SABIHUDDIN AHMED, J.---The petitioner who is the settler and founding trustee of a registered trust operating under the name and style of Al-Rasheed Trust appears to be aggrieved by the freezing of the funds of a Trust by the respondent No,1 pursuant to the directions of the respondent No,2 in the purported exercise of powers under section 41 of the Banking Companies Ordinance, 1962. The admitted facts seem to be that the Trust was maintaining three current accounts in Rupees, US $ and Pound Sterling respectively in the respondent No,1 Bank. While cheques from any of the said account have been duly honoured in the past by the respondent No,1, a cheque for Rs,400,000 presented on 25-9-2001 was dishonoured with the endorsement "stop your account by Government of Pakistan".
2. The petitioner attempted to find the reason for such dishonour whereupon he was informed by the respondent No,1 vide letter dated 6-10-2001 (Annexure E) that in terms of the State Bank of Pakistan letter dated 25th September, 2001, under section 41 of the Banking Companies Ordinance, 1962, the funds in the Trust account were frozen and as such the cheque was returned unpaid.
Aggrieved by the aforesaid refusal a petition was filed in the name of the Trust by the petitioner calling in question validity of the order of the respondent No,2 and seeking a direction to the respondent No,1 to honour the cheque. Since the Trust in our view was not a legal person but keeping in view the fact that it had been filed by one of the trustees in whom the prosperities of the Trust vested, we allowed filing of an amended petition by an order dated 15-1-2002.
3. Basically the petitioner's case as was argued, earlier by Raja Muhammad Irshad and subsequently upon his appointment as Deputy Attorney-General by Mr. Zafar Iqbal, appeared to be that the dishonour of the cheque on the part of the respondent No,1 was violative of the petitioner's right to hold property under Article 23 of the Constitution and protection against acquisition of property without compensation guaranteed by Article 24 of the Constitution.
4. The petition was admitted and upon notice to the respondents both of them filed detailed counter-affidavits supported by a substantial amount of data/material in justification of the impugned action. Elaborate arguments were also addressed by Mr. Qazi Faez Issa and Mr. Zahid Jamil respectively on behalf of the said respondents. Since question of interpretation of the Constitution were involved, we issued notice to the learned Attorney-General of Pakistan under Order 27-A, C.P.C. Who, after going through the contents of the petition requested that the Federation of Pakistan be also formally joined as a party. We granted his request and the case of the Federal Governm'ent was initially argued by learned Attorney-General himself and Mr. Amir Hani Muslim (before his lordship's elevation to the Bench) in his capacity as Deputy Attorney- General.
5. After hearing separate arguments, we had reserved judgment but it could not be pronounced within 90 days for unavoidable reasons. Accordingly the matter was posted for rehearing and this time Mr. Zafar Iqbal argued the petitioner's case while the same learned counsel addressed us on behalf of respondents Nos, 1 and 2. The Federal Government this time was represented by Mr. Nadeem Azhar Siddiqui, Deputy Attorney-General. Learned counsel were also kind enough to provide us their written notes, we also requested Messrs 'Mushtaq Ahmed Memon and Mr. Kazim Hassan, Advocates to assist us as amicus curiae and valuable contributions were made by both these learned counsel, the former supporting the petition and the latter arguing against it.
6. On behalf of the respondent No,1 a number of preliminary objections to the maintainability of the petition were raised, inter alia:--
(i) A petition could only be filed by all the trustees of Al-Rasheed Trust and the present petition being filed by only one of them, particularly when the account itself was required to be operated by two trustees was thus not maintainable.
(ii) That no relief had been sought against the respondent No,2 and respondent No,1 was not a person, performing functions in connection with affairs of the Federation, a Province or a local authority and as such not amenable to the jurisdiction of this Court under Article 199 of the Constitution.
(iii) That the accounts of the petitioners were frozen because of the petitioner's alleged involvement in acts of terrorism and the question whether such allegation was true or otherwise was a question of fact which could not be determined in these proceedings.
7. It may be appropriate at this stage to consider the preliminary objections. As to the plea that the petition should have been filed by all trustees, Faez Issa relied upon the judgment of the Court of Appeal in Luke v. South Kensington Hotel (1874) 80 AER 1293. In this case the trustees had invested a certain part of the Trust property into a company which ran into the difficulty and the defendant trustees entered into a composition accepting lesser amount by way of mortgaged debt and extending the period of repayment.
The plaintiff trustee declined to accept the composition and filed a suit for foreclosure on the original mortgage. The trial Court held that the plaintiff was not bound by the deed executed by two of the four trustees, but dismissed the suit on the ground that all trustees should have been arrayed as plaintiffs. Reversing the judgment, the Court of appeals upheld the finding of the trial Court to the extent that the plaintiff was not bound by deed executed by the defendant trustees 'but went on to hold that since the defendant trustees were arrayed as defendants and did not oppose a decree for foreclosure therefore, the decree should have been granted.
8. Having carefully gone through the aforesaid judgment, we are afraid that it does not really help Mr. Faez Issa. It seems to acknowledge that when a trustee is not willing to join as a plaintiff he could always be arrayed as efendant and acknowledges that an interested party could not be bound by a composition operating to his detriment made in his absence. In the instant case there seems to be no conflict of interest amongst the trustees D and the outcome is not likely to have any prejudicial effect on the interest of any one of them.
9. Moreover even if we assume that the suit involving Trust Property must be filed by all the trustees, or all of them should be joined as party thereto, we are of the view that the same conditions of procedural law would not necessarily apply to petition under Article 199 of the Constitution. It might be possible to urge that a strict legal right in respect of Trust Properties could only vest in the Trustees acting jointly. On the other hand it is well-settled, ever since the pronouncement of the Honourable Supreme Court in Fazal Din. v. Lahore Improvement Trust PLD 1969 SC 223, it has been repeatedly held by the superior Courts that for the purposes of maintaining a petition under Article 199 of the Constitution, a strict legal right need not be shown and a sufficient legal interest in the subject-matter was enough to confer locus standi upon the petitioneRs, Admittedly the petitioner being one of the trustees in whom the Trust Properties vest and entitled to operate the account alongwith another co-trustee does appear to have sufficient interest.
10. The second objection appears to be that no relief has been sought against the respondent No,2 and all that has been prayed for is a declaration that the letter of the respondent No,1 dated 6-10- 2001 be declared illegal and the said respondent be directed to honour the petitioner's cheque. It is contended that both these reliefs are beyond the purview of the Constitutional jurisdiction of this Court. Indeed Mr. Faez Issa is correct to the extent that the petitioner has only sought relief against the respondent No,
1. Nevertheless, we can always take judicial notice of the fact that the respondent No,1 is a company operating under the Banks Nationalization Act, 1975 and is substantially, owned and controlled by the Federal Government. It could therefore, be classified as a person performing functions in connection with the affairs of the Federation and amenable to the Constitutional jurisdiction of this Court. Indeed there is a dearth of recent case-law in support of this view, though it must be stated that the contrary view has also been taken in certain cases.
11. Nevertheless without pursuing this controversy further it needs to be kept in view that the petitioner has sought enforcement of fundamental right guaranteed under Articles 23 and 24 of the Constitution. In this context it needs to be kept in view that the language of Article 199 contains a special distinction in respect of orders relating to enforcement of fundamental rights. It may be seen that under clause (a) of Article 199 (1) a direction or declaration in the nature of prohibition, mandamus and certiorari can only be issued to persons performing functions in connection with the affairs of Federation, a Province or a local authority. On the other hand clause (c) contemplates that a direction which may be appropriate for enforcement of fundamental rights can be given to any person or authority including any Government (Underlining ours). In view of the above we are clearly of the opinion that in cases like the present one it is not necessary that the person to whom directions are given, must necessarily be one performing function in connection with the affairs of the Federation, a Province or a local authority.
12. In any event the respondent No,1 has urged, and rightly so that they are bound by any direction of the respondent No, 2 issued in the exercise of statutory powers under section 41 of the Banking Companies Ordinance, 1962 and have themselves placed on record the direction dated 25-9-2001, which is reproduced as follows:-- "Sanctions Imposed by U.N. Security Council against Afghanistan:-- In exercise of the power vested in State Bank of Pakistan under section 41 of the. Banking Companies Ordinance, 1962, it has been decided to freeze the , accounts of individuals/entities mentioned in the enclosed list with immediate effect.
You are, therefore, advised to take necessary action to freeze the funds/assets immediately, if any, of the individuals/entities mentioned in the list. You are also advised to furnish a statement of the frozen funds in the proforma given below, so as to reach us by 1st October, 2001 positively.
Rs, in Million Name of Bank/ NBFITitle of Account Amount frozen Please acknowledge receipt.
Yours faithfully, (Sd.)
(Aziz A. Lakhani)"
13. Indeed there could be no doubt that the respondent No,2 is amenable to the jurisdiction of this Court under Article 199 of the Constitution and the legality or otherwise of its directions issued in the purported exercise of statutory powers could always be examined in these proceedings. In case such directions are found to be unlawful the respondent No,1 would be bound to perform its obligations towards his customers in accordance with law.
14. Mr. Faez Issa is right in contending that no particular relief has been sought against respondent No,2 in the prayer clause. However, it cannot be overlooked that the direction in question has been clearly mentioned and on that ground the respondent No,2 has been joined as party. Moreover, it is well-settled that the Court can always modify relief or grant some relief which has not been prayed for provided it has jurisdiction to do so, as inter alia, held by Seven-Member Full Bench of this Court in Sharaf Faridi v. Province of Sindh PLD 1989 Kar.
404. Accordingly we consider the objection too technical to merit any serious consideration.
15. Another objection raised was that the petition involves determination of facts to the extent whether the amounts held in the account of the Trust were used in respect of any terrorist activity or against the public interest, which cannot be determined in these proceedings. In this context we need to make it explicitly clear that we do not intend to record any finding of fact whatsoever particularly. With regard to such sensitive allegations having international impact and would subscribe to the contention of learned counsel to that extent. At the same time however, it needs to be clarified that we are only concerned with the legality of the impugned action and would be required to examine whether section 41 of the Banking Companies Ordinance enables the respondent No,2 to pass the order dated 25-9-2001 on the basis of material brought to its notice and placed on record.
16. Qazi Faez Issa then argued that as far as the respondent No,1 is concerned the law casts a mandatory obligation upon it to comply with the directions of the respondent No,2. To this extent we entirely agree and would hold that for all practical purposes the validity of the direction of the respondent No,2 in the purported exercise of powers under section 41 of the Banking Companies Ordinance will have to be examined, which reads as follows:-- "41. Powers of the State Bank to give direction.---(1) Where the State Bank is satisfied that---
(a) in the public interest; or
(b) to prevent the affairs of any banking company being conducted in a manner detrimental to the interests of the depositors or in a manner prejudicial to the interests of the Banking Company; or
(c) to secure the proper management of any Banking Company generally; it is necessary to issue directions to Banking Company in particular, it may, from time to time, issue such directions as it deems fit, and the Banking Companies or the Banking Company, as the case may be, shall be bound to comply with such directions."
17. Before doing so however, it may be proper to consider, an objection to the maintainability of the petition raised on behalf of the respondent No,2, Mr. Zahid Jamil, learned counsel for the respondent No,2 in a well prepared and elaborate address argued that the petitioner would not seek enforcement of fundamental rights guaranteed under Articles 23 and 24 of the Constitution on the ground that the money deposited by the petitioner in their accounts with the respondent No,1 could not be described as their property. Referring to Thompson's dictionary and Bnking Law and the House of Lords decisions in Foley v. Fletcher 1843-1860 AER 953 and London Joint Stock Bank v. McMillan and another 1918-19 AER 330. Learned counsel argued that deposits in a bank account only created lender and borrower relationship between the customer and the Bank and the money deposited ceased to remain the property of the depositor. Without going into detail it may be stated that there could be no cavil with the first part of the contention but the second does not necessarily flow therefrom. In fact in Federation of Pakistan v. Mushtaq Ali Mian PLD 1999 SC 1026 cited by Mushtaq A. Memon amicus curiae, the Honourable Supreme Court struck down a few circular of the respondent No,2 relating to foreign currency account on the ground that they violated the depositor's fundamental right regarding property under Articles 23 and 24 of the Constitution. In view of the above, authoritative pronouncement, we are afraid, we cannot accept this rather ingenious contention.
18. On behalf of respondent No,2 detailed comments were filed accompanied by a number of documents spread over more than 80 pages to justify the direction given by respondent No,1 to freeze the petitioner's account. This material, inter alia, contained the executive order of the President of U.S.A. Directing freezing of accounts of a large number of organizations suspected to be financing terrorism, subsequent directions given by Banking Regulator in U.S.A. Communicated to the respondent No,2 and the Federal Government, resolution passed by the U.N. Security Council and other international bodies supporting sanctions against allegedly terrorists organization including the petitioner's Trust, and a great deal published material including some publications of the petitioner Trust purporting to support the allegations.
19. With respect to the direction of the Banking Regulators in U.S.A. Mr. Zahid Jamil referred to a letter dated 25-9-2001 from the respondent No,1 addressed to the Secretariat Ministry of Finance and Ministry of Foreign Affairs with a copy enclosed to the Deputy Governor of the respondent No, 2 which reads as follows:- "Dear Sirs: We have been advised by our New York Branch early this morning that our US Banking Regulators (Federal Reserve Bank of New York and the State Banking Commission of New York) have asked us to immediately freeze following accounts:-- A/C Title Location/Branch USD A/C No, Al-Rasheed Trust HBL Forex Branch, Habib Square, Karachi.055017-41 Taliban of AfghanistanHBL Civic Centre Branch, Islamabad.80835-17 In compliance with these instructions we have, as of this morning, taken the necessary action and advised the State Bank of Pakistan too. We were also advised by US Banking Regulators that in case we fail to take immediate action, then action against our Branch in New York would be taken.
In addition, the US Regulators also want the Account Statements pertaining to the aforesaid accounts on an urgent basis for the period commencing January 1, 2000 todate. In this regard, we have requested State Bank of Pakistan to grant us the necessary permission to provide this information to the US Banking Regulatory Authorities.
Further, we have also been provided a list of 27 individuals/organizations whose assets have been frozen by the US Government. We are in the process of ascertaining if these individuals/organizations have any banking relationship with us and once this information is available and subject to State Bank of Pakistan's permission, the same will be conveyed to our New York Branch for onward transmission to the US Banking Regulatory Authorities.
Considering the sensitivity of the matter, we are bringing 'this matter to your immediate attention and in case you wish us to take any specific action, the same may be communicated to us at the earliest.
Assuring you of our preferred attention at all times.
Yours truly, (Sd.) 25/9/2001.
Copy to Mr. R.A. Chughtai, Deputy Governor, State Bank of Pakistan, this refers to our telephone conversation with your Mr. Mansoor-ur-Rehman."
20 Learned counsel then pointed out that the Security Council of the UN in its Resolution No,1267 of 1999 dated 15th October, 1999 had resolved to:-- "4(c) Freeze funds and other financial resources, including funds derived or generated from property owned or controlled directly or indirectly by the Taliban, or by any undertaking owned or controlled by the Taliban, as designated by the Committee established by paragraph 6 below and ensure that neither they nor any other funds or financial resources so designated are made available by their nationals or by any persons within their territory, to or for the benefit of the Taliban or any undertaking owned or controlled, directly or indirectly, by the Taliban, except as may be authorized by the Committee on a case-by-case basis on the grounds of humanitarian need."
21. As regards the justification for specifying the petitioner Trust as an organization involved in financing terrorist activities learned counsel argued that listing of the Trust name in the Executive Order of the President of USA was not arbitrary and referred to the its drawn up by the UN Security Council Committee concerning Afghanistan issues dated 8th October, 2001 pursuant to the Security Council Resolution No,1333 of 2000 dated 19th December, 2000. It was argued that the list had been prepared in accordance with para.8-C of the Resolution.
22. In addition to the above learned counsel also referred to the European Commission Regulation No,1996 of 2001, dated 11th October, 2001 whereas sanctions were imposed against 27 organizations including the Trust. He further brought to our attention some material published in the local and international process indicating the trust's support or Taliban including material published by the Trust itself.
23. Both Mr. Qazi Faez Issa and Mr. Zahid Jamil argued that once it was shown from the material placed on record that some nexus between the petitioner's Trust and terrorist activities of Taliban and Organizations supporting them existed, this Court was not entitled to review the findings of facts arrived at by the Authorities competent to take action or to evaluate the material and record its independent findings of facts in these proceedings. In this context, reliance was inter alia palced upon a reported Division Bench Judgment of this Court in C.P.D. No,1786 of 1998 Muhammad Hussain and others v. State Bank of Pakistan and another, decided on 10-5-1999. In this case a direction of the State Bank restricting the operation of the Karachi Branch of the respondent No,1 and consequent failure of the respondent No,2 to honour a pay order was questioned. It was alleged by the State Bank that the petitioner had fraudulently attempted to withdraw the amount but the allegations were denied by the petitioner. The Court observed that the question of fraud required deeper enquiry and such enquiry could not be undertaken in a petition under Article 199 of the Constitution. The petition was accordingly dismissed in limine.
24. Indeed we have no cavil with the above proposition to the extent that it is neither possible nor proper for us to form an independent opinion as regards the alleged complicity of the Trust in terrorist activities. Nevertheless, it is our duty to examine whether the respondent No,2 is competent, in terms of section 41 of the Banking Companies Ordinance to form such opinion and whether it had been so formed in accordance with law before the impugned directive dated 25-9- 2001 had been issued.
25. Mr. Zahid Jamil argued that freezing of the petitioner's accounts was permissible under the Anti-Terrorism Act, 1997 and meticulously referred to several provisions of the Act particularly those inserted through the Anti-Terrorism (Amendment) Ordinance, 2001. Indeed apart from providing for trial of offences of terrorism section 11-B of the Act also enables the Federal Government to prescribe certain organizations upon reasons to believe that they were involved in terrorism. Under section 11-E the accounts of such organizations could be frozen. However, section 11-C confers a right to seek review of such order and upon refusal a right to appeal to the High Court. Again under sections 11-H, I and J providing money, raising funds or making money or property available to another, reasonably suspected of being involved in terrorism, have also been defined as offences for the purposes of the Act.
26. We requested learned counsel for the respondents as well as the learned Deputy Attorney- General as to whether any action against the petitioner or his co-trustee was taken under the Anti- Terrorism Act, but they were unable to refer to any such action having been taken. At this stage it may be pertinent to recall that when Legislature has made a special law to deal with suppression of terrorism and such law also confers powers to freeze accounts reasonably suspected of being used for promotion of terrorists' activities resort to general provision to issue any directions to the Banking Company in the public interest would be entirely unwarranted. At the same time it ought to be stated that when resort to the general law would deprive the affected party of the right to seek review or appeal to this Court the action has to be treated as mala fide in law.
27. Mr. Makhdoom Ali Khan, learned Attorney-General of Pakistan also brought to our attention the provision of section 2 of the United Nations (Security Council) Act, 1948, which reads as follows:-- "2. If, under Article 41 of the Charter of the United Nations signed at San Francisco on the 26th day of June, 1945, the Security Council of the United Nations calls upon the Central Government to apply any measures, not involving the use of Armed Force, to give effect to any decision of that Council the Central Government may, by order published in the official Gazette, make such provisions (including provisions having extra-territorial operation) as appear to it necessary to expedient for enabling those measures to be effectively applied, and without prejudice to the generality of the foregoing power, provision may be made for the punishment of persons offending against the order."
28. Learned Attorney-General contended that in view of the aforesaid statutory provision the resolutions of the Security Council were required to be given effect and as such the impugned direction enjoyed the protection of law ' under the above statutory provision. We are afraid and we say so with profoundest respect to the learning of the learned Attorney-General. We are unable to subscribe to this view. A bare perusal of the above provision would show that it only enables the Federal Government to give effect to such measures by "Order published in the official Gazette". No such order has been placed before us and it is not possible to say that a resolution, particularly one adversely affecting fundamental rights of citizen operates by its own force.
29. Indeed we agree with learned counsel for the respondents to the extent that terrorism is a fast going phenomena and it is in the wider public interest that all civilized States should make laws and take appropriate measures within their Constitutional system to combat it. We also agree with learned Attorney-General that international obligations to the State ought to be duly honoured. The question, nevertheless, is whether appropriate powers to do so are available with the respondent No,2 under section 41 of the Banking Companies Ordinance. It is apparent from section 2 of the United Nations (Security Council) Act, 1948 that the power to give effect to a request by the Council has been conferred upon the Federal Government but no order has been issued by the Government. Similarly the provisions of Anti-Terrorism Act, 1997 cited by Mr. Zahid Jamil himself show that the Legislature has conferred certain powers upon the Federal Government to deal with terrorist activities including the powers to freeze accounts which are reasonably suspected of being used for such activities. Nevertheless no action in exercise of such power has been shown to be taken. In Mushtaq Ali Mian's case PLD 1999 SC 1026 the Honourable Supreme Court expressly repelled the contention that the respondent No,2 could be identified with the State as defined in Article 7 of the Constitution and proceeded to hold that it was an autonomous body established under the State Bank of Pakistan Act, 1956.
30. Mr. Zahid Jamil indeed argued that the three clauses of section 41 (i) of the Banking Companies Ordinance were disjunctive and the respondent No,2 could issue any mandatory directions to a Banking Company in the public interest. We are afraid, we find it impossible to subscribe to such a broad proposition. Indeed a wide range of measures are expected to be undertaken by the State in the public interest in several areas such as national security, maintenance of public order, industrial development building of highways promotions of education and health care etc. Could it seriously suggest that the respondent No,2 enjoys the statutory powers to direct any Banking Company to undertake any such activity or to finance any of them.
31. We are therefore, of the view that the power to issue directions under section 41(1) must necessarily be confined to areas specifically relatable to the basic functions of the respondent No,2 under the State Bank of Pakistan Act, 1956 and the regulatory power available to it in respect of scheduled banks under the Banking Companies Ordinance, 1962. Moreover, clause (a) of section 41(1) is to be read ejusdem generis with the powers under clauses (b) and (c) and directions in the public interest can only be made to protect the interest of the Banking Company and its depositor and to secure the proper management of such company. The respondent No,2 does not have unbridled powers to issue any direction in any area of public interest, particularly when the law requires some other agency to do so.
32. In the above context, we are fortified by a recent Division Bench judgment of this Court in Universal Leasing Corporation v. State Bank of Pakistan 2002 CLD 102. In this case a directive of the respondent No,1 requiring all commercial banks not to allow withdrawals inter alia from the accounts of the petitioner without written permission from respondent No,1 in the purported exercise of powers under section 41 of the Banking Companies Ordinance was called in question. It was urged that one Tahir Siddiqui an ex-employee had embezzled large sums of money and had acquired substantial interests in several companies including the petitioner. Their Lordships held that directive was obviously not intended to secure better management of the Banking Companies or protect interests of depositoRs, On the other hand no public interest was shown in the directive and in any case any directive prejudicially affecting the interest of a depositor could not be defended on the ground of public interest and the same was declared unlawful.
33. Mr. Kazim Hassan learned amicus curiae in a brief presentation defended the impugned direction of the respondent No,2 and in this context placed reliance upon the letter of the respondent No,1 dated 25th September, 2001 addressed to the Secretary, Ministry of Finance and Secretary, Ministry of Foreign Affairs, Government of Pakistan with a copy endorsed to the Deputy Governor of the respondent No,2 which has been filed as Annexure "C" to the comments of the respondent No,2 and apparently on the basis whereof the impugned directions were given. In the aforesaid letter the respondent No,1 have stated that they were advised by their New York Branch that the US Banking Regulators (Federal Reserve Bank, New York and the State Banking Commission of New York) have asked them to immediately freeze the accounts of the petitioner and in the event of the failure of the respondent No,1 to take immediate action, against the Branch of respondent No,1 in New York would be taken. Learned counsel argued that irrespective of the legality or the morality of such a threat it was evident that in case the respondent No,1 fails to carry out such directions substantial prejudice could be caused to the interest of the Bank and its depositors in case banking operations in New York were closed which would have also caused prejudice to the national economy. In the circumstances, respondent No,2 was endowed with the responsibility of protecting the interests of the Banking Company, the depositors and the public at large owed a public duty to issue impugned directives. By arguing so indeed learned counsel has attempted to show that the impugned directions were given strictly within the scope of the powers of section 41 of the Banking Companies Ordinance. The argument however, appears to overlook the principle that when rights of a particular party are sought to be impaired an opportunity of hearing needs to be given. More particularly when the action restricts the fundamental right to hold and dispose of property it must enjoy the support of law, which should be both reasonable as well as in the public interest. Even it to be assumed that the power to freeze the petitioner's bank account emanates from section 41 of the Banking Companies Ordinance, it needs to be seen whether it qualifies all the requirements of Article 23. Admittedly the respondent No,1 were threatened with the closure of their operation in a foreign country in case they failed to freeze the Bank account of the petitioner's Trust on the ground that the latter were financing terrorist activities. No material whatsoever was conveyed even to indicate the basis of such suspicion. Admittedly the petitioners were never afforded an opportunity to confront any material that could have caused such suspicion. Against the above background we find it impossible to hold that draconian direction under section 41 could' withstand the test of reasonableness contemplated by Article 23 of the Constitution.
34. Indeed we are conscious that in an emergency situation an action might be required to be taken without affording an opportunity of a prior hearing to the affected party. Nevertheless it is well-settled that such defect can be cured by providing a subsequent hearing. In the instant case however, no such hearing was ever offered to the petitioner and the direction is liable to be struck down on this ground as well.
35. Incidentally Mr. Zafar Iqbal learned counsel for the petitioner relied upon the very same document to contend that the impugned directives were mala fide inasmuch as no resolution of the UN Security Council or any international body existed at the relevant time and the respondents had succumbed to blackmailing tactics of foreign agencies without notice to the petitioner resulting in violation of the petitioner's fundamental rights guaranteed by the Constitution.
36. Mr. Mushtaque A. Memon, learned amicus curiae on the other hand extensively relied upon the somewhat recent pronouncement of seven members Bench of the Honourable Supreme Court in Federation of Pakistan v. Mushtaque Ali Mian PLD 1999 SC 1026. In the aforesaid case the validity of certain circulars were called in question. These circulars inter alia provided that:-
(a) Foreign currency deposits should be encashed only into Pakistani rupees at a specified rate of exchange which was far below the market value.
(b) When such deposits were accepted as security for loans or other facilities the value of that security was to be converted into Pak. Rupees at the specified rate further securities be demanded from borroweRs,
37. Though one of these circulars were withdrawn before the final hearings their Lordships having heard elaborate arguments proceeded to lay down a number of legal principles most of which appear to have a direct bearing on the present controversy and may be summarized as follows:--
(i) The directions to treat the value of security in the form of foreign exchange deposits at a rate of substantially below its market rate was confiscatory and violative of Articles 23 and 24 of the Constitution.
(ii) That the proclamation of emergency under Article 232 of the Constitution did not empower the State Bank to issue aforesaid Circular in violation of Article 24 of the Constitution. While Article 233(1) did provide that during the operation of a proclamation of emergency the State could make a law or take executive action even in violation of Article 24, the State Bank of Pakistan was a statutory body established under the State Bank of Pakistan Act, 1956 and not covered by the definition of State appearing in Article 7.
(iii) That the protection of Article 233(1) is only available to an executive action taken under a law enacted during the operation of a promulgation of emergency it would not cover an action taken under an earlier law not enacted for dealing with the emergency as held by the Supreme Court of India in Bennett Coleman & Co. v. Union of India AIR 1973 SC 106.
(iv) That the treatment of the foreign currency deposits at a rate substantially below the market rate amounted to acquisition of property without compensation prohibited by Article 24 of the Constitution. Even if property was to be acquired for a public purpose the compensation should be based on market rate and not the rate fixed by the Authorities which is acquired or is instrumental in acquiring the property as held by the Shariat Appellate Bench of the Court in Qazalbash Waqf and others v. Chief Land Commissioner PLD 1990 SC 99.
(v) That in any event the fundamental rights guaranteed under Article 23 and the right to be treated in accordance with the law remained unaffected despite a proclamation, in terms of Article 233 (1) of the Constitution.
(vi) The impugned Circular not being backed by any law imposing unreasonable restrictions upon the right to own, hold and dispose of property was ultra vires Articles 4 and 23 of the Constitution.
(vii) That a notification of an executive order including a State Bank circular adversely affecting the rights of a person cannot be given retrospective effect as held in Hashwani Hotel v. Federation of Pakistan PLD 1997 SC 315 a State Bank circular could not affect a loan transaction already concluded.
39. Most of the above principles laid down in the above pronouncement of the Honourable Supreme Court as urged by Mr. Mushtaque A. Memon are clearly applicable to the instant case.
Indeed both Articles 23 and 24 of the Constitution have been held to be applicable to Bank deposits and while obviously the impugned direction cannot be sustained on the touchstone of Article 24 as admittedly no compensation for deprivation of use of property has been offered to the trust, the direction cannot be upheld on the yardstick of Article 23 as well, inasmuch as the right to use or dispose of money has not been subjected to a reasonable restriction imposed by law in the public interest.
40. In the above context it may be mentioned that learned Attorney-General did refer to the proclamations of emergency under Article 232 which was in force at the time the impugned action was taken. Nevertheless while the clog on the power of the State as defined in Article 7 of the Constitution to make a law or take executive action, which might impair fundamental right guaranteed under Article 24 stands removed during the emergency, the Supreme Court has authoritatively pronounced that the respondent No,2 cannot be classified as "State" for the above purpose.
41. With respect to Article 23 Mr. Zahid Jamil argued in rebuttal that the question whether a particular measure taken by an authority required to do so in the "pubic interest" was not justiciable and had to be left to the discretion of the concerned authority, Courts of law, according to learned counsel, could only undertake judicial review for the purpose of determining whether the impugned action was within the limitation laid down by the statute or in accordance with method of determination laid down therein, but were not capable to lay down any yardstick by which "public interest" could be measured. We regret our inability to subscribe to this proposition in the context where restrictions on Legislature power and action taken thereunder have been laid down by the Constitution itself. Article 23 stipulates that the right can be regulated only through reasonable restrictions imposed by law in the public interest. It is well settled that in such situation, both the validity of the law and the action taken become justifiable from the standpoint of reasonableness as well as public interest.
42. Mr. Zahid Jamil emphatically relied upon the House of Lord's decision in Council of Civil Services Union v. Minister for Civil Service (1984) 3 AER 935 to contend that when a particular measure was taken in the interest of national security, the Courts could not sit in judgment over the exercise of discretionary powers of the executive responsible for maintaining national security and judicial review would only be confined to examine whether there was some material before the concerned authority to take the impugned action in the interest of national security. Without going into detail, we would observe in all humility that the argument is entirely misplaced in the present context inasmuch as the impugned directive has not been issued by an agency responsible for maintaining national security, but a specialized body established to perform altogether different functions not connected with national security.
43. In any event we are of the view that the constraints on power of judicial review enforced by Courts in UK are not applicable to our Constitutional system. In UK measures taken in respect of National Security belong to the area of royal prerogatives and the Courts are not inclined to sit in judgment the moment a nexus with national security is shown. In Pakistan no prerogative exists and all public power has to be exercised in accordance with the Constitution and the law. The Constitution authorized imposition of reasonable restriction on the exercise of fundamental rights in the interest of national security etc. The right to hold property F is also subject to the reasonable restriction imposed by law F in the public interest. Indeed if a restriction to hold property is shown to have been imposed by a law which is found reasonable, a Court would uphold it. Nevertheless the reasonableness of such law is always justiciable.
44. Moreover, we are inclined to take the view that when a depositor opens an account with a bank there is always an implied contract to the effect that the bank would enable him to withdraw such moneys that he may desire subject to specified condition of the contract. The rights and obligations under the contract may be impaired by an overriding law, but, as held in Mushtaque Ali Mian's case, executive directives of the respondent No,2 could not be allowed to affect to concluded contract. For this reason as well we are constrained to hold that the impugned direction was issued beyond the purview of the lawful powers of the respondent No,2.
45. For the foregoing reasons we are constrained to allow this petition and declare that the directions of the respondent No,2 addressed to the respondent No,1 to freeze the account of the petitioner are without lawful authority and of no legal effect. Accordingly the respondent No,1 is directed to honour the cheque and make payment according to its tenor. The Federal Government however, will be free to initiate appropriate proceedings and exercise any lawful power that may be available to it for dealing with the petitioner's account.