JAMAL KHAN MANDOKHAIL, C.J.---The President of Pakistani vide notification dated 12th May 2020, constituted the 10th National Finance Commission (NFC) under Article 160(1) of the Constitution. The notification contains the name and numbers of the members and the terms of reference for the forthcoming NFC. Feeling aggrieved, the above titled petitions have been filed.
2. Since common Constitutional question is involved in these petitions, therefore, the same are clubbed and notices were issued to the learned Attorney General for Pakistan and the learned Advocate General as provided by Order XVII-A, C.P.C., besides, notice was also published in daily newspaper 'DAWN'. The learned Deputy Attorney General (DAG) stated that the learned Attorney General has authorized him to argue the matter on his behalf for the Federal Government and he is also representing the respondent No.7. The learned Advocate General appeared on behalf of the Government of Balochistan. As far as the respondents Nos.3, 4 and 5 are concerned, none appeared on their behalf despite service, as such, they were proceeded against ex parte. The respondent No.6 namely Javed Jabbar , who was nominated as member from Balochistan, has withdrew his name, as such, he is no more member NFC, therefore, his name has been deleted.
3. Learned counsel for the petitioners stated that according to Article 160(1) of the Constitution, the President shall constitute NFC consisting of the Minister of Finance of the Federal Government and Minister of Finance of Provincial Governments, but since there is no Minister of Finance for Government of Pakistan and the Prime Minister is holding the portfolio, therefore, the president has nominated the Advisor to the Prime Minister on Finance and Revenue as member of the NFC, to represent the Minister for Finance, Government of Pakistan, which is unconstitutional. According to them, even otherwise, nomination of the respondent No.7 as a member of NFC is not in accordance with provision of Article 160 (1) of the Constitution, hence is illegal. They stated that though the respondent No.6, who was nominated as member from Balochistan has withdrawn his name, but the manner in which he was nominated, was contrary to the settled practices. They stated that it was incumbent upon the President to nominate a person belonging to the province concerned, having expertise in financial matters, with ample knowledge' about the financial issues and requirements of the Province, but in the case of the member from Balochistan, these aspects have been ignored. They added that in the notification in question, the President has formulated the terms of reference for the NFC, which is beyond the scope of Article 160 of the Constitution, therefore, it cannot be acted upon. According to the learned counsel, the purpose of the NFC is to consider the financial requirements of the Federation and the Provinces, keeping in view different factors, and to distribute the available revenue amongst them judiciously . The learned counsel for the petiti oners stated that the terms of reference of the notification in question is evident of fact that the Federal Government intends to reduce the share of the provinces, which is against the provision of Article 160(3A) of the Constitution. They added that the Federal Government wants the provinces to share the expenditure and losses of the State's owned enterprises belonging to the Federal Government, instead of managing financial matters. According to them, after the 18th Amendment in the Constitution, most of the departments in the concurrent list, have already been devolved upon the provinces, as such, the financial burden of the Federation has become lessened, whereas the provinces have been overburdened, therefore, any attempt to curtail the share of the provinces from the available resources would not only be illegal, but will result into financial problem of the Provinces, especially of the Balochistan.
4. The learned DAG stated that the Presid ent of Pakistan by exercising power under Article 160(1), has constituted 10th NFC. He stated that since it is the prerogative of the President to appoint such other persons with consultation of the Governor of the provinces, on the basis whereof, the members other than the Federal Minister and Provincial Ministers of Finance have been made as members, therefore, there is no illegality or irregularity in constitution of the NFC. The learned DAG pointed out that the notification in question is clear enough that the Federal Minister of Finance is a Chairman of the NFC, whereas, the Advisor to the Prime Minister is a member , therefore, the allegation of the petitioners that the Advisor will replace the Federal Minister of Finance is baseless. He added that the TORs for the NFC are absolutely in accordance with the provisions of Article 160 of the Constitution and within the competence of the President, whereas the learned counsel for the petitioner has failed to point out violation of any provision of the Constitution. The learned DAG stated that as far as the reservation of the petitioners with regard to curtailment of the share of the provinces is concerned, it is premature and based on presumption, therefore, the allegations being baseless and premature, is not sustainable. The learned DAG argued that the NFC consists upon members of Federal Gover nment and all the Provinces, who have constitutional jurisdiction to reach a consensus regarding distribution of revenue, therefore, no limitation could be imposed upon the NFC for making an award, as such, the petitions are liable to be dismissed.
5. The learned Advocate General stated that under Article 160(1) of the Constitution, it is the prerogative of the President to appoint any person as member with consultation with Governor of the Province concerned, in addition to its permanent members, irrespective of the fact that he/she belongs to the same province or otherwise. He added that the Chief Minister Balochistan considered the respondent No.6, Javed Jabbar as a man of repute and having knowledge and command over the financial need and requirement of the province of Balochistan, recommended him to represent Balochistan, on the basis whereof, the Governor advised the President to include him as a member NFC. He added that unfortunately , the respondent No.6 excused to become a member and withdrew his name, as such, he is no more member of the NFC. He assured that the Government will recommend another member to properly defend the right of the Province in the NFC. The learned AG added that share of the province has already been secured by Article 160(3-A) of the Constitution, therefore, the apprehension of the petitioners is without any substance..
6. Argument heard and perused the record. According to Article 160(1) of the Constitution, there shall be a National Finance Commission (NFC) to be constitu ted by the President of Pakistan after every five years, for the distribution of revenue between the Federal Government and the Provinces in the manner s and purposes, mentioned as under: "160. (1) Within six months of the commencing day and thereafter at intervals not exceeding five years, the President shall constitute a National Finance Commission consisting of the Minister of Finance of the Federal Government, the Ministers of Finance of the Provincial Governments, and such other persons as may be appointed by the President after consultation with the Governors of the Provinces."
7. According to the above provision of the Constitution, there are two sets of members of the NFC, i.e. the Minister of Finance of the Federal Government , and the Ministers of Finance of the Provincial Governments being permanent statutory members, whereas the other members are temporary , hence are non-statutory members.
According to Article 92 of the Constitution, the Federal Minister and Minister of State shall be appointed from amongst the members of the Parliament, whereas according to Article 132 of the Constitution, the Provincial Ministers shall be appointed from amongs t members of the Provincial Assembly . The purpose of appointing Federal and Provincial Finance Ministers as permanent Statutory Members NFC, is because they are elected representatives and are part of their respective cabinets. They are under the constitutional oath, once on becoming members of Parliament and Provincial Assemblies and then before entering into the offices of the Federal or the Provincial Ministries, respectively . They , being chosen representatives, are well conversant with the problems and needs of the people, whom they represent and are also collectively responsible to the Parliament and Provincial Assembly , therefore, the Federal and Provincial Minister have been made perma nent members of the NFC .by designation only. Under such circumstances, constitutionally , no one, including an Advisor to the Prime Minister or Advisor to the Chief Ministers can replace the Federal and Provincial Finance Ministers of Finance. The notification in,' question is clear enough, according to which in absence of the Federal Ministe r of Finance, the Advisor to the Prime Minister will chair the NFC. According to Article 160 of the Constitution, the President has no jurisdiction to do so, as such, the Advisor to the Prime Minister cannot act on behalf of the Federal Minister of Finance in the NFC. If the Prime Minister is holding the portfolio of the Federal Minister of Finance, he in his capacity as Minister Finance, may attend the meeting of the NFC.
8. As far as the appointment of non-statutory members is concerned, the President may with consultation of the Governor concerned, appoint any such person as members. However , intention of the Constitution maker is evident from the words "after consultation with the Governors, of the Provinces", used in Article 160(1) of the Constitution, leads us to the conclusion that their appointment is to represent the concerned Province and because of this reason, in the present NFC and in all the previous NFCs, one member from each Province has been nominated. Though Article 160(1) provides that such other members may be appointed after consultation with Governors of the Provinces, but according to Article 105 of the Constitution, in performance of its function, the Governor being, a representative of the President, shall act on and in accordance with the advice of the Cabinet or the Chief Minister . It is, therefore, the Constitutional obligation of the Governor of a Province. to get advice of the Cabinet or the Chief Minister concerned, in respect of the executive and legislative authority of the Provincial Government, controlled by the Constitution. Thus, before recommending the name of a non-statutory member to represent a Province in the NFC, the concerned Governor is Constitutionally bound to get advice from the Provincial Government or the Chief Minister .
9. With regard to the contention of the learned counsel for the petitioners that the, non-statutory member should necessarily belong to the same Province is concerned, this is not the command of Article 160(1) of the Constitution.
It is important to mention here that the permanent statutory members are, though elected representatives, but most of the time, they are not expert on Finance. Thus, the purpose of making the non-statutory members is to select persons, having financial knowledge" and experience to give his/her input, enabling the NFC in reaching a consensus while distributing revenue between Federal and Provincial Governments, keeping in view the ground realities. Naturally , every Provincial Government would like to recommend a person through Governor to properly represent the Province, therefore, it will try to select the best amongst the best. Therefore, in the interest of the Province in particular and the Federatio n in general, it is the prerogative. of the Governor and the Provincial Government or the CM concerned, to nominate any qualified person as a non-statutory member , irrespective of his/her domicile, however , preference may be given to a person, belonging to the Province concerned, with a view that he/she would have more knowledge about the dynamics of the Province.
10. The composition of the NFC vide the referred notification would reflect that one non-statutory member from each Province has been nominated, but in addition, one Mr. Abdul Hafeez Shaikh, being the Advisor to the Prime Minister on Finance and Revenue has also been made member . Amongst the Provincial members, Mr. Javed Jabbar , who was recommended by the Government of Balochistan and Governor of Balochistan has excused to become a member of the NFC, as such, he is no more a member . The Provincia l Government and the Governor Balochistan are expected to recommend name of a person of repute, having financial knowledge and the monitory issues of the province. As far as the non-statutory members of the other three provinces are concerned, since they are unrepresented, therefore, it has not come on the record as to whether at the time of their nomination, the Constitutional provisions have been fulfilled or otherwise? Therefore, nothing could be said to their extent, however it is expected that while nominating them, the concerned Provincial Governments, the Governors of the concerned Provinces and the President might have followed the Constitutional provisions. It is important to mention here that Mr. Abdul Hafeez Shaikh has been appointed as one of the non-statutory member . Admittedly , he is not representing any Province, nor is there any evidence to believe that his appointment is with the consultation of any of the Provincial Government or any Governor . Article 160(1) of the Constitution empowers the President to appoint such other non-statutory member of the NFC only with the consultation of the Governor concerned. Since the Constitutional requirement of consulting the Provincial Government and the Governor has not been fulfilled, while nominating Mr. Hafeez Shaikh as membe r NFC, therefore, his appointment throu gh the notification in question is unconstitutional, as such, he cannot act as a member of the 10th NFC. Besides, through the Notification in question, the Federal Secretary , Finance has also been made as part of the NFC being Official Expert. Article 160(1) of the Constitution do permits the President only to nominate members of the NFC, described hereinabove.
Other than those, mentioned in the Constitution, the President is not authorized to include any other person in any capacity as part of the NFC, therefore, inclusion of Federal Secretary Finance in the 10th NFC through the Notification is against the relevant provision of the Constitution. However , the Finance Secretaries of the Federal and Provincial Governments can assist their respective Ministries before or during the meetings of the NFC.
11. One of the objections raised by the petitioners upon the Notification in question is with regard to TOR of the 10th NFC, set by the President. Article 160(1) of the Constitution assigns powers to the President only to constitute an NFC, after every five years and upon receiving the recommendation of the NEC, the President shall by Order , specify , in accordance with the recomme ndation of the Commission. Under Article 160(6), before specifying the recommendation of the Commission, the President may by Order make such amendments or modifications in the law relating to the distribution of revenue between the Federal Governments and the Provincial Governments and under Article 160(7), the President may by Order make grants in aid of the revenue of the province in need of assistance and such grants shall be charged upon the Federal Consolidated Funds. Other than the powers mentioned in Article 160 of the Constitution, the President has no power to direct the Commission to do certain acts or deeds. The said Article has provided a scope and mechanism for the NFC to be followed, therefore, any direction contrary to the provisions of Article 160 of the Constitution, with regard to proceedings of NFC is unconstitutional. Thus, the terms of reference made by the President, with directio n to the members of the NFC to follow the same are illegal and unconstitutional, hence cannot be acted upon. The President and the NFC are bound to follow whatever the Constitution of the Islamic Republic of Pakistan, empowers it.
12. According to Article 1 of the Constitut ion, Pakistan is a federation and has four Constitutional federating units, i.e. Balochistan, Khyber Pakhtunkhwa (KPK), Punjab and Sindh. Islamabad, Azad Jammu and Kashmir (AJ&K) and Gilgit-Baltistan are part of the Federal Government. President of Pakistan is the Head of the State, whose one of the Constitutional responsibilities is, intergovernmental transfer of economic resources, supervision of fiscal transfer and to correct financial imbalances between the Federal and the Provincial Governments. For this purpose, Article 160 of the Constitution empowers the President to constitute an NFC, which is the highest constitutional consultative body on matters only related to distribution of finance, amongst the Federal Government and the Provinces. Distribution of revenu e has always proved to be very sensitive issue, therefore, the NFC is supposed to amicably reach a consensus regarding distribution of resources between the Federal and the Provincial Governments for the joint goal of development and prosperity . To achieve judicious distribution, the members of the NFC are required to take into consideration different factors of the federating units. If any of the Province feels injustice, in distribution of the revenue, it will result into serious repercussions. Here, it is important to give reference of renowned "Hamood-ur -Rehman Commission Report ", compiled by the Hon'ble Chief Justice Hamood-ur -Rehman , wherein he concluded that one of the reasons of "Fall of Dhaka (East Pakistan)" was imbalanced distribution of revenue. It is, therefore, expected that all the members must think of the strengthening of the Federation, instead of creating disput es by making an attempt to get more and more for the Provinces or the Federal Government, they represent. It is a fact that since creation of Pakistan, only few NFC have reached a consensus, while making awards and the last one was 7th NFC award, wherein it was agreed that the Federal Government will gradually increase its growth to GDP and by the end of financial year 2019, it will try to achieve its growth up to 19%. Moreover , it was agreed that the Federal Government will decrease its non-development expenditures and will also control financi al losses of State-owned institutions, like PIA, Steel Mills, Railways, etc. After the 18th amendment in the Constitution, most of the departments reflected in the concurrent list, have been devolved upon the provinces, as such, now the burden of all these departments are on provinces, instead of the Federal Government. Under such circumstances, the needs of the provinces have now been increased, as compared to the Federal Government. It is a fact that the expected growth of GDP has not been achieved, whereas on the other hand, the expenditure of the Federal Government and the Provinces have unrealistically been increased. Similarly , the Federal Government and the Provincial Government have failed to show the financial discipline, consequently , the losses of the State-owned institutions/departments have been increased, rather than making an- attempt to curtail the same. This has resulted into shortage of revenue as compared to the current demand of the Federal and Provincial Governments. If the contention of the petitioner is believed that the Federal Government is meeting its expenditure at the cost of the provinces, this will be an immature decision, which will not only create bad taste amongst the provinces and the Federal Government, but will also affect the public at large as their affairs are directly associated with the Provincial Governments. It is important to mention here that under Article 160(3-A) of the Constitution, the share of the Provinces, in each Award of NFC shall not be less than the share given to the Provinces in the previous Award. Even otherwise, if the Federal Government fails to increase its income, whether it will meet its requirement by imposing "cut" upon the share of the provinces? If so, what would be the end result? Under such circumstances, we don't believe that the Federal Government will take any step contrary to the Constitution, nor will do any act which creates different between the Provinces and the Federal Governments. It is however expected that the Federal Government will evolve a mechanism to increase the revenue of divisible pool and to ensure imposing financial discipline within the departments and to curtail the losses of the State-owned institutions so that more revenue is made available to meet the needs of the Federal and Provincial Governments.
Thus, in view of above, the petitions are allowed. The Notification in question to the extent of respondent No.7 namely Abdul Hafeez Shaikh, being member of the NFC, the Federal Secretary Finance being financial expert, and the terms of reference made by the President for the 10th NFC is set aside. Since one of the members from Balochistan has withdrawn his name, therefore, the President may with the consultation of Provincial Governor , who on the advice of the Chief Minister or the Provincial Government, to appoint fresh member , accordingly . After constitution of the NFC, its members should follow the provisions of Article 160 of the Constitution in its later and spirit.