Al Wakeelo
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Petitioner: National Bank of Pakistan VS Respondent: Iftikhar Rasool Anjum and others
Court Name: Lahore High Court Judge(s): Shahid Karim, Jawad Hassan Title: National Bank of Pakistan vs Iftikhar Rasool Anjum and others Case No.: I.C.A. No.120/2016 Date of Judgment:2017-01-16 Reported As: 2016 LHC 4144 Result: Appeal Dismissed
Judgment JAWAD HASSAN, J:- Through this Intra Court Appeal, the Appellant, namely the National Bank of Pakistan (NBP), has called in question judgment rendered in Constitutional Petitions, including W.P. No. 8260/2014, W.P. No. 31187/2013, W.P. No. 19765/2010, W.P. No. 13400/2010, W.P. No. 13401/2010, W.P. No. 21843/2010, W.P. No. 22757/2010, W.P. No. 8730/2013, W.P. No. 8731/2013, W.P. No. 25207/2013, W.P. No. 27942/2013, W.P. No. 28452/2013, W.P. No. 29211/2013, W.P. No.29217/2013, W.P. No. 29717/2013, W.P. No. 30704/2013, W.P. No. 32081/2013, W.P. No. 1111/2014, W.P. No. 1112/2014, W.P. No. 2588/2014, W.P. No. 2590/2014, W.P. No. 3209/2014, W.P.No. 3209/2014, W.P. No. 5903/2014, W.P. No. 5907/2014, W.P. No. 7246/2014, W.P. No. 8724/2014, W.P. No. 8798/2014, W.P. No. 8956/2014, W.P. No. 8958/2014, W.P. No. 9029/2014, W.P. No. 9551/2014, W.P. No. 10590/2014, W.P. No. 10925/2014, W.P. No. 2259/2013 and W.P. No.19091/2015, which were heard on 30.7.2015 and 15.10.2015, and a consolidated judgment was pronounced on 15.01.2016 by the learned Single Judge in Chamber (the "Impugned Judgment"), whereby Constitutional Petitions filed by the Respondents/ Petitioners were allowed and the Appellant/Respondent was directed to release pensionary benefits of the Respondents/Petitioners in accordance with Circular No.228 (C) dated 26.12.1977 issued by the Appellant/Respondent within two months from the date of the decision. 2. This judgment shall also render decision on connected Appeals bearing numbers I.C.A. No.121/2016, I.C.A. No.122/2016, I.C.A. No.123/2016, I.C.A. No.124/2016, I.C.A. No.125/2016, I.C.A. No.126/2016, I.C.A. No.127/2016, I.C.A. No.128/2016, I.C.A. No.129/2016, I.C.A. No.130/2016, I.C.A. No.131/2016, I.C.A. No.132/2016, I.C.A. No.133/2016, I.C.A. No.134/2016, I.C.A. No.135/2016, I.C.A. No.136/2016, I.C.A. No.137/2016, I.C.A. No.138/2016, I.C.A. No.139/2016, I.C.A. No.140/2016, I.C.A. No.141/2016, I.C.A. No.142/2016, I.C.A. No.143/2016, I.C.A. No.144/2016, I.C.A. No.145/2016, I.C.A. No.146/2016, I.C.A. No.148/2016, I.C.A. No.149/2016, I.C.A. No.150/2016, I.C.A. No.151/2016, I.C.A. No.152/2016, I.C.A.
---
## Page 2
No.153/2016, I.C.A. No.154/2016, I.C.A. No.155/2016, I.C.A. No.156/2016, I.C.A. No.460/2016, I.C.A. No.461/2016, I.C.A. No.462/2016, I.C.A. No.463/2016, I.C.A. No.464/2016, I.C.A. No.991/2016. 3. Brief facts for the disposal of instant Intra Court Appeals filed under Section 3 of Law Reforms Ordinance, 1972 are that the Respondents/Petitioners are retired officials/officers of Appellant/Respondent which was constituted under the National Bank of Pakistan Ordinance, 1949 and was governed by the NBP Employees Pension Provident and Guarantee Rules, 1958 and the National Bank of Pakistan (Staff) Service Rules, 1973 made thereunder, duly approved by the Federal Government of Pakistan. During their service with the NBP, the Federal Government launched a new pension scheme which was circulated by NBP vide Instruction Circular No.228 (C) dated 26.12.1977. As per Clause 4(b) of the said Circular, the pension of the retired employees of NBP was to be enhanced at the rate of 70% of average emoluments on completion of 30 years qualifying service. The Respondents/Petitioners opted for the aforesaid Scheme. In para-10 of the aforesaid Scheme it was further mentioned that any change or revision in rates/scales of pension or gratuity that may thereafter be made by the Federal Government shall also apply to the officers/executives of the Bank. In the year 1999, the Management of the NBP issued another Instruction Circular No.37/1999 dated 16.06.1999, whereby the pension was reduced to almost 33% as against 70% and basic pay was increased, which was assailed in the Constitutional Petitions, which ultimately were allowed through the Impugned Judgment. Hence, this Intra Court Appeal. 4. After hearing the arguments of the parties at length on 21.12.2016, 22.12.2016, 26.12.2016, 27.12.2016 and 28.12.2016 following moot points arising out of instant Intra Court Appeals requiring determination upon which through this judgment, the decision shall be rendered by us: A. Whether the Instruction Circular No.228 (C) dated 26.12.1977 is a statutor y instrument, having backing of law , or merely executive instrument issued by the Federal Government? B. Whether the Instruction Circular No.37/1999 dated 16.06.1999 issued by the Board of Directors of NBP repeals and overrides the Circular No. 228(C) dated 26.12.1977? C. Whether the principle of Estoppel is attracted in the instant appeal? D. Whether the petitions suffer from Laches and are liable to be dismissed? 5. Before proceeding further with the matter for determination of above-mentioned points, it is essential to briefly have a look upon the legislative history of entire NBP laws, rules, regulations and circulars: A. THE ESSENTIAL HISTORY OF LAWS RELATING TO THE NA TIONAL BANK OF P AKIST AN: (i) On 09.11.1949, the first legislation in respect of the National Bank of Pakistan (NBP) was promulgated, namely National Bank of Pakistan Ordinance, 1949 (the "1949 Ordinance"), to extend banking facilities generally and under Section 3 of the 1949 Ordinance, NBP was constituted to carry on the business of banking. Under Section 12 of the 1949 Ordinance, "the general superintendence and direction of the affairs and business of the Bank shall be entrusted to the Central Board, which may exercise all powers and do all such acts and things as may be exercised or done by the Bank and are not by this Ordinance expressly directed or required to be done by the bank in general meeting." Further, under Section 26(A)(2) of the 1949 Ordinance, the NBP was authorized to "grant or subsidise, from time to time, pensions, gratuities, bonuses or other funds created for the benefit of its officers and staff or their dependents" . Further , under Section 32 of the 1949 Ordinance, the Central Board was authorized, with the previous approval of the Federal Government (Central Government at that time), to make bye- laws not inconsistent with this Ordinance. It was made clear in Section 32(2)(xxviii) of the 1949 Ordinance that such bye-laws may provide for "the recruitment of officers and staff of the bank including the terms and conditions of their service, and the constitution and management of staff and superannuation funds for the officers and servants of the Banks" . (ii) In 1958, the NBP Employees Pension Provident and Guarantee Rules, 1958 (the "1958 Rules ") were made by the Central Board under Bye-Law 18(a)(V) of the NBP Bye Laws, with the prior approval of the Central Government. The 1958 Rules created 'the National Bank of Pakistan Employees' Pension Fund', with the objective to provide every employee, who was a member of the Fund with a pension, the amount of which was to be ascertained according to 1958 Rules. Importantly , Rule 17 of the 1958 Rules stated that the pension shall be
---
## Page 3
payable at the rate of one seventieth part for every year's service of the average monthly pay drawn during the last three years of service on the date of retirement. Further , Rule 18 of the 1958 Rules put a ceiling by declaring that the maximum pension shall in no case exceed Rs. 650/- per mensem. (iii) Thereafter, in 1973, the National Bank of Pakistan (Staff) Service Rules, 1973 (the "1973 Rules") were made by the Central Board under Bye-Law 18(a)(iii) of the National Pakistan Bye-Laws, with prior approval of the Central Government. Importantly, under Rule 4 of the 1973 Rules, the Central Board was given powers to amend, modify or omit all or any of the 1973 Rules, with the prior approval of the Federal/Central Government, as may be found necessary from time to time. As per Rule 41 of the 1973 Rules, all employees in the permanent service of NBP became members of the Bank's Provident and Pension Funds excluding those who (i) were on contract basis, (ii) had attained age of 35 years at the time of appointment (iii) were in permanent service of NBP and drawing pension from another source. (iv) However , on 11.03.1974, the Banks Nationalization Act, 1974 (the "1974 Act") was enacted in public interest to provide for nationalization of the banking business in Pakistan, and Section 9 of the 1974 Act constituted/established the Pakistan Banking Council (PBC), having functions under Section 9(4) of the 1974 Act, including to make policy recommendations to the Federal Government for directing banking activities towards national socio economic objectives and for formulating policy guidelines for the banks. Section 11 of the 1974 Act provided that the Bank shall have an Exec utive Board consisting of a President and not less than two and not more than four other members to be appointed by the Federal Government, for general direction and superintendence of the affairs and business of the banks. Section 13 of 1974 Act provided that "... all officers and other employees of a bank, shall continue in their respective offices and employments on the same terms and conditions, remuneration and rights as a to pension and gratuity , as were applicable to them immediately before the commencing day". Further , Section 20 of the 1974 Act provided that "The Federal Government may, by notific ation in the Official Gazette make rules to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provision of this Act." (v) On 31.11.1977, the Government of Pakistan Finance Division (Internal Finan ce Wing), vide letter No.17(9)- IF.XI/77 (the "1977 Notification "), addressed to Chairman Pakistan Banking Council conveyed the decision to introduce pension and retirement benefits for the officers/executives of banks along the lines of those introduced by the Federal Government for civil servants and to discontinue the existing scheme of pension in NBP Contributory Provident and Gratuity Fund. The date of effect of these new Pension and retirement benefits was stipulated as May, 1977 at the replica rate and scale mentioned in below 1977 Circular . (vi) On 26.12.1977, an Instruction Circular No. 228(C) (the "1977 Circular ") was issued, in respect of 'Establishment of Pensions and Retirement Benefits for Officers/Executives of Banks' (as have been introduced by the Federal Government for Civil Servants) and it was provided in para 2 of the 1977 Circular that " ... The contribution made by the bank towards the Contributory Provident Fund shall be withdrawn as that service shall now count for the purpose of pension ..." Further , Clause 4, 10 and 11 of the 1977 Circular reads as follows: "B- RATE AND SCALE OF PENSION 4. a) Pension shall be payable if the total service of an officer/executive at the time of retirement or death is 10 years or more. .... b) Pension shall be calculated at the rate of 70% of average emoluments on completion of 30 years qualifying service. Where qualifying service is less than 30 years but not less than 10 years, proportionate reduction in percentage shall be made. Any amount of pension in excess of Rs. 1000/- shall be reduced by 50%... C- GRATUITY FOR SERVICE OF LESS THAN 10 YEARS BUT NOT LESS THAN 5 YEARS 5.................. D- GRATUITY AND COMMUTATIONFOR PENSIONERS RETIRING AFTER 10 YEARS SERVICE 6. .... E- FAMILY PENSION 7. .....................
---
## Page 4
F- PENSIONS/GRA TUITIES FOR INJUR Y OR DEA TH IN COURSE OR CONSEQUENCE OF DUTY 8 ..................... 9..................... 10. Since the rates of pension and gratuity given above have been fixed by the Pay Commission for Banks and Financial Institutions on the same lines as obtaining on the side of the Federal Government, the existing provisions and any changes or revision in the rates or scales of pension or gratuity that may hereinafter be made by the Federal Government shall also apply to the officers/executives of the Banks. 11. The existing schemes of Pensions, Contributory Provident Fund and Gratuity shall be discontinued." (vii) On 18.08.1979, the Bank (Nationalization) (Amendment) Ordinance, 1979 (the "1979 Amendment ") was enacted to amend Section 9, whereby further functions of overseeing foreign operations, establishing a Research Department, establishing a Central Training Institute, acting as arbiter in inter-bank disputes, appointing lead banks in respect of consortium loans, watching the progress of the implementation of the rulings made in SPB' s inspection report were entrusted to the Pakistan Banking Council. Through the 1979 Amendment, Section 11 was also amended and sub section 4-A, 4-B and 4-C were inserted as follows: "4-A. A bank shall have a Board of Directors consisting of the President and all the other members of the Executive Boards, one member of the Council to be nominated by the Council and an official of the Ministry of Finance to be nominated by the Federal Government. 4-B. The Board of Directors shall be responsible for overall policy making in respect of the bank' s operations....... 4-C........................ " (viii) On 01.01.1980, the National Bank of Pakistan Staff Service Rules, 1980 (the "1980 Rules ") were made by the Executive Board under bye-law 18(a) (iii) and (iv) of NBP Bye-Laws, read with Section 11(4) of the 1974 Act. While the 1980 Rules did not provide any formula for pension fixation, Rule 41 of the 1980 Rules provided that "All employees in the permanent service of the Bank shall become members of Bank' s provide nt Fund, Benevolent Fund, Pension/Gratuity and Group Insurance Scheme" . (ix) On 12.01.1983, the Respondent No. 1 opted for the Item No. 2, the new retirement benefits w.e.f. 01.05.1977/01.07.1977, in exercise of the option afforded under the announcem ent of Instruction Circular No. 228(I) dated 03.07.1978 regarding 'Retirement Benefits of Of ficers/Executives'. (x) On 08.09.1983, another amendment vide Banks (Nationalization) (Amendment) Ordinance, 1983 (the "1983 Amendment "), was introduced by which Section 11(7-A) was inserted and it was provided that "the Chairman and a member of the Council and the President and a member of an Executive Board shall be liable to such disciplinary action and penalties, to be awarded in such manner and by such authorities, as may be prescribed" . (xi) On 24.07.1985, an Instruction Circular No. 804(N) (the "1985 Circular ") was issued, in respect of 'Further Liberalization of Pensions Rules, Indexation of Pension and other Allied Matters - Officers/Executives and Clerical/Non-Clerical Staf f of the Bank'. (xii) On 9.9.1986, an Instruction Circular No. 804(ZD) (the "1986 Circular ") was issued, in which further concession in pension were granted to all categories of Of ficers/Executives and Clerical/-Non-Clerical staf f of NBP . (xiii) On 22.09.1988, another amendment vide Banks (Nationalization) (Amendment) Ordinance, 1988 (the "1988 Amendment ") was promulgated and Section 5(6) was inserted highlighting that "the Federal Government or a corporation owned or controlled by the Federal Government may from time to time, sell all or any of its shares in the capital of a bank, other than the State Bank, to such persons, and on such terms and conditions, as it may determine." Further , Section 9 of the 1974 Act was amended to give more power to the Banking Council, and Section 11 of 1974 Act was amended by substituting subsection (1) through which composition of Board of Directors of every bank was changed by adding, inter alia members of Banking Council and eminent persons from private sector . Further , a new subsection 1-A was inserted which provided that "the Board shall have an Executive Committee consisting of its President, three Directors and such other senior executives of the banks as the Board may, from time to time, decide and the Executive Committee shall exercise such powers, and perform such functions as may be delegated to it by the Board from time to time." Moreover , subsection 4-A to 4-C (earlier inserted vide 1979 Amendment) were deleted.
---
## Page 5
(xiv) On 24.01.1989, the Banks (Nationa lization) (Amendment) Ordinance, 1989 (the "1989 Amendment ") was promulgated whereby section 9 was amended and functions of Banking Council were added, while by amending Section 11. Board of Directors was constituted for every bank consisting of Executives of Banks, Chief Executives of development financial Institutions, members of Pakistan Banking Council, eminent persons from private sector and Directors from Federal Government. (xv) On 23.11.1991, the Banks (Nationalization) (Amendment) Act, 1991 (the "1991 Amendment ") was promulgated, whereby new Sections 5-A (Sale of Shares) and 5-B (Section 5-A to have effect notwithstanding any other law etc) were inserted. Further , functions of the Council under Section 9 were revised and Section 11 was substituted, whereby Section 11(1) provided that "A bank shall have a Board of Directors consisting of the President and six other members to be nominated by the Federal Governmen t". Further , Section 11(2) also provided that "the general direction and superintendence of the affairs, and business of a bank, and overall policy making in respect of its operations, shall vest in the Board which may exercise all such powers and do all such acts, deeds and things as the bank was competent....to exercise or do in a meeting of the Board of Directors" . (xvi) On 19.08.1996, an Instruction Circular No. 73/96 (the "1996 Circular ") was issued, in respect of Pension Benefits after Retirement, and it was specified that it has been decided in meeting of Presidents of NCB at PBC on 18.04.1996 to allow some benefits of revision of pay scales in pension/commutation to those Banks employees, who have retired one year preceding the revision of pay scales in Banks. (xvii) On 10.06.1997, the Banks (Nationalization) (Amendment) Act, 1997 (the "1997 Amendment ") was enacted whereby Section 9 was replaced to dissolve Pakistan Banking Council forthwith, and all assets, properties, rights of the Council, all liabilities and encumbra nces were transferred to State Bank. Further , Section 11 was also substituted, under which subsection 4 provided that "the general direction and superintendence of the affairs and business of a bank, and overall policy making in respect of its operations, shall vest in its Board ." Importantly , new subsection 10 of section 11 provided that "All selections, promotions and transfers of bank except the President and decisions as to their remuneration and benefits shall be made by the President in accordance with the evaluation criteria and personnel policies determined by the Board" . (xviii) On 16.06.1999, an Instruction Circular No. 37/99 (the "1999 Circular ") was issued, through which the Board of Directors of the NBP approved revised pay structure of executives and officers effective from 01.01.1999, and it was further stated that parameters of revised pay scales would be periodically revised to reflect the market movements and costs of living changes. (Note: this revision of pay structure entailed drastic increase in basic pay e.g. SEVP' s existing pay scale was Rs.9070 to 15375 which was revised to 43,500 to 108,750) Further , as per Part V of the 1999 Circular , it was stated that "Monthly Gross Pension under the new retirement benefits will be calculated on the basis of Revised Basic Pay (x) Number of years of Service (x) 1.10%. However , the amount of gross pension on the basis of existing Basic Pay and existing formula is protected and will not adversely affect the present amount of pension as on 31.12.1998 with this change in the formula. Other terms and conditions of pension scheme will continue to be the same." (xix) On 8.5.2000, the NBP issued Instruction Circular No. 28/2000 to sanction w.e.f 1.7.1999 an increase in pension to the retired Executives/Of ficers and Clerical/Non-Clerical staf f. (xx) On 15.7.2002, the NBP issued Instruction Circular No. 43/2002 to sanction w.e.f. 1.1.2002 an increase in pension to all the retired Executives/Of ficers and Clerical/Non-Clerical staf f. (xxi) On 21.5.2004, the NBP issued Instruction Circular No. 54/2004 to grant approval of increase in pension being drawn by Bank' s retired Executives/Of ficers and Clerical./Non-Clerical Staff including family Pensioners with effect from 1-1-2004. (xxii) On 1.02.2005, the NBP issued an Instruction Circular No. 23/2005 and 24/2005 to approve revision of pay, allowances and other benefits of Clerical, Non-Clerical Staf f, and executives/of ficers. (xxiii) On 24.04.2006, Instruction Circular No. 27/2006 was issued whereby BOD approved grant of increase in Gross Pension plus increases from time to time to the Bank' s retired Executive Officers and Clerical/Non-Clerical staff at the following rates w .e.f. 1.1.2006.
---
## Page 6
(xxiv) On 10.07.2006, the NBP issued an Instruction Circular No. 53/2006 (the "2006 Circular ") in which it was highlighted that the Bank' s management is pleased to approve the revision pay, allowances and other Clerical and Non-Clerical staff for the year 2006 to 2007, after having detailed meeting with authorized representative of CBA's and in pursuance of settlement reached with them all over Pakistan. (xxv) On 10.07.2006, the NBP issued an Instruction Circular No. 54/2006 to approve revision of pay, allowances and other benefits of executives and of ficers. (xxvi) On 30-11-2007, Instruction Circular was issued by NBP to approve grant of increase in Net Pension of NBP pensioners w .e.f. 1-7-2007. (xxvii) Another amendment in Section 11(1) and 11(3) was introduced vide the Banks (Nationalization) Amendment Ordinance 2007 (the " 2007 Amendment "). (xxviii) On 15.02.2008, Instruction Circular No. 15/2008 and 16/2008 was issued by NBP after detailed discussion with the representatives of CBAs, the Bank' s Management was pleased to revise pay, allowances and other benefits to clerical/non-clerical staf f, executives and of ficers. (xxix) On 01.07.2008, Circular No.58/2008 was issued through which the Manag ement of the NBP revised the aforenoted pension factor from 1.10% to 1.25% for service after 01.01.2004. Moreover , it was decided to reduce the monthly contribution of 2.5% of the basic pay of each employee to 18% per month employee basic pay . (xxx) On 12.08.2008, through the Informa tion Circular No. 205/2008, NBP constitu ted the high powered committee of four Group Chiefs to look into the issues raised by employees representatives with regard to revision of pension formula and some other related matters. (xxxi) On 1.4.2009, the committee hold meeting with employee representative and after due deliberations recommendations were prepared for a settlement which recommendations were prepared for a settlement which recommendations were duly signed by the President of CBAs. (xxxii) On 1.4.2010, all CBAs functioning in all provinces signed a MoU and a revised formula for pension was prepared which was to take affect from 1.1.2010. (xxxiii) On 3.4.2010, an office note based on the said formula was duly issued by the Bank vide Circular No. 33/2010 revising the rate/formula of pension agreed upon between the parties. With effect from 01.01.2010 pension of retired employees is being calculated on the basis of said formula. (xxxiv) On 18.9.2008, the President CDA (Trade Unions Federation) wrote a letter to the President of NBP to uphold the legitimate rights of the bank employees and restore the pension and the benefits since reduced vide Instruction Circular 32/99 dated 17.5.1999 and No. 37/99 dated 16.6.1999 and continue allowing the pensions/benefits as allowed to the employees of NCBs in line with government servants besides restoring all their benefits protected vide Section 13(1) of 1974 Act. It was further requested that the management should increase the pension of the employees in proportion to the present inflationary and economic hardship. (xxxv) On 11.11.2009, the Respondent No. 1 sent a letter to the President of NBP requesting that his pension may fairly and graciously be fixed according to the Pension Rules of 1977 as reflected in 1977 Circular . (xxxvi) On 3.04.2010, NBP issued another Instruction Circular No. 33/2010 whereby it was intimated that management is pleased to announce the revision in Pension Formula for the calculation of Gross Pension of employees who have retired or shall be retiring on or after 1.1.2010. (xxxvii) Furthermore, clauses (i), (ii) and (iv) were omitted in Section 11-A vide the Banks (Nationalization) Amendment Act 201 1 (the " 2011 Amendment "). (xxxviii) On 16.11.2012, the Instruction Circular No. 97/2012 was issued by NBP to announce increase in Net Pension to all NBP Pensioners/Families of deceased NBP Pensioners retired on or before…
Read the unabridged text and precedent citation network on Al Wakeelo Legal Research Platform.