MALIK HAQ NAWAZ, C.J.---Since a common question of law and similar facts are involved in the above titled writ petition, therefore, we deem it congenial to decided both petitions through this single consolidated judgment. operative Bank Gilgit-Baltistan (hereinafter referred as KCBL) with the following prayer: "(a) The formation of present BoDs (Board of Directors) and decisions taking by said BoDs are without authority , unlawful and liable to be superseded/cancelled till next calling of AGM (Annual General Meeting) and formation of legal representatives (BoDs)
(b) That the advertisement of the position of GM (General Manager) by so-called BoDs is also illegal and same act has been done by the respondents, is serious violation of law. Orders for calling AGM may be made and till next formation of legal BoDs, the appointment/promotion against the position of GM my be stayed."
The shareholders of KCBL also moved an application bearing C.M. No.614/2019 under Order XXXIX, Rules 1, 2 read with sections 151/94, C.P.C. for grant of temporary injunction to the effect that respondents may be restrained from appointment/promotion of any person against the vacant position of GM KCBL. This Court vide order dated 08.01.2020, after hearing arguments on the petition, disposed-of f the same as accepted. Relevant part of referred order sheet is reproduced for convenience as under: "The earlier restraining order is modified to the extent that the answering respondents shall proceed with the process of appointment of CEO/GM but the outcome of the same shall not be circu lated till the final disposal of the instant writ petition. In the circumstance, the C.M. No.614/2019 stands disposed of as accepted."
3. The officials of KCBL have filed Writ Petition No.204/2020 under Article 86(2) of Gilgit-Baltistan Order , 2018 seeking remedies as follows: "(a) The Respondents 1 and 2 may kindly be directed to expedite the process towards fulfillment of conditions set by the State Bank of Pakistan in the larger public interest.
(b) The Respondents 1 and 2 may kindly be directed to utilize the four hundred million rupees as allocated in the budget 2020-21 for acquisition of majority shares of Karakuram Co-operative Bank Limited by the Government of Gilgit-Baltistan so as to save the said amount from being lapsed in the larger public interest.
(c) The newly nominated Board of Directors may please be directed to convene their meeting immediately to pass annual budget of Karakuram Co-operative Bank Limited for the next financial year as soon as possible as three months of current financial year have already been lapsed due to unnecessary litigations.
(e) The respondent No.4 may kindly be directed not to create unnecessary hurdles in the smooth running of the bank affairs."
The officials of KCBL also submitted an application bearing C.M. No.420/2020 under Order XXXIX, Rules 1 and 2 read with sections 151/94, C.P.C. for grant of temporary injunction to the effect that respondent No.4 (Registrar Co- operatives Gilgit) may be restrained from making any hurdle to convert KCBL into Micro Small and Medium Enterprises Bank and to interfere unnecessarily in administrative af fairs of KCBL.
4. The KCBL GB initially emerged in the area as Northern Areas Provincial Co-operative Bank Ltd. in the year 1956 under Co-operative Societies Act, 1925. The bank remained connected with the Federal Bank for Co-operatives from 1977 to 2002. The present status of KCBL is that it has 31 branches and 5 micro finance units throughout Gilgit-Baltistan. It is one of the most prominent financial institutions in Gilgit-Baltistan, which offers its valuable services even in far-flung areas of the region with a vision to eliminate a sense of disappointment besides providing opportunities of employment to the public, which is a valuable and encouraging step even to put an end unemployment in an area where opportunities of employment in private sector is nominal and the entire population of the region solely depends on government jobs. It provides loans to the public on accessible terms and conditions to uplift the economic standard of the middle and lower class. In such a backward area, the role of KCBL is praiseworthy .
5. The KCBL has its own BoDs to manage and decide the affairs of the bank, whereas the Chief Secretary of Gilgit- Baltistan is its ex-of ficio chairman. The bank has framed its bylaws to run the institution in a profitable manner .
There are 52 share holders of KCBL in terms of section 2(P) of byelaws includ ing the petitioners of W.P. No. 305/2019. The Government of Gilgit-Baltistan initiated correspondence with the State Bank of Pakistan for conversion of KCBL into Gilgit-Baltistan Microfinance Bank. The request of Gilgit-Baltistan Government was considered by the State Bank of Pakistan subject to fulfillment of certain legal requirements viz. acquisition of majority of shares of KCBL by Government of Gilgit-Baltistan. However , the matter is kept in abeyance by the government of Gilgit-Baltistan, whereas the State Bank of Pakistan is still waiting to a positive response of the Gilgit-Baltistan Government.
6. After expiry of the term of BoDs, the competent authority of KCBL has nominated the BoDs for the next term of two years and advertised the position of GM in Daily Dawn and Daily K2 dated 23.11.2019 to appoint a competent individual to manage the affairs of bank in an improved manner to make it even a more profitable institution. The shareholders of KCBL being aggrieved of the formation of fresh BoDs and advertisement of the position of GM moved W.P No.305/2019, whereas the officials of KCBL being aggrieved by the delaying tactics of the Government of Gilgit-Baltistan to convert KCBL into Gilgit-Baltistan Microfinance Bank submitted W .P. No. 204/2020.
7. Mr. Sher Madad Khan Advocate, learned counsel for the petitioners of W.P. No. 305/2019 submitted that the bylaws of KCBL and other rules and Co-operative Societies Act provide a method and give mandate to its shareholders to recommend all affairs relating to the business of bank and delegate the powers to BoDs of the bank to take all kinds of decisions in the interest of bank. The members of BoDs are elected/selected by shareholders after calling AGM and empo wer the BoDs to supervise and run the business of the bank. The learned counsel for the petitioners argued that the nomination/selection of the present BoDs is against the will and consent of the petitioners (shareholders) as no AGM has been called and the shareholders including the petitioners have never elected the present so-called BoDs, therefore, the existence and function s of BoDs is without mandate, unlawful and entirely illegal and liable to be superseded. The learned counsel for the shareholders contended that there is a method and manner provided in the relevant laws for the appointment/p romotion of GM/CEO, wherein it has been manifestly mentioned that the position of GM should be filled on the basis of seniority-cum-fitness after approval of recommendations of BoDs. For the last six decades this method of appointment/promotion has been adopted by KCLB, but the advertisement of the position of GM/CEO by respondents is based on mala fide intention and clear discrimination with senior qualified of ficers of KCBL, who are entitled for the senior position of GM.
8. Mr. Manzoor Hussain Advocate, learned counsel for the petitioners of W.P. No. 204/2020 (officials of KCBL) contended that the conversion of KCBL into Gilgit--Baltistan Microfinance Bank under the license of State Bank of Pakistan is in the larger public interest as it is beneficial to the 2 lac 79 thousand account holders of the bank whose deposition is twenty million rupees and this deposition may be protected and it is also useful to the employees of KCBL as their services will also be protected under the statutory rules. The learned counsel for the petitioners argued that the State Bank of Pakistan has shown keen interest in the matter and the Government of Gilgit-Baltistan has allocated four hundred million rupees in the current financial year for the purpose, but the respondents are using delaying tactics to process the matter due to political influence. The learned counsel for the petitioners submitted that there is apprehe nsion of misuse of the allocated fund for the purpose, if no direction from the Hon'ble Court is issued to expedite the matter and to use the fund properly .
9. The Assistant Advocate General and Mr. Khurshid UI-Hassan Advocate appear ing on behalf of respondents of both writ petitions argued that there are 52 general shareholders besides the regular employees of KCBL and without consent of all of them, no one can file any petition on their behalf, hence the Writ Petition No.305/2019 is liable to be dismissed. They submitted that the present members of BoDs have been nominated as per bylaws of KCBL and after fulfillment of all codal formalities with best intention to protect the bank. They further contended that the BoDs of KCBL is competent and empowered to appoint the CEO/GM as per requirements under rules and bylaws and the advertisement of the position of CEO/GM is made to appoint a competent person who will run the affairs of the bank efficiently which is in the larger public interest. The Assistant Advocate General submitted in W.P, No.204/2020 that the Government of Gilgit-Baltistan is ready to take all the measures to covert the KCBL into Gilgit-Baltistan Microfinance Bank and the matter is still under process with the State Bank of Pakistan. The Government has never created hurdles to prolong the matter which is in public interest.
10. We attended the arguments of the parties with full devotion at a considerable length and gone through the available record of the case.
11. The shareholders of KCBL have placed a question mark on the constitution of fresh BoDs, which as per their contention is constituted against their consent being shareholders Clause 24 of Byelaws provides as under:.
"24. Board of Directors.--- There shall be an elected or nominated Board of Directors consisting of 9 members proposed by the General Manager in consultation with the Registrar- a) The Chief Secretary Gilgit-Baltistan shall be the ex-officio Chairman of the Bank and preside over the meetings of the Board. b) The Vice Chairman elected with a majority of votes from amongst the Directors shall enjoy the status for the period decided by the Board. c) The General Manager/Chief Executive Officer as Secretary to the Board. d) The Director except ex-officio shall retire after completion of their tenure."
This section vividly provides the manne r of election/nomination of BoDs witho ut any obscurity . The General Manager in consultation with the Registrar may nominate members of BoDs. The referred section by no means states that the BoDs shall be selected in the Annual General Meeting having participation of shareholders.
12. Since KCBL is a financial Institution of Gilgit-Baltistan, which provides its valuable services to all the people of region equally with the vision "do the right thing" and as per vision, the institution provides equal representation to all regions of Gilgit-Baltistan irrespective of regional or communal bias. This vision of equal representation emanates from the nomination of current BoDs. The notification bearing Ref. No.KCB-/BOD/2020 dated 25.08.2020 issued by GM/Secretary to the Board regarding nomination of BoDs is reproduced for ready reference as under: "Notification .
The Chairman, KCB/Chief Secretary , Gilgit-Baltistan has been pleased to nominate the following as Directors of the Karakuram Cooperative Bank Limited as per provision under clause 24 of the bylaws of the Bank for two years' term with immediate ef fect.
Region Name Profile Baltistan Haft Sanaullah Retired Senior Civil Servant Ex Secretary Home, Tourism DMR/AST Mr. Aftab Ismail MBA from Pepperdine University USA Experience working with USAID, DFID, UNDP etc Gilgit- BaltistanSyed Mehdi Haider Senior banker with more than 20 years banking experience working in Faysal Bank, Habib Bank, ABN Amro Bank and Bank of America Hunzal/NGR Ms. Mehnaz Parveen CEO KADO Mr. Waqar Abbas MBA from IBA Karachi Banking Experience in HSBC Experience working in AKRSP AKFED, venture financing The members of BoDs have been nominated under the law and following the bylaws of KCBL and the plea of shareholders regarding illegal selection/nomination of BoDs is not based on convincing grounds.
13. As far as the appointment of GM/CEO is concerned, clause 34 of ibid bylaws provides as under: "34. General Manager/Chief Executive Officer .---The General Manager of the bank who should be a graduate and technically qualified officer with adequate banking and administrative experience shall be appointed by the Board.-- Whereas Rule 10(1) of Service Regulations and Establishment Rules of KCBL provides as under: "10. PROMOTION: I. As decided by the Board of Directors in its meeting held on 31st August, 1989, promotions to the officer cadre beyond grate III shall be made on the basis of professional qualifications, experience, good conduct and performance of an employee, in future. No employee shall have a claim to be promoted by virtue of seniority alone. ---"
Thus no official can claim promotion to officer cadre only on the basis of seniority . The competent authority of KCBL has advertised the position of GM/CEO to .acquire talented and experienced person, which is not against the laid down rules and policy of the bank. The senior officers of the bank have neither claimed promotion on the basis of seniority , nor the remaining shareholders of the bank have challenged the nomination of BoDs, thus the petitioners of Writ Petition No.305/2019 have miserably failed to substantiate their claim through reliable and cogent documentary evidence.
14. It is worth to mention here that the shareholders of W.P, No.305/2019 durin g pendency of petition, filed an application bearing C.M. No.47/2020 under Order I, Rule 10, C.P.C. for impleading the names of remaining shareholders as respondents. The petitioners of said application neither pressed the same, nor the vakalat nama attached with the application contains .signatures of all the petitioners. Another application bearing C.M. No. 414/2020 has been moved again by the shareholders for suspension of the operation of office order dated 21.08.2020 issued by GM/CEO, whereby the GM/CEO has scheduled the meeting of BoDs on 26th August 2020.
This petition is also baseless as we have already defined the validity of nomination of BoDs, hence both the applications being meritless are hereby dismissed.
15. As regards Writ Petition No. 204/2020, it is highly commendable to state here that in response to the request of Government of Gilgit-Baltistan regarding issuance of license and conversion of KCBL into Gilgit-Baltistan Microfinance Bank, the State Bank of Pakistan (SBP) has shown keen interest to convert the current status of KCBL into Gilgit-Baltistan Microfinance Bank. In this regard, the letter of State Bank of Pakistan bearing No.BPRD/BLD-01/7624-2016 dated 28th March, 2016 addressed to Mr. Hafeez ur Rehman, the then Chief Minister of Gilgit-Baltistan, is reproduced for ready reference as under: "Establishment of Gilgit-Baltistan Microfinance Bank This is with reference to your letter of February 02, 2016 regarding establishment of Gilgit-Baltistan Microfinance Bank.
While I share your concerns about the delay in processing of licensing request for Gilgit-Baltistan Microfinance Bank, I would also like to highlight the significance of regulatory framework for the sound and efficient working of banking system and the protection of depositors. In this regard, the State Bank of Pakistan (SBP) has already apprised that it would be able to process the licensing request only after the resolution of legal issues as per the requirements of the Gilgit-Baltistan (Self Governance and Empowerment) Order , 2009 (copy of SBP's letter dated 25.08.2015 attached)
You would appreciate that the State Bank has made earnest efforts time and again for the early resolution of legal issues in consultation with honourable Council of Gilgit-Baltistan. This was the result of SBP's efforts and request that a tripartite meeting was arranged in the Ministry of Finance on June 15, 2015. During the meeting it was resolved that Gilgit-Baltistan Council and the Federal Government will create legal grounds for SBP to exercise its regulatory powers in the Gilgit-Baltistan area in view of above-mentioned Order and the Constitution of Islamic Republic of Pakistan. In this regard, SBP has also recently taken an independent legal opinion, from a legal firm of repute i.e. M/s Liaquat Merchant who have corroborated SBP's view that the jurisdiction of banking law can extend to Gilgit-Baltistan only with an enabling legislation. The copy of this legal opinion was duly forwarded to the Ministry of Finance on February 12, 2016 with the request to take necessary , action.
This was also decided during the meeting that majority of shareholding in Karakuram Bank would be acquired by the Gilgit-Baltistan Government. However , the relevant information and details about the acquisition of Karakuram's Bank are still awaited at out end.
In the light above, I would request you to kindly take the necessary measures in consultation with Federal Government so that the bank can be established on urgent basis. I would like to reiterate that the promotion and expansion of banking services, especially in undeserved regions like Gilgit-Baltistan, is a key strategic goal of the SBP and I assure you full support and cooperation for the establishment and sound functioning of Gilgit-Baltistan Microfinance Bank.
With best regards."
This step taken by the GB Government and the SBP is of paramount importance and may bring prosperity in the region with various opportunities of employment to a large portion of educated youth with additional benefit of protection of deposits. But at the same time, it is a situation of embarrassment to the Government of Gilgit-Baltistan that due to its lethargic attitude the process of issuing license by SBP is not comple ted within time. The above letter of SBP lucidly explains the concerns of SBP to the welfare of Gilgit-Baltistan. The SBP is looking towards Gilgit- Baltistan Government for fulfillment of legal and other necessary requirements viz. acquisition of majority shares of KCBL, but the irritating attitude of Government of Gilgit-Baltistan creates unneces sary hurdles to plain the ground for the purpose. This insensitive attitude of GB Government is against the interests of public at large and a big hurdle to uplift the socio-economic standard of the region.
16. Clause 2(P) of bylaws of KCBL provides that the shareholders may be an individual or government, or any other co-operative society etc., which means that there is no legal impediment if the government of Gilgit-Baltistan acquires majority shares of KCBL. Clause 2(P) of by-laws of KCBL is reproduced for ready reference as under: "2(p) A Shareholder/Individual means: a) An individual competent to contract under Contract Act, 1872 b) Any other cooperative society/regd. Association c) The Government d) A firm, a joint stock company , or any other body corporate constituted under any law; and e) Such class or classes of persons or association of persons as may be notified by the government in this behalf. "
During the financial year 2019-20, five hundred million rupees were available in the Head A05205-T o Financial Institutions, but the same fund was not utilized for the purpose for which it was allocated. In the current fiscal year, four hundred million rupees has been placed in the head of financial institutions, still the government, as it appears, is not ready to consume the fund to acquire the majority shares of KCBL, Share Holders of Karakuram Co- Operative Bank v. 1157 Karakuram Co-Op erative Bank (Malik Haq Nawaz, C.J.) which at the end of financial year s all be surrendered without utilization, or the same shall be transf7 ed to any other head of their own desire. Some stakeholders/shareholders of KCBL are playing a filthy game to maintain their monopoly in the institution and do not let the government to do the things in a legal and rightful manner . We, while considering the overall public interest of the region, cannot shut our eyes in the matter and cannot let a faction or group to ruin a financial institutions where deposits of poor peopl e exist, and those deposits are required to hand over in safe custody of State Bank of Pakistan.
17. In view of what has been discussed herein above, we hereby dismiss Writ Petition No.30 5/2019 filed by shareholders of KCBL being meritless, whereas Writ Petition No.204/2020 filed by officials of KCBL is accepted with strict directions to Chief Secretary Gilgit- E Baltistan and Secretary Finance Gilgit-Baltistan (Respondents 1 and 2 of W.P No.204/2020) to accelerate the process regarding fulfillment of all conditions as required by the State Bank of Pakistan. They are further directed to utilize the allocated fund of four hundred million rupees in the current financial year i.e. 2020-21 for financial institutions to acquire majority shares of KCBL. The GM/CEO of KCBL is at liberty to convene meeting of newly nominated members of BoDs to manage the affairs of bank smoothly . The Chief Secretary on behalf of Provincial Government of Gilgit-Baltistan shall purchase minimum 80% shares at least.
18. Before parting with this judgment, it is to be noted here that those who will create unnecessary and illegal hindrances in the matter to convert KCBL into Gilgit-Baltistan Microfinance Bank, would be responsible for the consequences of their own act/conduct and they shall be tried under Contempt Act considering the same against the verdict of this Court as the matter is one of public importance and welfare of Gilgit-Baltistan is involved.
19. A certified true copy of this judgment be sent to Chief Secretary Gilgit-Baltistan and Secretary Finance Gilgit- Baltistan for information/ compliance as directed. The Chief Secretary Gilgit-Baltistan/Secretary Finance should take up all necessary steps to comply the judgment of this Court without being influenced from any extraneous pressure. The Chief Secretary and Secretary Finance shall be personally respo nsible to co-ordinate with State Bank of Pakistan.
20. Writ Petition No. 305/2019 along with Civil Misc. Nos.47/2020 and 414/2020 and Writ Petition No.402/2020 along with Civil Misc. No.420/2020 are disposed-of f accordingly . File