the minimum charges and the sales price for each category of retail consumers for natural gas:

Provided that the Federal Government shall ensure that the sales price so advised are not less than the revenue requirement determined by the authority.

(4) If the Federal Government fails to advise the Authority within the time specified in sub -section (3), the category wise prescribed prices so determined by the Authority under subsections (1) and (2), as the case may be, shall be notified by the Authority as the category wise sale prices:

Provided that sub-sections (1) to (4) shall not be applicable in case of RLNG price determined under section 43B.”

(underlining added)

7. A combined reading of the foregoing provisions shows that under sub -sections (1) and (2), OGRA determines the revised prescribed price for each consumer of natural gas based on SSGC’s Petition for Determination of its Revenue Requirement. OGRA then shares the determination with the Federal Government for its advice.

8. Under sub -section (3), within 40 days of receiving OGRA’s advice, the Federal Government must advise OGRA of the sales price for all consumers. Based on the Federal Government’s advice, OGRA must notify the sales price.

9. Sub-section (4) then provides a fail -safe in case the Federal Government fails to provide its advice within the prescribed period. In such case, OGRA notifies the prices determined by it under sub - sections (1) and (2).

10. In the instant case, on 15.12.2016, the ECC approved a summary circulated by the Ministry of Petroleum & Natural Resources for the revision of the prescribed prices for FY 2017, i.e., the ECC Decision. It approved an increase of the price for industrial consumers to Rs. 600/MMBTU.4

4 Page 465.

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11. Section 8(3) specifically refers to the Federal Government. In the Mustafa Impex Judgment, the Supreme Court held that wherever any law refers to the Federal Government, that is a reference to the Federal Cabinet alone and no other body or entity. The advice under Section 8(3), therefore, is to be provided by the Federal Cabinet.

12. It is as clear as night and day that t he ECC is not the Federal Cabinet. Therefore, the ECC Decision is not a decision of the Federal Cabinet. Yet, OGRA proceeded to issue the Notification on 30.12.2016 based on the ECC Decision.5

13. Therefore, at the outset, this bench is inclined to find t he Notification is contrary to law on two counts, based on a constitutional and statutory violation.

14. It is based on a constitutional violation because treating the ECC Decision as the advice of the Federal Government under Section 8(3) violates the provisions of the Constitution under which the Federal Cabinet, and no other body or entity, can act as the Federal Government (as held in the Mustafa Impex Judgment).

15. It is based on a statutory violation because OGRA cannot issue a notification under Section 8(3) without receiving the advice of the Federal Government.

16. For the above reasons, and additional grounds discussed herein, this bench, in the first instance, finds that the Notification was, therefore, illegal on the date it was issued.

17. On 13.01.2017, the Cabinet passed the Cabinet Decision.6 The Cabinet Decision was passed under Rules 17(1)(b) and 19 of the Rules of Business 1973.

5 Page 269. 6 Page 487.

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18. The Cabinet approved the ECC Decision but did not ratify it or grant post-facto approval, that is, retrospective approval.

19. The Federal Cabinet or the Federal Government only approved the proposed sales price on 13.01.2017. Section 8(3) requires OGRA to notify the sales price based on the Federal Government’s approval. Appellant Counsel informed that OGRA, however, has not issued any notification based on approval from the Federal Government.

20. Even assuming that the Federal Cabinet had post -facto or retrospectively approved the ECC Decision, the Supreme Court has held that post-facto approval is illegal . It was declared by the apex Court in the Mustafa Impex Judgment:

“81. … Furthermore, the Prime Minister is not constitutionally mandated to authorize expenditure on his own. In all cases the prior decision of the Cabinet is required since it is unambiguously that body alone which is the Federal Government. All discretionary spending without the prior approval of the Cabinet is contrary to law. We clarify that an ex post facto approval by the Cabinet will not suffice since money once spent cannot be unspent. …”7 (emphasis supplied)

21. The Division Benches of this Court and the Supreme Court have recognized and applied this principle in subsequent cases.8

22. In accordance with the foregoing principle, the Cabinet Decision cannot grant any legal sanctity to the Notification which was based on a constitutional and statutory violation and was, therefore, illegal and void when it was issued.

23. Apart from the reasons stated above as to why the impugned Judgment challenge cannot be sustained, and the aforesaid reasons are ours, we now turn to the arguments raised

7 Ibid at 2327 KK. 8 See (i) Karamat Ali v. Federation of Pakistan, PLD 2018 Sindh 8 at 92 paragraph 72; (ii) Mirpurkhas Sugar Mills Limited v. Province of Sindh, 2020 CLC 232 at 239 to 242 paragraphs 12 to 17; and (iii) S. M. Kaleem Makki v. Province of Sindh, 2021 PLC (C.S.) Note 11 at paragraph 18. See also Government of Sindh v. Dr. Nadeem Rizvi, 2020 SCMR 1 at 27 M, 34 and 41 S.

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by the Appellants. As articulated in paragraph 3 above, Appellant Counsel has advanced six (6) propositions for the bench to consider as to why this bench should set aside the impugned Judgment. We will now address each of the Appellant’s six (6) propositions, “A” to “F”:

A. Appellant’s Proposition “A” – “Mustafa Impex Judgment not violated”:

24. The Appellant’s general argument that the Mustafa Impex Judgment applies to the facts and circumstances of the case and is not violated is neither understood nor made out by Appellant Counsel. The onus was on him and he has not satisfied the same for the reasons discussed by us in this judgment.

B. Appellant’s Proposition “B” – “Mustafa Impex applies to fiscal and budgetary matters” and “Karamat Ali applies prospectively”:

25. Appellants argued that the Mustafa Impex Judgment only applies to fiscal and budgetary matters.

26. A bare reading of the Mustafa Impex Judgment itself, however, establishes otherwise . The Supreme Court declared that “[i]n all cases the prior decision of the Cabinet is required since it is unambiguously that body alone which is the Federal Government ”.9 There is, therefore, no basis for circumscribing its scope and applicability as different from the apparent and obvious read of the said Judgment.

27. The Supreme Court observed that the principles set out in the Mustafa Impex Judgment apply to “[a]ny Act, or statutory instrument (e.g. the Telecommunication (Re-Organisation) Act, 1996) purporting to describe any entity or organisation other than the Cabinet as the Federal Government is ultra vires and a nullity” .10 The Telecommunication (Re-Organisation) Act, 19 is not a fiscal law.

9 2016 PTD 2269 at 2327 KK 10 Ibid at 2331 QQ.

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28. The Mustafa Impex Judgment is based on the Supreme Court’s interpretation and application of the Constitutional structure and specifically Articles 90, 91, 97, 98 and 99 of the Constitution. Appellants appear to be arguing that in accordance with the Constitutional structure and these Articles , if a decision does not relate to fiscal and budgetary matters, it can be taken by any individual, body or entity on behalf of the Federal Government but if it relates to fiscal and budgetary matters then it must be t aken by the Federal Cabinet alone. In short, the Federal Government means something different depending on the decision that is being taken.

29. For the above reasons, this bench is not inclined to accept the Appellant’s arguments raised in proposition “B” . We agree with the learned Single Judge that neither the Supreme Court nor other superior courts that followed the Mustafa Impex Judgment have limited the ratio of Mustafa Impex to only fiscal matters. There is no reason to interpret the decision in any manner other than following its plain language.11

Karamat Ali applies prospectively

30. Appellants submitted that:

(i) The applicability of the Mustafa Impex Judgment to matters beyond fiscal and…

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