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Petitioner: Muhammad Ashraf Tiwana, Etc. VS Respondent: Pakistan, Etc.
Court Name: Supreme Court of Pakistan Judge(s): Khilji Arif Hussain, Jawwad S. Khawaja Title: Muhammad Ashraf Tiwana, Etc. vs Pakistan, Etc. Case No.:Constitution Petition No. 59 of 2011 and CMAs Nos. 326 and 633 of 2012 and
JUDGMENT
Reported As: 2013 SCMR 1159, 2013 SCMR 836, 2013 P.C.T.LR. 724 Result: Petition dismissed Judgment JUDGMENT JAWWAD S. KHAWAJA, J. - This is a petition filed under Article 184(3) of the Constitution. The Petitioner is a former employee of. The respondent No. 2, viz. Securities and Exchange Commission of Pakistan (SECP/Commission). The other respondents in the case are the Federation through the Secretary, Finance Division (Respondent No. 1), the Chairman, Securities and Exchange Policy Board (Respondent No. 3), Muhammad Ali Ghulam Muhammad, Chairman SECP (Respondent No. 4), Tahir Mehmood, Commissioner (Company Law Division) SECP (Respondent No. 5) and Bushra Aslam, Director Human Resource Department, SECP (Respondent No. 6). The respondents (other than respondent No. 3) were represented by their respective learned counsel. 2. The petition was decided by means of a short order announced on 12.4.2013 in the following terms:- "This petition has raised important questions of. Public importance relating to the enforcement of fundamental rights guaranteed in Chapter I of Pad II of the Constitution. The salient aspect of this petition relates to the functioning and governance structure of the Securities and Exchange Commission of Pakistan (SECP) which is the apex regulator inter alia, of the corporate sector and the capital markets of the country. 2. Over the course of several days, we have heard and noted in detail, the submissions of learned counsel representing the parties. For reasons to be recorded we hold, declare and direct as under:- 3. That:- (a) the selection and appointment of respondent No. 4 namely, Muhammad Ali Ghulam
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Muhammad as Commissioner and Chairman SECP does not meet the requirements of the Securities and Exchange Commission of Pakistan Act, 1997 (the Act); (b) as a consequence, the Notification No. SRO 21 (KE)/2011, dated 24th December, 2010 appointing Mr. Muhammad AH Ghulam Muhammad as Commissioner and Chairman SECP is set aside; (c) the Federal Government shall, without delay, make appointments to statutory positions in SECP which meet the requirements of the Act including Sections 5, 6 and 7 thereof, in a credible, rigourous, transparent and open manner, through a selection and appointment process undertaken with due diligence and deliberation which manifestly and demonstrably ensures that the appointees meet the requirements of law as enunciated by precedent, including mutatis mutandis, the principles of law determined in the case of Muhammad Yasin v. Federation of Pakistan (PLD 2012 SC 132); (d) the insertion of Section 5(5) in the Act through the Finance Act 2003 was violative of the Constitution and in particular Article 73 thereof; (e) Clause 3(1) of Chapter 11 of the SECP Service Rules (HR Handbook), which allow for termination simpliciter (without cause) of employees of SECP, is ultra vires the Constitution and inter alia, the Act; (f) the above Clause must be replaced appropriately by provisions ensuring due process and adherence, inter alia to Articles 9, 10A, 14, 18 and 25 of the Constitution and which are consistent with the provisions of the Act ensuring independent and objective decision making without fear or favour, required of an independent regulator; (g) the prayer in the petition for striking down the order dated 13.6.2011 terminating the employment of the petitioner is disallowed as not pressed, but without prejudice to his rights/remedies, if any, before a competent forum in accordance with law; (h) respondent No. 1 (Federation) and respondent No. 2 (SECP) shall bear the costs of the petitioner. 4. A copy of this Order shall be sent to each member of the Securities and Exchange Policy Board for action deemed appropriate by said Board in relation to the governance structure and decision making policies of SECP as per requirements of the Act and for consideration on issues of policy- making highlighted by the present petition and for the effective performance of ihe Board's functions under the Act, particularly Section 21 thereof. The Board having, inter alia, the duty to "oversee the performance of [SECP] to the extent that the purposes of the [SECP] Act are achieved", shall look into this petition and documents placed on file and after making such further inquiries as may be deemed appropriate by it, submit within 45 days, a report as to the performance of the SECP. 5. A copy of this Order shall be sent to the Secretary, Ministry of Finance to enable the Federal Government to remain compliant with the law and legal principles enunciated by this Court, in terms of Article 189 of the Constitution. The Secretary (Finance) shall also took into this petition and documents placed on file (including those filed by the Ministry itself) to examine wrongdoings/shortcomings, if any, within the Ministry and the decision-making processes of the Federal Government under the Act. A report in this respect shall be submitted in Court within 45 days". 3. We give below, the reasons in support of the aforesaid short order. 4. SECP has been established under the Securities and Exchange Commission of Pakistan Act, 1997 (the 'Act'). The powers and functions^ of the SECP are elaborated in the Act. The purpose of the Act as recorded in its preamble is "to provide for the establishment of the Securities and Exchange Commission of Pakistan for the beneficial regulation of the capital markets, superintendence and
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control of corporate entities and for matters connected therewith and incidental thereto". The SECP administers a number of statutes including the Companies Ordinance, 1984, the Insurance Ordinance 2000, the Securities and Exchange Commission of Pakistan Act, 1997, the Central Depositories Act, 1997 and the Securities and Exchange Ordinance, 1969. Ln addition to administering these and other statutes, the SECP is responsible for enforcing subordinate legislation comprised of rules framed in exercise of rule-making powers mentioned in the statutes. Here we may add that in the performance of its functions, the SECP has from time to time issued a number of regulations, guidelines, orders, directives and policies. It is not necessary to enumerate all of these. However, a list of some such regulations etc. Has been given in annex 'A' To the petition. 5. The SECP as such is amongst the most important regulatory authorities directly impacting the economic life of the citizens of Pakistan. It may also be noted that amongst the various functions and powers of SECP which have been mentioned in Section 20 of the Act, there are a number of functions which relate directly to the economic well-being of the people of Pakistan. By way of illustration only, it may be mentioned that in Section 20(6), the SECP has been specifically ordered and mandated inter alia, "to maintain the confidence of investors in the securities markets by ensuring adequate protection for such investors" The Securities and Exchange Ordinance, 1969 which, as noted above, is also administered by SECP deals with the capital markets in Pakistan. By virtue of that statute too, the SECP is required "to provide for the protection of investors" (Preamble). It is worth noting that the market capitalization just through the stock exchanges in Pakistan is in excess of Rs. 4,000,000,000,000/- (rupees four trillion). The investments made in unlisted companies (private or public) and in other sectors such as insurance etc., regulated by SECP, is in addition to and may even be in excess of the said figure. Millions of Pakistani citizens and institutions and quite a few foreign investors and their investments are directly affected by the quality of regulation of companies, securities markets and the statutes/rules etc. Administered by SECP. 6. It is in the context of the above circumstances that it can be stated that the SECP is the apex regulator in the economic sector in Pakistan. Its activities including aspects of its governance and functioning are clearly questions of public importance. These questions relate directly to the effective enforcement of fundamental rights guaranteed by the Constitution, In Muhammad Yasin v. Federation of Pakistan (PLD 2012 SC 132), we had held that our Constitution "contains a whole range of Articles which have a direct nexus with good economic governance and fundamental rights. At the very beginning in Article 3 there is, for instance, an oft-forgotten but eloquently stated directive: 'The State shall ensure the elimination of all forms of exploitation and the gradual fulfilment of the fundamental principle, from each according to his ability to each according to his work". Then there is Article 4 which guarantees the protection of law, not just for life and liberty, but also for the body and property of citizens. Furthermore, there is a whole range of fundamental rights, such as the right to life (Article 9), the universal and non-derogable right to a life of dignity (Article 14), the right to engage in business (Article 18) and to hold and acquire property (Article 23), and the right to be governed equally and in accordance with law (Article 25) which have clear economic ramifications. When these articles are read together, we cannot escape the conclusion that the Constitution envisages a political dispensation where good economic governance is a right of the people of Pakistan which they cannot be deprived of." We had also held that "there is an ever-greater nexus between the proper and independent functioning of regulatory bodies and the economic life of the nation and its citizens." It is a self-evident fact that persons making investments in and through the capital markets of the country will either be attracted to the capital markets or shy I away from such markets depending upon the trust and confidence which they have in such markets and this in turn depends upon the rigour and quality of the regulator. Moreover, investments made by the people, being property, are required to be
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protected through enforcement of the fundamental rights enumerated in the extract, from the case of Muhammad Yasin supra. 7. Despite our asking, we were not informed of the nurnber of investors making investments through the capital markets in Pakistan nor were we given figures which would show that the number of investors has increased or decreased during the past few years. Some figures which have come on record indicate that the number of companies listed on the stock exchanges in Pakistan has declined over the past few years. The importance of SECP in the economic well-being of the country and of the people of Pakistan and the direct relevance of the SECP in relation to fundamental rights guaranteed by the Constitution ought to be obvious from the very nature and extent of the statutes and activities regulated by the SECP. However, much was made by learned counsel for the respondents by way of argument that no questions of public impqrtance relating to enforcement of fundamental rights arose in this petition. As such it was argued that the petition is not maintainable in terms of Article 184(3) of the Constitution. We, therefore, firstly take up and address the arguments made on this score by learned counsel representing the respondents. A - MAINTAINABILITY. 8. We may start by refe* ; ng to Civil Misc. Appeal No. 99 of 2011. When the present petition was filed, the Office raised an objection to the maintainability of the petition on the ground that it did not raise any issues of public importance affecting fundamental rights guaranteed under Chapter 1 Part II of the Constitution. This office order was challenged by the petitioner through the said Civil Misc. Appeal No. 99 of 2011. On 23.8.2011, after hearing learned counsel for the petitioner, a Bench of this Court opined "that in the instant case question of violation of fundamental rights relating to the general public in respect of their rights and obligations is involved as the SECP is responsible to regulate the entire capital markets, NBFC, the whole Insurance Industries etc. Which according to the learned counsel deals with about 58 thousands companies ..." The objection raised by the office was thus over-ruled. The petition was registered and notice was issued to the respondents. However, since the aforesaid order was passed on an office objection and the respondents were not present, at the time, we will address the objections to maintainability which have been urged before us on behalf of the respondents. 9. Learned counsel for the respondent No. 4 drew the attention of the Court to an unconnected petition filed by Muhammad Ashfaq Ahmed bearing Civil Misc. Appeal No. 191 of 2012 in Const. P. No. Nil of 2012 titled Muhammad Ashfaq Ahmed v. Ali Arshad Hakeem wherein an objection to maintainability was raised by the office similar to the objections in the present case. The aforesaid petitioner then did not pursue the matter further in this Court. Learned counsel for respondent No. 4, therefore, argued that the present petition also was not maintainable. This contention is misconceived because of the material and obvious difference between the present case and the case of Muhammad Ashfaq Ahmed v. Ali Arshad Hakeem. As noted above, in the present case, a Bench of the Court after hearing the learned counsel, over-ruled the office objection. 10. We also found an apparent lack of clarity and consistency in the submissions advanced on behalf of the respondents on the question of maintainability. Though learned counsel for the respondents vehemently opposed the maintainability of this petition, they did not draw a distinction between want of jurisdiction under Article 184(3) of the Constitution as opposed to the question of discretion whereby the exercise of such jurisdiction may be regulated. This Court, it may be noted, may have the jurisdiction but may still choose to regulate and decline the exercise of such jurisdiction. The jurisprudence of this Court has evolved, particularly since 1988, on this important issue. The decision to decline exercise of such jurisdiction has always been taken based on the facts and circumstances of each case. The nature of the respondents' objection, as discussed below, is based more on the propriety of exercise of jurisdiction in the light of precedent rather than the existence of jurisdiction. Bearing in mind the facts and circumstances, the nature,
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scope and extent of the activities regulated by SECP and also taking into account its mandate to protect a large body of investors who have invested trillions of rupees in the economy of the country, makes this a clear case in which there can be no doubt whatsoever that the governance structure of SECP and more specifically the appointment of its Chairman and Commissioners are questions of "public importance with reference to the enforcement of fundamental rights". 11. The mainstay of the argument of the respondents against the maintainability of the present petition, therefore, rests on the framework established by precedent to regulate the exercise of this jurisdiction. On this score, learned counsel, representing the SECP and respondent Nos. 5 and 6 argued that the petition was based on malice and was nothing more than an attempt at personal aggrandizement of the petitioner with the object also, of settling personal scores because his employment as Executive Director had been terminated by SECP. Arguments of learned counsel for the SECP were also adopted by learned counsel for respondent No. 4. Formulations which were framed by. Learned counsel for SECP reflect the thrust of his argument as to maintainability and are reproduced as under:- (1) Could equitable jurisdiction of this HoC be invoked at the behest of a person whose hands are stained with malice? (2) 1 Could this Hon'ble Bench deviate from the 1 settled law of this Court including full Court's judgments that no action could be taken with regard to quo warranto petition filed by an individual having personal malice? (3) Whether a mala fide complaint vitiates even the most solemn component of the same and could the doctrine of severance be applied to isolate good bad from bad faith? (4) Could the grain be sifted from the chaff by the apex Court while exercising jurisdiction under Article 184(3)? (5) Could an employment dispute and primarily a "no notice dismissal petition" be clubbed with a quo warranto relief and would such a composite petition become maintainable? (6) Could a sacked and disgruntled employee be elevated to be considered as a whistle blower? (7) Could a person having a personal malice, grouse and a score to settle become a whistle blower and could his bad faith be totally ignored by disregarding the settled jurisprudence? (8) Could the method of appointment of one regulator in isolation from method of appointment of most of the regulators be dealt with in isolation from the appointment of governor of state bank, Judges of the superior Courts notwithstanding the absence of statutory requirements? 12. At the very outset it may be noted that the petitioner categorically stated that he would not press the petition to the extent of the prayer for striking down the order dated 13.6.2011 terminating his employment. Although it 2013 Muhammad Ashraf Tiwana V. Pakistan, etc. C.L. 739 (Jawwad S. Khawaja, J.) was argued on behalf of SECP that the hands of the petitioner "are stained with malice", no such stain or malice was adverted to or brought on record. The mere fact that the petitioner was aggrieved also of the order dated 13.6.2011 does not in any manner amount to malice. The term "malice" as used in the law has distinct and well-developed, connotations as will be discussed shortly. However, the submissions on this score oh behalf of SECP were unnecessarily repetitive as is evident from the formulations submitted in Court reproduced above. Formulation No. 8 framed by the learned counsel for SECP, however, itself indicates that this is a fit case in which jurisdiction under Article 184(3) of the Constitution should be exercised, In the common law tradition reflected in Article 189 of the Constitution and adhered to in our Courts, the provisions of Article 184(3) have been interpreted. Recent judgments in Muhammad Yasin supra and Munir Hussain Bhatti v. Federation of Pakistan (PLD 2011 SC 407) have defined the extent and scope of Article 184(3) with
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reasonable clarity. The present Case falls within the parameters so defined. 13. We may with advantage refer to case-law in the context of objections to maintainability of Constitution petitions under Article 184(3) of the Constitution. These precedents raise issues of discretion and propriety rather than the constitutionality of petitions under Article 184(3) of the Constitution. The concurring opinion of my learned brother Khilji Arif Hussain, J. In Muhammad Azhar Siddiqui v. Federation of Pakistan (PLD 2012 SC 774), is most helpful on the question. After surveying precedent on the question, the learned Judge highlighted three categories of cases in which this Court has found that the test of maintainability is easily met. One of these categories includes cases which "pertain to appointments, promotions, dismissals ... Of key executive officials, including but not limited to ministers, senior bureaucrats and heads of regulatory bodies and statutory corporations". He explained the reason for this, observing that "the executive, especially its upper echelons, is the first and foremost branch of the Constitutional government which is entrusted with the execution of laws and framing and enforcement of policies which directly affect the citizens' rights, including Fundamental Rights". This should be a sufficient response to the objection raised against the maintainability of the present petition which pertains, amongst other things, to the process of appointment of the Chairman of the SECP. Earlier, in Muhammad Yasin v. Federation of Pakistan (PLD 2012 SC 132), the Court held that "vital autonomous institutions such as OGRA can function "effectively and efficiently" only if their autonomy is respected. This is the letter as well as the spirit of the law. Such autonomy is only possible when appointments to key positions in these regulators are made in a demonstrably transparent manner; that is, by ensuring the implementation of the checks which the [law] lays down for such appointments". This dictum applies equally to the SECP which is the apex regulator responsible for oversight, inter alia, of capital markets and the corporate sector. 14. We can now consider the question of the petitioner's alleged malice, which was raised on behalf of the respondents to bolster their argument against the maintainability of the present petition. Learned counsel for SECP also made much of the bona fides of the petitioner. He emphatically contended that the petitioner is merely a disgruntled employee who is motivated by ill-will towards his former bosses and is attempting to abuse the process of this Court for his personal ends. He placed reliance upon some precedents which caution the Courts against entertaining petitions which smack of mala fides. Reliance was also placed on, inter alia, the following cases of the Supreme Court of India: Bholanath Mukherjee v. R.K. Mission Centenary College (2011)5 SCC 464, Gurpal Singh v. State of Punjab and others (2005) 5 SCC 136, Dr. B. Singh v. Union of India and others (2004) 3 SCC 363, Dattaraj Nathuji Thaware v. State of Maharashtra (2005) 1 SCC 590 and Ashok Kumar Pandey v. State of West Bengal (AIR 2004 SC 280). Reliance was also placed on the recently decided case of this Court in Dr. Muhammad Tahirul Qadri v. Federation of Pakistani2013 SCMR461). 15. We are in full agreement with the ratio spelt out in precedents which caution against entertaining cases which are not really in the nature of public interest litigation but only masquerade as such. This is so because the Court's jurisdiction under Article 184(3) is discretionary; if the circumstances and facts of the case so warrant, the Court refrains from exercising it on account of the evident mala fides of the petitioner. This principle has most recently, been elaborated in Dr. Muhammad Tahirul Qadri v. Federation of Pakistan (2013 SCM R 461). However, it should be clear that such mala fides can only be judged on the basis of the facts of each case, In the present case, nothing has been placed on record which would indicate any mala fide on the part of the petitioner, or which would suggest that the petitioner is seeking to exploit the process of this Court for purely personal gain. 16. That the petitioner has been an employee of the respondent is not sufficient to establish his mala fides, as we clarified in Muhammad Yasin's case supra, In fact, it is only understandable that if employees and other insiders, who naturally have the most understanding of the functioning of
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concerned institutions, are the ones who most frequently bring the issues of public importance arising in those institutions to the notice of the Constitutional Courts. Furthermore, in Muhammad Yasin's case supra, while relying on Maulvi Iqbal Haider v. CDA (PLD 2006 SC 394), we clarified that "the contents of a petition under Article 184(3) ibid will override concerns arising on account of the conduct or antecedents of a petitioner." The questions which the contents of this petition have brought to light are, without doubt, matters of public importance and, as discussed above, relate directly to the enforcement of fundamental rights. Therefore, concerns about the conduct or antecedents of the petitioner, if any, would stand overridden by the contents of the petition. We may also emphasize that exercise of jurisdiction under Article 184(3) ibid is not dependent on the existence of a petitioner. Here it may also be added that the term "malice" when used in law, has well-defined connotations. Black's law dictionary clarifies that whereas in ordinary parlance malice refers to mere "[i]ll will or wickedness of heart", in , legal contexts, it requires "[t]he intent, without justification or excuse, to commit a wrongful act." In Bhagat Singh v. The Crown, (1930 The Punjab Law Reporter 73), the Lahore High Court, relying on Bromage v. Forsser, clarified the distinction thus: "Malice in common acceptation means ill-wiii against a person, but in its legal sense it means a wrongful act, done intentionally without just cause or excuse." It seems clear that if the petition is to be struck down on account of malice, there must be some evidence of a wrongful act. The only wrongful act which the' petitioner is alleged to…
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