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Petitioner: ZARAI TARAQIATI BANK LIMITED and others VS Respondent: SAID REHMAN and others
Court Name: Supreme Court of Pakistan Judge(s): Sarmad Jalal Osmany, Mian Saqib Nisar, Tasaddaq Hussain Jillani Title: ZARAI TARAQIATI BANK LIMITED and others vs SAID REHMAN and others Case No.:Civil Appeals Nos.269 to 275, 1047, 1048 of 2011 and Civil Petition No,657 of
JUDGMENT
Reported As: 2013 PLC (C.S.) 1223 Result: Appeals dismissed Judgment JUDGMENT ' TASSADUQ HUSSAIN JILLANI, J.---Facts giving rise to these appeals briefly stated are that respondents were at the relevant time serving as Vice-Presidents (C.A. No, 275 of 2011) and Assistant Vice-Presidents in the appellant Bank (in all the remaining appeals and Civil Petition No, 657 of 2012). They were aggrieved of the recommendations made by the Departmental Promotion Committee in its meeting held in October 2007 vide which they were not recommended for promotion to the next grade. Those orders were challenged in Constitutional petitions on the ground that the respondents had secured the requisite qualifying marks for their promotion from Vice President to Senior Vice-president/Directors; that they had illustrious careers; that no cogent reason had been given by the said Departmental Promotion Committee for ignoring them; that the procedure adopted by the Departmental Promotion Committee had no sanction in law or the rules inasmuch as there was no provision of interview and for allocation of 25% marks for the interview. The Constitutional petitions have been allowed by the learned Division Bench of the Peshawar High Court vide the impugned judgment on the ground that the procedure provided in the Zarai Taraqiati Bank Limited Staff Regulations, 2005 (hereinafter referred to as the Staff Regulations, 2005) could not have been adopted to consider the respondents' promotion; that in view of section 6 of the Agricultural Development Bank of Pakistan (Re-organization and Conversioh) Ordinance, 2002 (hereinafter referred to as the Ordinance, 2002), the respondents are to be governed by the same Rules and Regulations which were applicable to them prior to the promulgation of the afore- referred Ordinance. The appellant Bank was directed to send their cases of next step promotion
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back to the Departmental Promotion Committee for consideration afresh in the light of the observations made in the impugned judgment.' 2. Leave was granted by this Court in terms of order dated 30-3-2011 which reads as follows:--- "In the petitions the points which have been raised for consideration of this Court are, (i) that the petitioner bank is a limited company and against which the writ cannot be issued, and (ii) that after the reorganization of Zarai Taraqiati Bank Limited it is not certain that the respondents would be governed by the old rules and regulations on the strength of section 6 of Agricultural Development Bank of Pakistan (Reorganization and Conversion) Ordinance, 2002, or by the rules and policy so framed by the petitioner/bank. ' Learned counsel for the respondents has controverted the aforesaid points. However, in order to consider, inter alia, the aforesaid points, leave to appeal is granted. C.M.As. Are allowed and the operation of the impugned judgment is suspended." 3. Learned counsel for the appellants submitted that the learned High Court has fell in error in not appreciating that in terms of Ordinance 2002, the appellant-bank had become a public limited company; that the employees of this company are governed by non-statutory regulations so far as the issues of promotion are concerned; that the relationship of the appellant with the respondents is governed by the principle of master and servant and in view of the law laid down by this Court in Muhammad Mubeen-us-Salam v. Federation of Pakistan (PLD 2006 SC 602) and Muhammad Idrees v. Agricultural Development Bank of Pakistan (PLD 2007 SC 681), the learned High Court had no jurisdiction to entertain the petitions. He added that after the promulgation of the afore-referred Ordinance, the respondents are to be governed by Staff Regulations, 2005 which is in accord with section 9 of the Ordinance, 2002 and sections 6 and 10 of the said Ordinance could not override the former provision; that they were disentitled to any discretionary relief on account of their conduct as having availed the benefits of Staff Regulations, 2005 and having appeared in the interview they could not have taken a somersault claim to be reconsidered under the old Staff Regulations of 1961. 4. Tracing the history of the development of law relating to Agricultural Development Bank (which now is Zarai Taraqiati Bank) from the Agricultural Development Bank Ordinance, 1961 to the current law i,e, the Agricultural Development Bank of Pakistan (Re-organization and Conversion) Ordinance, 2002, learned counsel submitted that prior to the former Ordinance, two institutions existed to provide financial and credit facilities to the agriculturalists: (i) Agricultural Development Finance Corporation (established through the Agricultural Development Finance Corporation Act 1952 Act XVII of 1952) and (ii) Agricultural Bank of Pakistan (established under Act XXIII of 1956). Section. 43 of Act XV of 1952 provided that the Board of the Corporation, with previous sanction of the Central Government, may make regulations not inconsistent with the Act to provide for all matters necessary or expedient for the purpose of giving effect to the provisions of the Act. Section 39 of Act XXIII carried a similar provision of the power of the Board to make regulations not inconsistent with the Act with prior approval of the Central Government. Both these Acts were repealed with the promulgation of Agricultural Development Bank Ordinance 1961 (Ordinance IV of 1961) in terms of its section 41. Section 39 of this Ordinance pertained to the power of the Board to make regulations not inconsistent with the Ordinance for the purpose of giving effect to the provisions of this Ordinance and spelt out matters inter alia on which the regulations could be framed. The provision of prior approval of the Central/Federal Government contained in Act XVII of 1952 and Act XXIII of 1956 was done away wiih. The said provision reads as under:-- "39. Regulations.----(1) The Board may make regulations not inconsistent with this Ordinance or the rules to provide for all matters for. Which provision is necessary or expedient for the purpose of giving effect to the provisions of this Ordinance and the efficient conduct of the affairs of the Bank. (2) .
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(a) (c) .. (d) (e) the recruitment of the employees of the Bank, the terms and conditions of their service, the constitution and management of Provident Funds for the employees. Of the Bank and all other matters connected with any of these things; (f) the duties and conduct of employees and agents; (g) .. (h) .. 5. Agricultural Development Bank Ordinance, 1961 was gazetted on 11-2-1961 and the Regulations were drafted immediately thereafter when the Board had yet to be constituted. Those Regulations in absence of the Board were sent to the Government for approval and after Government's approval those were brought into force. It was on 3/4 May, 1961 that those were placed before the Board of Directors and approved. The approval by the Government did not make it statutory as requitement of approval by the Government stood dispensed with in terms of section 39 of the 'Ordinance,' 1961; that the Agricultural Development Bank Ordinance, 1961 (IV of 1961) was, however, amended through Act XII of 1973 and thereby eight Sections of the said Ordinance including section 39 were amended (relatable to regulations). A proviso was added to section 39(2) and the requirement of prior approval of the Federal. Government for making regulations was reipserted. The said proviso reads as follows:- "Provided that no regulation made with respect to the matters mentioned in clauses (e) and (D shall take effect until it has been approved by the Federal Government". 6. The effect of the afore-mentioned amendment, according to learned counsel, would be prospective and all regulations framed after 1973 would be statutory as requirement of approval by the Federal Government was made a condition precedent. In support of this submission, he relied on a judgment of this Court in Anwar Hussain v. Agricultural Development Bank of Pakistan (1992 SCMR 1112). 7. Elaborating his submission, learned counsel added that the Agricultural Development Bank of. Pakistan Officers Service (Efficiency and Discipline) Regulation, 1975 were statutory as those were duly approved by the Federal Government. ' But in the appeals in hand, he maintained, the issues raised are relatable to promotions whereas the Officers Service (Efficiency and. Discipline) Staff Regulations, 1975 which statutory, cater to disciplinary matters. The regulations governing issues of promotion or the Agricultural Development Bank Staff Regulations, 1961 were neither approved by the Federal Government nor it was so required prior to the amendment by Act XII of 1973. 8. The Agricultural Development Bank Ordinance, 1961 was however repealed with the promulgation of the Agricultural Development Bank of Pakistan (Re-organization and Conversion) Ordinance, 2002. The Bank was converted into a corporation, all the employees were transferred and became the employees of the company and it was provided under the Ordinance that these employees shall be governed and subject to same rules and regulations as were applicable to them before the effective date. 9. A close reading of section 6 of the Ordinance, 2002, according to learned counsel, would indicate that the legislative intent was that the employees of the Bank who stood transferred to the newly created/converted company were to be governed by the same rules as existed prior to promulgation of new Ordinance and that would mean that so far as the matters pertaining to efficiency and discipline are concerned, the employees would be governed by the Agricultural Development Bank Staff Regulations of 1975 which are statutory. However, the subject of promotions (contained in paragraph 17 of the Staff Regulations, 1961) has not been approved by
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the Federal Government after the Regulations, 1961 were made by the Board. Therefore, the subject of promotions continues to be non-statutory in nature. He added that after promulgation of the Agriculture Development Bank of Pakistan (Amendment) Act, 1973, no Regulations on the subject of promotions have been made except the Promotion Policy, 1999, which has never been approved by the Federal Government and, therefore, non-statutory. 10. He contended that though Promotion Policy is admittedly non-statutory but assuming without admitting or conceding that regulations pertaining to promotions were statutory in nature, the writ petitions would nonetheless be not maintainable on account of the fact that the writ petitioners had voluntarily and consciously applied for and adopted the ZTBL Staff Regulations, 2005, which have been framed by the Board and not approved by the Federal Government. Paragraph 14(h) of the ZTBL Staff Regulations, as notified vide circular dated 27-6-2007 provided as follows:--' "Promotion for VP and above shall be based on merit and open competition, interviews and selection by a promotion committee to be constituted by the President. Vacancies for VP and above as such shall be advertised internally and externally." 11. According to learned counsel the writ petitioners (1) after voluntarily and consciously adopting the Regulations, 2005; (2) after taking all the monetary benefits on account of adopting the Regulations, 2005 i,e, 100% commutation of pension, which otherwise was not permissible under the ADBP Employees (Pension and Gratuity) Regulations, 1981; (3) after sitting or participating in the competitive process for promotion as contemplated by Paragraph 14(h) of the Regulations, 2005; and (4) after not scoring the above threshold required for promotion, cannot turn around and claim promotion on the basis of seniority - cum fitness under the Promotion Policy of 1999. Therefore, the writ petitioners were estopped by their own conduct from claiming protection under the Promotion Policy of 1999 or the non-statutory Regulations of 1961 on the subject of promotion. 12. Learned counsel for the respondents-writ petitioners defended the impugned judgment by making following submissions:-- (1) That after the conversion of Agricultural Development Bank into a corporation by virtue of the Ordinance, 2002, the employees became employees of the company. By virtue of section 6 of the said Ordinance, service terms and conditions which were in field prior to its promulgation were made applicable to the respondent employees. The question of their promotion which was subject matter of the constitutional petitions had to be governed under the Staff Regulations, 1961 and the Promotion Policy, 1999; (2) That the Staff Regulations 1961 and the Promotion Policy, 1999 are statutory as those have been adopted by legislative reference. Section 6 of the Ordinance 2002 specifically provides that employees of the company "shall be subject to the same rules and regulations as were applicable to them before the effective date". In support of this contention, learned counsel relied on a judgment of this Court in Masood Ahmad Bhatti v. Federation of Pakistan (2012 SCMR 152); (3) That the ADBP Staff Service Regulations, 1961, prior to promulgation of ADBP (Amendment) Act, 1973 were approved by the Federal Government and the same were subsequently approved by the Board of Directors. The legal status of the said Service Regulations came under scrutiny before this Court in the case reported as 1992 SCMR 1112 and the Court authoritatively decided it. A reasonable interpretation of the provisions of this Act, particularly the proviso appended to subsection (2) of section 39, would therefore, be that the said provision would be applicable prospectively to any regulations made which fall under clauses (e) and (I) in future. In other words, if any regulation on these subjects is framed after the date of the coming into force of the Amendment Act, prior approval of the Federal Government would be essential for bringing such regulations in effect. But, it will be difficult to construe that it would destroy the regulations which had already come into force prior to the amendment, as obviously that would amount to giving retrospective operation to the provisions of the Amendment Act. It therefore, follows that the remaining Regulations of 1961,
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other than the substituted Regulations, 1995, having come into force prior to the 1973 amendment, when no prior approval of the Federal Government was necessary, shall continue to remain in force and operative notwithstanding the amendment of subsection (2) of section 39; (4) that the 1961 Staff Regulations were, framed under section 39 of 1961 Ordinance (un-amended) by the Board so those were statutory and this Court has already held so in an unreported judgment of this Court (in C.P. 495 of 2010) wherein it has been candidly held as follows:- "We have no doubt in our minds that the National University of Sciences and Technology (Enforcement of Academic, Service, and Financial Matters) Statutes, 2005, are statutory in nature as they were framed in accordance with the procedure prescribed in the statute. Since this was the only ground on which leave was granted, the appeal is dismissed." (5) that the treatment meted out to respondents in matters of promotion is discriminatory and violative of Article 25 of the Constitution inasmuch as while the regulations pertaining to efficiency and discipline are statutory and they can invoke the remedy of filing a petition under Article 199 of the Constitution, but with regard to promotion they have no remedy and they are hit by the principle of master and servant; (6) that if this Court comes to the conclusion that the 1961 Staff Regulations or Promotion Policy of the year 1999 are non-statutory, it would not be in accord with the canons of equity and justice as the said conclusion may render them without any remedy or forum to agitate their grievance. In this context, learned counsel relied on a judgment of this Court in Muhammad Amin v. President Zarai Taraqiati Bank Ltd. (2010 PLC (C.S.) 710) wherein the Court itself provided a remedy in terms of para 7 of the Esta Code to grant the relief which was prayed by the aggrieved; (7) that in C.P. 427 of 2010, counsel appearing for Zarai Taraqiati Bank had contended that the Service Tribunal had no jurisdiction to entertain the appeal and the Court had repelled the contention holding as follows:-- "From the above narration, we have no doubt left in our mind that the respondent's services are to be governed by the Rules and Regulations framed under the 1961 Ordinance as in force at the repeal of Ordinance." 13. In his rebuttal, learned counsel for the appellant submitted as follows:-- (1) that it is incorrect to state that any counsel appearing on behalf of the Zarai Taraqiati Bank had conceded to the proposition that the 1961 Staff Regulations were statutory except in one case (C.Ps. Nos. 434 and 435 of 2009). In those cases, the matter was remanded and a case decided on concession is not the law declared. He gave a list of other cases wherein concession was made by counsel for the appellant and in all those cases the Regulations/Rules were statutory. The list of those cases is as under:- (i) C.A. 1394 of 1999 etc and C.P. 1208 of 2000 (ii) Crl. Org. No, 44 of 2010 in C..As. Nos. 749 to 761 of 2009. (iii) C.P. No, 2726 of 2004 (iv) C.P. No, 1135 of 2010 (v) C.P. No, 427 of 2010 (vi) C.P. No, 1410 of 2009 and C.M.A. No, 2513 of 2009. (2) Suggesting a way out he submitted that since there is no provision of regulations in the 2002 Ordinance and section 9 of the same provides for making rules, a direction can be issued to the Federal Government to amend the said Ordinance and thereafter the Federal Government may accord the requisite approval in terms of section 39(2) of the 1961 Ordinance; 14. Having heard learned counsel for the parties, the issues which crop up for consideration are as follows:-- (1) Whether the old Staff Regulations of 1961 framed by the Board are non-statutory and if so were the Constitutional petitions filed by the respondent employees maintainable?
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(2) whether the respondent employees were disentitled to any discretionary relief under Article 199 of the Constitution on account of their own conduct? 15. Historically statutory rules and orders were the means by which delegated legislation used to be made in United Kingdom. "The Rules Publication Act, 1893 in England defines "rule making authority" to include every authority authorized to make any statutory rules. Statutory rules are defined as rules, -regulations or by-laws under any Act of Parliament, in England. Orders are excluded from the statutory definition of statutory rules as being administrative. In England regulation is the term most popularly understood and the one favoured by the Committee on Ministers' Powers, who suggested that regulations should be used for substantive law and rules for procedural law, while orders should be reserved to describe the exercise of executive power or the taking of a judicial or quasi-judicial decision (See Craies on Statute Law, 7th Ed. At p. 303). The validity of statutory instruments is generally a question of vires, i,e,, whether or not the enabling power has been exceeded or otherwise wrongfully exercised'." 16. The "rules" and "regulations" framed under any Act are meant to regulate and limit the statutory authority. All statutory authorities or bodies derive their powers from statutes which create them and from the rules or regulations framed thereunder. Any order passed or action taken which is in derogation or in excess of their powers can be assailed as ultra vires. Rules and regulations being forms of subordinate legislation do not have substantial difference as power to frame them is rooted in the statute. Statutory bodies are invariably authorized under the Act to make or adopt rules and regulations not inconsistent with the Act, with respect to such matters which fall within their lawful domain to carry out tie purposes of the Act. This rule making power of such bodies, called 'delegated legislation' has assumed importance in the contemporary age. "The justification for delegated legislation is threefold. First, there is pressure on parliamentary time. Second, the technicality of subject matter necessitates prior consultation and expert advice on interests concerned. Third, the need for flexibility is established because it is not possible to foresee every administrative difficulty that may arise to make adjustment that may be called for after the statute has begun to operate. Delegated legislation fills those needs2." 17. Broadly the salient characteristics of statutory rules are threefold:-- . (i) Rules or Regulations are framed by statutory or public body; {{FOOT NOTE}} ' Sukhdev Singh and others v. Bhagat Ram and others (AIR 1975 SC 1331) 2 AIR 1975 SC 1331 {{FOOT NOTE}} (ii) Those are framed under the authority or powers conferred in the statute; (iii) Those have statutory Governmental approval or statutory sanction. 18. The question as to which rules or regulations are statutory and how they affect the rights of the employees has been a subject of comment in several judgments. In Principal, Cadet College, Kohat v. Muhammad Shoab (PLD 1984 SC 170), this Court considered this issue with reference to sections 17 and 18 of the West Pakistan Government Educational and Training Institutions Ordinance, 1960. Section 17(1) of the said Ordinance provided that the Government may make rules for carrying out the purposes of the said Ordinance and section 18 provided that the Board of Governors may subject to the approval of the Government, frame regulations "not inconsistent with the provisions of this Ordinance and the rules made thereunder, to carry out the purposes of this Ordinance." Since the "rules" framed by the Board of Governors, governing the appointment, promotion, retirement, termination of service and dismissal of staff employed by the Board had not been made by the Government, those 'rules', the Court held "could not be regarded as "rules" under section 17, nor having been approved by the Government, be treated as Regulations under section 18 thereof. These "rules" therefore could only be regarded to be in the nature of mere instructions issued for the guidance of the Board of Governors and the Principal of the Cadet College, Kohat."
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This view was reiterated in Zia Ghafoor Piracha v. Chairman, Board of Intermediate and Secondary Education (2004 SCMR 35) wherein in para 7, it was held as follows:-- "7. The Service Regulations of the Employees of the Board were framed by the Board. However, as has been determined by the learned Single Judge of the Lahore High Court, the Government, as required by the Act, has not given its formal approval to these Regulations. In these circumstances, these Regulations may be termed as internal instructions or domestic rules having no status of statutory rules. Reference in this regard is made to the case of "The Principal Cadet College, Kohat and another v. Muhammad Shoab Qureshi (PLD 1984 SC 170). In that case, the Government under the West Pakistan Government Educational and Training Institution Ordinance, 1960 was empowered to make Rules for carrying out the purposes of the Ordinance under section 17 thereof. Similarly, under section 18, the Board was also empowered to make Regulations subject to approval of the Government. There was identical situation in the aforesaid case as is now prevailing in the present case because the Regulations though made by the Board but the approval of the Government had not been secured. Similarly, the Government too had not made any Rules as mandated by section 17 ibid." 19. An identical issue was considered by this Court in Asad Bashir v. Chairman Board of Intermediate and Secondary Education, Lahore and others (2006 PLC (C.S.) 110) and relying on the afore-referred precedent case-law, the Court upheld the judgment of the learned Lahore High Court and held that since the rules/regulations governing the service of the appellants were non- statutory, the Constitutional petitions were not maintainable. 20. In Muhammad Mubeen-us-Salam v. Federation of Pakistan (PLD 2006 SC 602), the question inter alia of the remedies available to employees who are governed by statutory rules was a moot point and this Court observed in para 50 as under:- "Prima fade, this provision of law, i,e, section 2-A of the STA, 1973 has not advanced the cause of employees of Corporations, etc. By providing them remedy before the Service Tribunal because initially in the…
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