JUDGMENT: SHAFIUR RAHMAN, J.--1. This judgment disposes of six appeals and two Miscellaneous applications filed therein. all arising out of a consolidated judgment of Lahore High Court.
2. Leave to appeal was granted in all these appeals to examine inter alia, the following questions of law:~ "(1) Whether compliance had taken place with section 5(3) of Ordinance XVII of 1969 (Securities and Exchange Ordinance, 1969) in the matter of refusing the applications for registration? If not so, its effect on the proceedings?
(2) Whether in fact requirement of Rule 5(10) of Rules of Business was infringed by the State Minister for Finance in according the approval to one of the applicants not recommended by the Member, Corporate Law Authority or the Secretary Finance? If so, its effect.
(3) Whether a mala fide of fact as held in the impugned judgment, was made out on the facts found established?"
3. There was a move on the part of the concerned quarters to have a Stock Exchange at Islamabad. The decision to establish and register a Stock Exchange at Islamabad was formally taken and publicly announced in June, 1989 on the eve of or at the time of the announcement of the Budget. At that time, two proper applications for registration as Stock Exchange were already pending before the Corporate Law Authority which was in fact administering the Securities and Exchange Ordinance, 1969 (hereinafter referred to as the Ordinance). The earliest application on record happens to be that of Syed Sarmad Maqsood Al-Hussaini and others, the writ petitioners in the High Court in Writ Petition No. 663 of 1989. Their application was filed on 31st January, 1989 while that of Amanullah Khan and others, the appellants in three appeals (C.A. Nos. 677/90 to 679/90) before us, was filed on 2nd February, 1989. Mr. Iqbal Zaki, an Advocate, who had applied on plain paper for establishing Stock Exchange at Islamabad in April, 1988; formally applied on proper application form on 24th of June, 1989. Their cases were examined by the Corporate Law Authority.
They were interviewed by the mMember, Corporate Law Authority. Syed Sarmad Maqsood Al- Hussaini and his associates were orally heard by the Member, Corporate Law Authority on 1st July, 1989. Mr. Aman Ullah and his associates were heard on 2nd July, 1989. Mr. Iqbal Zaki was heard on 19th July, 1989. However, no minutes were recorded of the oral hearing afforded by the Member. The first summary on the subject was prepared by the Chairman, Corporate Law Authority, meant for the attention of the Minister of State for Finance and it is dated the 25th of May, 1989 i.e., before the announcement of the Budget and the decision to establish Stock Exchange at Islamabad. This summary concluded as hereunder:-- "6. In view of the procedure prescribed under the Securities and Exchange Ordinance, 1969 for processing of applications for registration of Stock Exchanges, Corporate Law Authority is required to proceed as follows:-
(i) The two applications are to be examined in order to ensure that all relevant information on such issues as financial standing of sponsors, their experience of securities business and their competence to run a Stock Exchange is available. If necessary, additional information would be obtained.
(ii) In case an applicant is found to be satisfying all requirements, clearance for incorporation of the company would be given. Conditions considered necessary for safeguarding interest of the investors as well as public interest would be specified.
(iii) The applicant whose application is not considered eligible for registration shall have to be heard before rejection of the application.
7. In view of the telephonic directions of the Minister of State, action as mentioned in para 6 above is being initiated.
8. Submitted for information and any orders which the Minister of State for Finance may like to pass."
What comments were made by the Secretary or by the Minister of State for Finance, is not on record, but two facts emerge from this note, one that the procedure prescribed by law had been pointed out to the Secretary Finance as well as to the Minister of State for Finance, and the second that this Summary was preceded by a telephonic direction from the Minister of State.
4. Another Summary for the Minister of State for Finance was submitted for information, on 17th June, 1989, and the relevant portions of it are as under:-- - "(2) Corporate Law Authority received two applications for establishment of a stock exchange at Islamabad in 1988. The sponsors of The Islamabad-Rawalpindi Stock Exchange (Guarantee)
Limited" (Proposed) include a number of members of the Lahore Stock Exchange namely, Mr. Sarmad Maqsood Al-Hussaini, Syed Mohsin Raza Bokhari, Mr. Asmatullah Sheikh, Mr. Noshir F.
Dastoor and Mr. Jamil Ahmad Sheikh. It has been indicated that some members of the Karachi Stock Exchange may become additional sponsors. Sponsors of 'The Islamabad Stock Exchange (Guarantee) Limited" (Proposed), include Mr. Amanullah Khan, Mr. Tariq Iqbal Khan, Mr. Khalid Waheed, Mr. Ferozuddin A. Cassim, Mr. Latif and Mian Pervaiz Alam.
(3) ............................
(4) ............................
(5) ............................
(6) In view of the requirements of the law, sponsors of both the proposed stock exchanges are being given an opportunity of hearing by the Member, Corporate Law Authority on 1st July and 2nd July 1989 which would enable us to determine eligibility of the applicants for registration as the Stock Exchange, Islamabad. Clearance for incorporation of the company could be given in the first place. After incorporation under the Companies Ordinance, 1984, it would be granted certificate of registration under the Securities and Exchange Ordinance, 1969."
This summary was seen without comments by the Finance Secretary and the Minister of State for Finance.
5. The third summary was submitted by the Chairman, Corporate Law Authority on 31st July, 1989 reporting to the Minister of State for Finance, through the Finance Secretary the following facts:- "Minister of State for Finance has been pleased to announce in the budget speech, the decision of the Government to allow establishment of a Stock Exchange at Islamabad. Corporate Law Authority has initiated action to implement the decision of the Government in accordance with the requirements of Securities and Exchange Ordinance, 1969 which regulates registration and operation of the stock exchanges in the country.
Applications have been received from the following three parties for registration of a stock exchange at Islamabad:-
(i) Mr. Amanullah Khan and others;
(ii) Mr. Sarmad Maqsood Al-Hussaini and others; and
(iii) Mr. Muhammad Iqbal Zaki and others.
The applications were examined and the sponsors were asked to furnish additional information considered necessary for processing of the applications. In view of the requirements of the law, all the three applicants have been given an opportunity of hearing by Member, Corporate Law Authority.......................... The applicants who were heard on 1st July and 2nd, 1989, were requested to furnish more detailed information latest by 22nd July, 1989. The information called for relates to their financial resources, business plans, membership criteria and experience in the securities business. Details of the information required may be seen at Annexure T. The information has since been received and is being scrutinised. Mr. Zaki and his co-sponsors are required to submit information by 1st August, 1989. All the parties have been given at least ten days for preparation and furnishing of the information............................ "
6. The last Summary on the subject presented to t ie Minister of State for Finance by the Chairman, Corporate L aw Authority, is dated 8th August, 1989. Herein, the claims of the applicants were evaluated and the following recommendations were made:- ....On the basis of analysis of the information which has been received from the three sponsors, Corporate Law Authority has reached the conclusion that the application received from Mr. Muhammad Iqbal Zaki may not be considered as none of the sponsors has any experience of dealing in securities which is a critical requirement for operating a stock exchange. Mr. Zaki has also revised the list of sponsors after the hearing and adding five new sponsors and deleting eight sponsors. The application received from Mr. Amanullah Khan has sponsors who belong to Rawalpindi and the adjoining areas and are mostly engaged in business. However, only one of the sponsors namely Mr. Firozuddin A. Cassim has practical experience in dealing in securities and managing a stock exchange. The application received from Mr. Sarmad Maqsood Al- Hussaini includes five sponsors who are stock brokers of Lahore Stock Exchange and five sponsors who are stock brokers of Karachi Stock Exchange. However, there is no sponsor from the Rawalpindi Region and it is apprehended that if allowed registration alone the group would tend to manage Islamabad Stock Exchange through remote control.
In view of the position explained above, Corporate Law Authority is of the opinion that in the interest of successful establishment and operation of a stock exchange at Islamabad the sponsors should represent a happy blend of experience in dealing in securities and the local contracts. It would be appropriate if sponsors mentioned in the application of Mr. Amanullah Khan and Mr. Sarmad Maqsood Al-Hussaini join hands and a joint application to be submitted by them is allowed to be registered. This course of action would enable entrepreneurs of the region and the persons having practical experience of dealing in securities and managing stock exchanges to establish a stock exchange at Islamabad on the right lines.
In case the proposal of the foregoing paragraph is approved, the two applicants would be advised to submit a joint application. Corporate Law Authority would also prescribe necessary conditions as required by section 4 of Securities and Exchange Ordinance, 1969 to ensure establishment and smooth operation of stock exchange at Islamabad."
The Finance Secretary signed the Summary, showing his concurrence with the proposal and forwarded it to the Minister of State who, on 19th August, 1989 passed the following Order:-- The sponsors of the Group led by Mr. Amanullah Khan, are allowed to establish and operate the Stock Exchange at Islamabad."
7. While implementing the Orders of the Minister of State for Finance just reproduced, the Corporate Law Authority formally addressed Mr. Amanullah Khan, on 27th August, 1989, in the following words:-- Subject: NO-OBJECTION CERTIFICATE FOR INCORPORATION OF ISLAMABAD STOCK EXCHANGE (GUARANTEE) LTD. (PROPOSED).
The Corporate Law Authority, after having considered the application filed by the sponsors led by Mr. Amanullah Khan for registration of Islamabad Stock Exchange (Guarantee) Limited (Proposed) for registration under section 5 of the Securities and Exchange Ordinance, 1969 and being satisfied that the proposed Stock Exchange is eligible for registration and that it would be in the interest of trade and also in the interest of public to register the said Stock Exchange, hereby grants this No- Objection Certificate to enable the sponsors to incorporate the Company, as a company limited by guarantee under the Companies Ordinance, 1984.
(2) However, this N.O.C, is granted subject to the conditions laid down in the annexed Annexures 'A' and 'B' which are to be incorporated in the Memorandum and Articles of Association of the proposed company.
(3) The certificate of registration under section 5 of the Securities and Exchange Ordinance, 1969 shall be granted after incorporation of the company."
8. On 25th October, 1989, Mr. Amanullah Khan and his associates got the company incorporated and registered and a Certificate of Registration under section 5 of the Ordinance was issued to him on 6th of December, 1989, in the words that follow: ~ "Corporate Law Authority have considered the application for registration under section 5 of the Securities and Exchange Ordinance, 1969 by the Islamabad Stock Exchange (Guarantee) Limited, Islamabad, and have satisfied that the said Islamabad Stock Exchange (Guarantee) Limited is eligible for registration and that it would be in the interest of trade and also in the public interest to register the said Stock Exchange, hereby grant, in exercise of the powers conferred by the said section 5, registration to the Islamabad Stock Exchange (Guarantee) Limited subject to the conditions stated herein below or any other conditions which may be imposed subsequently:-
(i) For the first five years of the operation of the Exchange membership shall be restricted to one hundred.
(ii) Nominee Director of Corporate Law Authority will be represented on the committees concerning membership and listing of companies.
(iii) Applications for initial membership shall be invited through an advertisement in the Press.
(Sd.) (Shamim Ahmad Khan)
Member."
9. Ch. Muhammad Aslam, the writ petitioner in Writ Petition No. 655 of 1989, filed an application on 26th August, 1989 with the Corporate Law Authority seeking permission for opening Stock Exchange in Islamabad. He was informed by the Corporate Law Authority on 16th September, 1989 that 'No- Objection Certificate' for incorporation of a Company Limited by Guarantee for establishment of a Stock Exchange at Islamabad, had already been granted to one of the sponsors' group, as such his application cannot be entertained. In this background, Ch. Muhammad Aslam filed the Constitution Petition (W.P.No. 655 of 1989) which is shown to be drawn up on 12th December, 1989, alleging as hereunder:-- "(b) the petitioner however has now come to know that this statement made by respondent No. (?) and the orders contained in the impugned letter dated 16th September, 1989 were factually incorrect. In fact the permission has been granted to respondents Nos. 3 and 4 only on 15th October, 1989. The petitioner has further come to know that the requisite permission/licence has been granted to them only on 2nd December, 1989. This the petitioner came to know only after respondents Nos. 3 and 4 held a Press Conference giving information in this behalf and also inviting applications from various persons for the purpose of becoming members of the said Stock Exchange. The petitioner further understands that the respondents have managed and manoeuvred the entire process for getting a No-Objection Certificate in then- favour in a clandestine manner and they are further taking steps to have applications from their own dose associates excluding the members of the public in general and thereby they intend making only their own henchmen as members of the said Stock Exchange."
10. The specific allegations made against the Minister of State for Finance, in the Constitution Petition filed by Ch. Muhammad Aslam, were as hereunder:-- "That the entire proceedings have been done in a mala fide manner by a group of persons for exterior motives. The petitioner understands that respondents Nos. 3 and 4 were given No- Objection Certificate/registration surreptitiously through the patronage of the Minister of State for Finance. The persons who have been granted No-Objection Certificate/permission for registration are the close associates of the said Minister of State for Finance. They have been selected for the grant of No-Objection Certificate/permission for registration only because they have been old associates of the said Minister of State for Finance in various capacities including Rawalpindi Chambers of Commerce and Industry etc. Some of the sponsors are directly related and business partners of the said Minister of State for Finance................. All these considerations have been completely and deliberately ignored by the respondents Nos. 1 and 2 only for the purpose of projecting and promoting the self-interests of a small group of persons who are their henchmen and who have been close associates of the- Minister of State for Finance."
In his Constitution petition, Ch. Muhammad Aslam, impleaded as respondents the Federal Government of Pakistan, through Secretary, Ministry of Finance, the Corporate Law Authority; Mr. Amanullah and the Islamabad Stock Exchange (Guarantee) Limited.
11. Raja Abdul Rehman, the Chairman of Raja Group of Industries and the President-elect of the Federation of Pakistan, Chambers of Commerce and Industry, made an application on 27th November, 1989 to the Corporate Law Authority. He claimed that his application was still pending consideration but he came to know through the Press that "No- Objection Certificate"/Permission for registration had been granted to Mr. Amanullah and his associates. He, therefore, challenged that decision by a Constitution petition (Writ Petition No. 658 of 1989) shown to have been drafted on the same day Le. 12th December, 1989. The specific allegation against the Minister of State for Finance were stated therein as hereunder:-- "That the entire proceedings have been done id a mala fide manner by a group of persons for exterior motives. The petitioner understands that the respondents Nos. 3 and 4 were given No- Objection Certificate/registration surreptitiously through the patronage of the Minister of State for Finance. The persons who have been granted No Objection Certificate/Permission for registration are the close associates of the said Minister of State for Finance. They have been selected for the grant of No-Objection Certificate/Permission for registration only because they have been old associates of the said Minister of . State for Finance in various capacities including Rawalpindi Chambers of Commerce and Industry etc. Some of the sponsors are directly related and business partners of the said Minister of State for Finance. The case of the petitioner was not at all considered on merits and due to unlawful and clique consideration out of pure favour the licence/permission for registration was granted to respondents Nos. 3 and 4........... All these considerations have been completely and deliberately ignored by the respondents Nos. 1 and 2 only for the purpose of projecting and promoting the self-interest of a small group of persons who are their henchmen and who have been close associates of the Minister of State for Finance."
In his petition, Raja Abdul Rehman impleaded the Federal Government of Pakistan through Secretary, Ministry of Finance, Corporate Law Authority; Mr. Amanullah and Islamabad Stock Exchange (Guarantee) Limited.
12. Syed Sarmad Maqsood Al-Hussaini and his associates, the writ petitioners in Writ Petition No. 663 of 1989, acted somewhat differently. Mr. Al-Hussaini was informed by a letter from the Corporate Law Authority dated 27th August, 1989 as hereunder:- "In the light of the hearing held on 10th July, 1989 and the information furnished by you in respect of your application, it has not been possible to agree to allow registration of the company sponsored by you alongwith others for establishment of 'a stock exchange at Islamabad."
He applied for a certified true copy of orders containing reasons for the refusal of registration to him and reasons for the grant of registration to others and also sought inspection of the file with a view to inform himself of the facts leading to the decision which he wanted to impugn. He was denied both. He alongwith his associates, therefore, challenged by means of a Revision Petition addressed to the Secretary, Ministry of Finance, the communication received by him from the Corporate Law Authority. The Finance Secretary by an Order dated 4th December, 1989 entertained the Revision and proceeded to dismiss the same on 4th December, 1989. Significantly, the Finance Secretary in his order did not disclose that the Order was passed by the Minister of State for Finance and that a revision did not lie to him but proceeded to deal as if the decision has been taken by the Corporate Law Authority. The merits were dealt by him in the revisional order as hereunder:-- "1 have noticed that Corporate Law Authority had received three applications for registration under section 5 of Securities and Exchange Ordinance, 1969. However, since only one company could be allowed to establish and operate the proposed Stock Exchange, two applications had to be rejected. One of the rejected application happens to be that of the petitioners. The party which has been permitted to establish the Stock Exchange at Islamabad consists mostly of persons having business interest in Islamabad- Rawalpindi Region and this appears to be the dominant factor leading to the decision. The party also includes an experienced broker of Karachi Stock Exchange............ In my view, the party approved for issue of certificate of registration had been selected after proper comparative evaluation. Besides, the petitioners would have an opportunity to apply for membership of the Stock Exchange at Islamabad. As such, I do not find any justification to upset the impugned order."
He, then, alongwith his 16 associates filed a Constitution petition (Writ Petition No. 663 of 1989) which is shown to have been drafted on 13th December, 1989. They made the following specific allegations against the Minister of State for Finance in his Constitution petition:- "That Mr. Khalid Waheed respondent No. 4 is not only a close relation of Mr. Ehsan-ul-Haq Piracha, Minister of State for Finance, Government of Pakistan but also is a business partner in Ferozsons Laboratories Ltd. Of which Khalid Waheed is Chairman/Chief Executive and Mr. Ehsan-ul-Haq Piracha, Minister of State is one of its Directors. Respondent No. 5 (Mr: Feroz-ud-Din A. Qassim) is also one of the Directors of the Ferozsons Laboratories Ltd.
The petitioners have every reason to believe that respondent No. 1 refused certificate of registration to the petitioners and granted the same to respondents 2 to 11 and respondent No. 12 rejected the petitioners' revision petition (Annex. 'E') with ulterior motives under the dacites of Mr. Ehsan-ul-Haq Paracha, Minister of State for Finance and on this account as well the impugned orders of respondents 1 and 12 are mala fide and without lawful authority and of no legal effect."
In their petition, they impleaded Mr. Shame em Ahmad, Member, Corporate Law. Authority; Mr. Amanullah and his associates namely, Tariq Iqbal Khan, Khalid Waheed, Ferozuddin A. Cassim, Latif Ibrahim Jamal, Mian Habib Ullah, Mian Pervaiz Aslam, Muhammad Haji Yaqub, S.M. Hasan, Shabir Ahmad; and Secretary, Finance Division. He did not implead Islamabad Stock Exchange (Guarantee) Limited, as a party/respondent.
13. The Corporate Law Authority filed its comments justifying the orders passed and claiming that it was in accordance with law. Mr. Amanullah and his associates in their comments took a number of preliminary objections to the very competence of these Constitution petitions and the right of the writ petitioners to challenge the decision on any ground whatsoever. It was also claimed by them that they had taken certain steps, consequential to the decision of the Government whereby a right had come to vest in them of which they could not be deprived by its revocation, withdrawal or modification.
14. The three Constitution petitions being on the same subject were taken up by the learned Judge together and disposed of by a single judgment dated 10th April, .1990. During the course of hearing in the High Court, on 23rd December, 1989, the Court passed the following Order:-- "Javed Panni, Deputy Chief, Government of Pakistan, Corporate Law Authority (Corporate Regulation Wing), Islamabad has been directed to bring the entire original record of relevant proceedings on the next date of hearing and if meanwhile the learned counsel for the parties want to inspect the record, he shall allow them inspection."
On 22nd January, 1990 arguments by the parties were concluded and the judgment was reserved.
But, on 24th January, 1990, an Order was recorded by the learned Judge whidbreads as hereunder:- "On the conclusion of arguments on 22nd January, 1990 the judgment was reserved but at the time of writing the judgment it has been felt that in the writ petition there are certain allegations of somewhat personal nature against the Minister of State for Finance, Government of Pakistan and in the absence of his explanation it may not be possible to record any findings on those allegations.
Besides, in view of nature of allegations and keeping in view the requirements of rule of natural justice, even otherwise it appears to be in the fitness of things that he should be given an opportunity to explain his position though some of the respondents, who are allegedly his business partner in Ferozesons Laboratories Limited, have filed sworn affidavits in his defence. Therefore, the matter needs to be further considered for which it should be listed on 27th January, 1990 and the Deputy Attorney-General should also be asked to appear."
On 27th January, 1990, the matter came up in the presence of the parties and the following order was passed:- "For the reasons stated in the preceding order, a copy of the writ petition alongwith the copy of that order should be sent to the Minister of State for Finance, Government of Pakistan, Islamabad, with a view to enable him to explain his position, at his option in view of the provisions of Article 248(1) of the Constitution of Pakistan, 1973, in relation to certain allegations of somewhat personal nature against him and if he so wishes he may avail of the opportunity of being heard before this Court on 6th February, 1990 either personally or through some attorney or through some counsel.
(2) The learned Standing Counsel is also directed to contact the said Minister and convey him this order and get instructions from him, if any, for the next date of hearing."
On 6th February, 1990, the matter was taken up again in the presence of the parties and the following Order was passed:-- "The office has, in compliance with the orders dated 24th January, 1990 and 27th January, 1990, conveyed the directions/observations of this Court to the Minister of State for Finance, Government of Pakistan, vide registered letter No. 1139, dated 29th January, 1990, alongwith the relevant document.
(2) The learned Standing Counsel for the Federal Government, vide paragraph 2 of the preceding order, was also directed to contact the Minister and convey the relevant order of this Court to him and get instructions, if any, from him for this date of hearing.
(3) 'The learned Standing Counsel states that he met the Minister and conveyed the relevant orders of this Court in order to enable him to put in his point of view, if any, and he stated that whatever he did was done in his official capacity as a Minister of State for Finance of the Federal Government and since it was not his personal matter, he had nothing to add to the defence already taken by or on behalf of the Federal Government.
(4) Since the legal formality of affording an opportunity of being heard, as it appears from the statement of the learned counsel for the Federal Government, has been complied with and final arguments on the writ petition have already been heard, the judgment is reserved."
15. In his judgment dated 10th April, 1990, the learned Judge, after narrating the facts noticed that "the main ground of attack common to all these three writ petitions, but more elaborately stated in Writ Petition No. 663 of 1989, is that of mala fide". From the arguments addressed at the hearing, the following factual malafide was inferred:- "(i) the Minister of State was hand in glove with him (Mr. Aman Ullah) on account of their close association in Rawalpindi- Islamabad Chamber of Commerce when the former was its President/Chairman and the latter was its member; and
(ii) the Minister of State had direct financial and other interests in the proposed stock exchange which he allowed to be set up for his personal aggrandizement as well as for the benefit of his close business associates and relations."
It was further inferred that:- "(i) the Minister of State was not a sleeping partner in Feroze- sons Laboratories Ltd., a business concern of repute, rather, he was one of its directors and had been its Chief Executive for a number of years before he became the Minister of State and since then he continued to be shown as a 'Director on leave' in its records;
(ii) Mr. Khalid Waheed respondent, who was one of the group of sponsors being headed by Mr. Aman Ullah, besides being a major partner of the Minister of State in Ferozesons Laboratories Ltd., was also his brother-in-law {{URDU MISS}} and they joined hands to promote their business interest through the stock exchange;
(iii) Mr. Feroz-ud-Din A. Qasim respondent was also business partner of the Minister of State in Ferozesons Laboratories Ltd., while the rest of the respondents constituting the group of sponsors handed by Mr. Aman Ullah respondent were his henchmen and hand-picked persons of his main business associates, including a relation, named above; and
(iv) Aman Ullah's group, after obtaining the Certificate of Registration of the exchange, within the span of a few days and with the blessings of the Minister of State had collected one crore rupees as membership fee at the rate of rupees on lac per member and one can imagine the financial benefits of their joint venture."
16. The learned Judge noted in the judgment the procedure adopted by him in order to deal with the grounds of mala fide elaborately projected before him during the course of the arguments as hereunder:-- "... On the conclusion of most of the arguments in the third week of January last, in view of the some allegations of personal nature against the Minister of State and great stress thereon having been laid in the context of mala fide during the course of argument, it was considered necessary to afford him an opportunity of explaining his position to satisfy the requirements of rule of natural justice. Therefore, vide interim orders, dated 24th January, 1990, and dated 27th January, 1990 not only Pakistan or Government of Pakistan through Secretary Finance, who was, in fact, already a party in a different context, was directed to be impleaded as a respondent, but also a copy of the Writ Petition No. 663 of 1989 alongwith that of supporting documents, which contained allegations of favouritism more elaborately, was sent to him through the office of this Court as also through the learned Standing Counsel for the Federal Government to enable him to explain his position at his option in terms of the provisions of Article 248(1) of the 1973 Constitution. The petitioners impleaded Pakistan through Secretary Finance as an added respondent and on 6th February, 1990 the learned Standing Counsel made a statement at the Bar in the Court that- "he met the Minister and conveyed the relevant orders of this Court in order to enable him to put in his point of view, if any, and he stated that whatever he did was done in his official capacity as a Minister of State for Finance of the Federal Government and since it was not his personal matter, he had nothing to add to the defence already taken by or on behalf of the Federal Government."
23. The legal requirement of affording opportunity of being heard to the Minister of State thus having been complied with and no formal written statement/comments having been filed on behalf of the Federal Government as the added respondent, as the stand taken and the argument already addressed on behalf of the Authority and Secretary Finance and some other respondents were stated to be enough, the hearing stood concluded and judgment reserved."
17. After dealing with some of the preliminary objections to the competence of the petitions, the learned Judge held as hereunder:-- "But, to my mind, the decisive factor in this case is the question of mala fide which, if decided in favour of the petitioners, would override and wash away all technical and preliminary objections raised by or on behalf of the respondents. Therefore, I intend to consider it before taking up any other preliminary objections raised on behalf of the respondents and that too if the necessity arose."
The following findings of fact on mala fide were recorded by the learned Judge:-- "It is admitted position that the Minister of State was, and even now continues to be, one of the Directors in Ferozesons Laboratories Ltd., a business concern of repute with its Head Office at Rawalpindi, and Khalid Waheed respondent, who is his brother-in- law {{URDU MISS}}, is also a Director therein, besides Feroz-ud-Din A. Qasim respondent. It is also an admitted position that he had been its Chief Executive for a number of years before he accepted the present assignment and in that capacity he had been enjoying a number of facilities and privileges. In the record of the company he is nowadays shown as a 'Director on leave'. Mr. Khalid Waheed respondent is now the Chief Executive. As submitted by the learned counsel for respondent No. 2, his total investment "in this concern may be around rupees one lac but the fact remains that besides being a Director he has been incharge of its management alongwith his brother-in-law {{URDU MISS}} . It is almost their family concern as other shareholders appear to be playing only nominal role. Therefore, I am not inclined to agree with the contention of the learned counsel for respondent No. 2 that due to his meagre - investment, the Minister of State has no significant position in the company and his position was no better than of an employee. Perhaps the learned counsel has forgotten that, besides being a director in this company, he has been President of the Rawalpindi Chamber of Commerce, an office which is not occupied by an ordinary businessman. Besides, he is a politician and because of his political background he is now a member of Federal Cabinet. It is, therefore, due to the interplay of his business pursuits and political activities that he is now occupying the pivotal position of the Minister of State for Finance, Incharge of the most important Ministry in the Federal Government. Therefore his business links could not be separated from his political interest and being basically a businessm an he was very much interested in the establishment, constitution and control of the proposed financial institution at safeguarded and taken due care of by his own men. It is in this background that he seems to have picked up Mr. Amanullah respondent, his old business associate in the Rawalpindi Chambers of Commerce, and his own relation and partner in business, namely, Mr. Khalid Waheed and Feroz-ud-Din A. Qasim respondent even if he had to go out of the way to do so."
18. The magnitude of the consequences of such a mala fide act was evaluated by giving the reasons and illustrations as hereunder:-- "(i) It may be mentioned here that during the course of arguments I have asked Dr. Pervaiz Hassan, Advocate, the learned counsel for respondent No. 2, who was trying to defend the Minister of State to the best of his ability, as to whether he could quote any judicial precedent wherein a public functionary of the State of the status of a Minister or Minister of State, as in the instant case, might have passed an order similar to the one now under discussion and he would have been able to justify it on any ground and signified his inability to quote any.
(ii) it is an admitted fact that within a few days of the issue of certificate of Registration for the establishment of stock exchange, Mr. Amanullah respondent and his group collected membership fee to the tune of one crore and it is by no means a small amount. How they will spend this money, is entirely their discretion as they are controlling this organisation and unfortunately the record of those who control finances of most of such like organisations in this country is not very clean.
(iii) it may be noted here that the learned counsel for the petitioners, during the course of arguments, has repeatedly made offers to his counterparts that his clients are ready to join hands with the group of sponsors led by Mr. Amanullah respondent to share with them the controlling power in the stock exchange and his clients are ready to withdraw the writ petitions, but each time the learned counsel representing the respondents, under the instructions of their clients, have spumed his offers. This was not without purpose as they could not fritter away the favour which they had won with so much efforts from one of the highest in the Government.
19. The conclusion drawn was as hereunder.-- "In the light of these definitions of mala fide and certain admitted facts already stated above, the order dated 27th August, 1989, passed by the Minister of State, granting permission to set up stock exchange at Islamabad was clearly an order stemming from mala fide or bad faith with a view to favour his own business associates, one of whom was even his relation, through whom he wanted to safeguard and promote not only his business and commercial interests but also his political stature and influence, both of which were so inter-connected and intermingled that it was difficult to separate one from the other."
20. The two other legal defects noted by the learned Judge need mention because they require correction. The first was that in view of the delegation of the powers of the Federal Government to the Corporate Law Authority and its Member, the learned Judge held that:-- "The Authority under SRO No. 1023(I)/81 and SRO No. 1024(I)/81, both dated 10th September, 1981, issued under section 28 of the Securities and Exchange Ordinance, 1969, had the delegated power of the Federal Government and had all the necessary competence to entertain, enquire into, adjudicate and decide upon the applications made to it by the petitioners to set up the stock exchange at Islamabad and it was not at all necessary for it to have referred the matter to the Minister of State for his approval or decision. In referring the matter to him it abdicated or surrendered its own powers to him which by itself was an illegality in the schemes of things."
The second was with regard to the conduct of the Secretary, Ministry of Finance and the learned Judge noted it as hereunder: ~ "But, if under some compulsion, it chose to submit the matter to the Minister of State for decision through Secretary Finance, he (Secretary) could and should have avoided to handle it at his own level while sending it up to the Minister of State but he did not do so. If he wanted to avoid his coming into picture at that stage he could do so by asking one of his Additional Secretaries to forward the case to the Minister of State instead of putting his own signatures on it. By putting his signatures on the summary he happened to approve the proposal of the Chairman of the Authority and when the Minister of State disagreed with them by selecting Mr. Amanullah's group for the establishment of the proposed stock exchange, instead of approving the joint venture between that group and Al-Hussaini's group as proposed by them, then under rule 10 of the Rules of Business 1973 a difference of opinion had arisen between him and the Minister of State and it was his duty to request the Minister for reconsideration of his decision and if he stuck to his decision, then the matter should have been referred to the Prime Minister for her decision. This procedure was not adopted by the Secretary Finance and he did not perform his statutory duty. In these circumstances, the exercise of his revisional power also became meaningless. In fact he could exercise those powers, and quite lawfully, if the decision had been taken by the Authority itself. But by the intervention of Minister of State the entire set up envisaged by law became incapable of being acted upon. For that reason too the impugned order is unsustainable at law."
21. On these findings all the three Constitution Petitions were accepted by the learned Judge of the Lahore High Court and the following operative order was passed:-- "For various reasons stated above, all the three writ petitions are accepted, and the impugned order, dated 27th August, 1989, passed by the Minister of State and all subsequent orders passed on the basis of the order and other acts done pursuant thereto, are declared against law, without lawful authority, and having no legal effect. The respondents shall pay the costs of the petitioners."
22. Aggrieved by this judgment three appeals have been filed by Mr. Amanullah Khan mid his associates and three others by the Government of Pakistan and its functionary, each relatable to the three writ petitions filed in the High Court. Two applications have also been made by Mr. Ihsanul Haq Paracha, Minister of State for Finance; one under Order V Rule 2(2) read with Order XXXIII Rules 5 and 6 of the Pakistan Supreme Court Rules, 1980 for impleading him as party in the proceedings; and the other under Order XXXIII, Rule 6 of the Pakistan Supreme Court Rules, 1980 by which the expunction of the following remarks made in the judgment of the High Court is sought:-- "Para. 25. Out of these two groups of petitioners, the case of petitioner in Writ Petition No. 655 of 1989 was till better as his application had reached the Authority on 28th August, 1989, a day prior to the issue of No-Objection Certificate to Mr. Aman Ullah Khan Respondent on 27th August, 1989 and it could be brought to the notice of the Minister of State for reconsideration but 'in the circumstances of the case the Authority, which appeared to be under pressure, perhaps could not dare to breach the subject again before him.
Para. 26. Another objection of the respondents against the maintainability of these two Writ Petitions was that they did not avail of the remedy of revision available to them before the Secretary Finance. This objection is devoid of force for the simple reason that the Minister for State had already passed a Definite Order on the subject and it was fatuous to expect from Secretary Finance any remedy as there could be little possibility of his passing any order against the order of Minister of State already passed. Therefore, to invoke his revisional powers in these circumstances would have been an exercise in futility.
Para. 27. But, to my mind, the decisive factor in this case is the question of mala fide which, if decided in favour of the petitioners, would override and wash away all technical and preliminary objections raised by or on behalf of the respondents. Therefore, I intend to consider it before taking up any other preliminary objections raised on behalf of the respondents and that too if the necessity arose.
Para. 28. It is an admitted position that the Minister of State was, and even now continues to be, one of the Directors in Ferozesons Laboratories Ltd., a business concern of repute with its Head Office at Rawalpindi, and Khalid Waheed respondent, who is his brother-in-law {{URDU MISS}} is also a Director therein, besides Ferozeud-Din A. Qassim respondent. It is also an admitted position that he had been its Chief Executive for a number of years before he accepted the present assignment and in that capacity he had been enjoying a number of facilities and privileges. In the record of the company he is nowadays shown as a Director on leave. Mr. Khalid Waheed respondent is now the Chief Executive. As submitted by the learned counsel for the respondent No. 2, his total investment in this concern may be around rupees one lac but the fact remains that besides being a Director he had been incharge of its almost their family concern as other shareholders appear to be playing only nominal role. Therefore, I am not inclined to agree with the contention of the learned counsel for respondent No. 2 that due to his meagre investment, the Minister of' State has no significant position in the company and his position was no better than of an employee.
Perhaps the learned counsel has forgotten that, besides being a Director in this company, he has been President of the Rawalpindi Chamber of Commerce, an office which is not occupied by an ordinary businessm an. Besides, he is a politician and because of his political background he is now a member of Federal Cabinet. It is, therefore, due to the interplay of his business pursuits and political activities that he is now occupying the pivoted positions of the Minister of State for Finance.
Incharge of the most important Ministry in the Federal Government. Therefore, his business links could not be separated from his political interest and being basically a businessman he was very much interested in the establishment, constitution and control of the proposed financial institution at Islamabad wherein his business-cam - political interest would remain safeguarded and taken due care of by his own men. It is in this background that he seems to have picked up Mr. Aman Ullah Khan respondent, his old business associate in the Rawalpindi Chambers of Commerce, and his own relation and partner in business, namely Mr. Khalid Waheed and Feroze-ud-Din A. Qassim respondent even if he had to go out the way to do so.
Para. 29. It may be mentioned here that during the course of arguments I have asked Dr. Pervez Hassan, Advocate, the learned counsel for respondent No. 2, who was trying to defend the Minister of State to the best of his ability, as to whether he could quote any judicial precedent wherein a public functionary of the State of the status of a Minister or Minister of State, as in the instant case, might have passed an Order similar to the one now under discussion and he would have been able to justify it on any ground and signified his inability to quote any.
Para. 30. This argument does not out much ice because it is an admitted fact that within a few days of the issue of Certificate of Registration for the. Establishment of Stock Exchange, Mr. Am an Ullah respondent and his group collected membership fee to the tune of one crore and it is by no means a small amount. How they will spend this money, is entirely their discretion as they are controlling this organisation and unfortunately the record of those who control finances of most of such like organisations in this country is not very clean. That was not without purpose as they could not fritter away the favour which they had won with no much efforts from one of the highest in the Government.
Para. 31. In my opinion, the grant of permission by the Minister of State to the Group of sponsors led by Mr. Aman Ullah respondent for setting up of Stock Exchange at Islamabad was a clear act of favouritism and nepotism, having all the attributes of mala fide which according to the Federation of Pakistan etc. v. Saeed Ahmed Khan (PLD 1974 S C151) means "bad faith". Action taken in bad faith is usually action taken maliciously in fact, that is to say, in which the person taking the action does so out of personal motives either to hurt the person against whom the action is taken or to benefit oneself.
Para. 32. In the light of these definitions of mala fide and certain admitted facts already stated above, the Order, dated 27th August, 1989, passed by the Minister of State, granted permission to set up Stock Exchange at Islamabad was clearly an Order stemming from mala fide or bad faith, with a view to favour his own business associates, one of whom was even his relation through whom he wanted to safeguard and promote not only his business and commercial interests but also his political stature and influence, both of which were so inter-connected and intermingled that it was difficult to separate one from the other.
Para. 33. But, if under some compulsion, it chose to submit the matter to the Minister of State for decision through Secretary Finance, he (Secretary) could and should have avoided to handle it at his own level while sending it up to the Minister of State but he did not do so.
But by the intervention of Minister of State the entire setup envisaged by the law became incapable of being acted upon. For that reason too the impugned order is unsustainable at law.
Para. 34. Since the basic order passed by the Minister of State for the setting up of the Stock Exchange is untenable being tainted with mala fide, all subsequent orders passed by any authority on the basis of that order are also bound to crumble.
Para. 35. I have tried to discuss and record my findings on almost every point raised by the learned counsel for the parties, particularly by the learned counsel representing the respondents, but if some preliminary objection stands omitted or it has not been adequately dealt with, it cannot save the impugned order for being struck down because the element of mala fide or bad faith which is figuring prominently in this case, is so basic, formidable and forceful that it can easily wash away and undo any legal objection raised in defence of the impugned order.
23. The grievance made and the grounds taken were enumerated as hereunder:- "(a) The applicant was not arrayed as a "party" to the writ petitions and in any case not in his personal capacity. If the writ petitioners intended to bring the personal acts of the applicant as subject-matter of writ petitions, he ought to have been made a party by name. The fact that the applicant was called upon to explain his position, by the learned High Court, it is submitted with respect, is of little consequence since, as submitted above, he was not personally a party to the writs and did not consider it proper to become one.
(b) Questions of mala fide raised in the writ petitions were essentially questions of facts. The learned Judge has recorded findings on the questions of fact which were not even raised in the petitions. Most of the findings are based on inferential basis"
(c) The tenor of the findings on "mala fide" and "bad faith" against the applicant, in the impugned judgment are of extraordinary nature and unfortunately (for the applicant) have received wide (adverse) publicity. The judgment is being playing up not only by the political adversaries of the applicant but also by opponents of the ruling Government party. Applicant has been subjected to an unamending trade in the Senate, National Assembly, Television, Radio and Press.
Members of Senate and National Assembly have moved motions against the applicant.
Newspapers have printed Editorials and articles.
Questions are put to the Prime Minister, applicant or other Ministers in Press Conferences.
Almost every day a news item/statement appears in the press condemning the applicant.
(d) Applicant humbly submits that the remarks against him were neither necessary, nor justified for disposing of the writ petition.
(e) This Honourable Court has been pleased to declare law relating to expunction of remarks in various judgments specially in relation to a person who is not a party to or witness in the proceedings. Applicant relies on the law declared in Malik Feroz Khan Noon's case, Abdul Hayee Khan's case and Mujahid-ud-Din's case.
24. Mr. K.M.A. Samdani, Advocate, the learned counsel representing the Government of Pakistan in three appeals has taken up the plea that there may have been at certain stages mishandling of the applications for registration of the Stock Exchange by the Corporate Law Authority but this was more due to its inexperience than any deliberate design or dictation from superior or otherwise.
The Minister of State could not, according to him, on the facts stated and found established, be accused of favouritism, nepotism and bias. For mere relationship by marriage with one of the promoters of the public company which was to be registered as a Stock Exchange, the Minister of State for Finance did not and could not stand disqualified from dealing with the matter nor could that relationship by itself be made the sole ground for inferring favouritism, nepotism and bias.
Similarly, by being in the past Director in a Public Company or President of the Chamber of Commerce, or a member of its Committees, the Minister of State for Finance did not in respect of other Directors or Members with whom he worked on such bodies, render himself disqualified to deal with their matter. Further, according to the learned counsel, the impugned judgment in so far as it took Stock Exchange to be like an investment company, the case in hand to be one of serious violation of Rules of Business or one of failure of the Secretary, Ministry of Finance, to take his difference of opinion with the Minister of State, to the Cabinet, showed lack of awareness of the law applicable. On merits, the learned counsel considered that the Summary submitted to the Minister of State for Finance contained all the relevant data on which Order could be passed and was passed.
25. In the written arguments which was required to be submitted to supplement the oral submissions, the learned counsel has brought out and explained the nature of acquaintance or relationship which the Minister of State had with the parties, the protection that he enjoyed under Article 248 of the Constitution and his qualification to act for and on behalf of the" Government.
26. As regards the first, the learned counsel has concluded as hereunder:-- "In short, both contestants being eligible, the Minister of State had the option to choose one or the other. If one group of contestants were better known to the Minister some of them being relatives or business associates, they did not stand disqualified on that, ground. If the order had been passed in favour of the other group, the first group would be equally justified to question the validity of the decision on grounds of discrimination. Therefore, if such grounds were to be entertained, the administrative authority would always be in a quandary and it would not be possible to take any decision in such a situation."
As regards the second, the learned counsel for the Government considers the provision regarding the unanswerability of the Ministers to the Courts contained in Article 248 of the Constitution to be absolute. Howsoever derelict the Minister, howsoever outlandish his approach, howsoever gross and determined the violation of law, the Minister remains, according to him untouched, unscathed, beyond the pale of Courts. This has been expressed as hereunder:-- In view of the protection provided to the Minister of State in terms contained in the said Article, no party or Court could implead him or subject him to the process of Court in relation to the exercise of powers and performance of functions of his office." "it is, therefore, humbly submitted that neither the kind of adverse remarks passed by the High Court could have been passed against the Minister of State in his absence nor his order in question could be set aside merely on the basis of those remarks because the Minister of State was not and could not be made a party to the proceedings."
As regards the third point, the learned counsel has submitted as hereunder: - "Neither the term Central Government/Federal Government nor the term Minister/Minister of State is defined anywhere in the Securities and Exchange Ordinance, 1969. "Federal Government" has not been defined under Article 260 of 1973 Constitution, either. This term has not expressly been defined even in Part III, Chapter 3 of the Constitution. However, if we read the Articles 91 and 92 of the Constitution and the Rules of Business framed under the authority (Article 99) of the Constitution, we come to the unescapable conclusion that the Minister of State is the Federal Government so far as the Ministry of Finance is concerned. The relevant provisions of the Rules of Business are rules 3 and 5."
27. Raja Muhammad Anwar, Advocate, representing the Islamabad Stock Exchange and its promoter, Mr. Amanullah and his associates, has in the three appeals taken up and reiterated his preliminary objections to the very competence of the Constitution Petitions. For example, about the two Constitution Petitions (Writ Petitions Nos. 655/1989 and 658/1989) it was stated that the two petitioners therein had not exhausted the departmental remedy, not even availed of it, though a right of revision or review was available. Reliance has been placed by him on the Tariq Transport Company, Lahore v. The Sargodha-Bhera Bus Service, Sargodha and others (PLD 1958 SC (Pak.)
437), Muhammad Aslam v. Member (Colonies), Board of Revenue, Punjab, Lahore and another (1988 SCMR1803) and Ahmad Ali and others v. Haji and others (1988 SCMR 1945). Secondly, it was contended that in none of the petitions the mala fide of fact alleged was pleaded with particularity and detail as is required under the law laid down by this Court in the Federation of Pakistan through the Secretary, Establishment Division v. Saeed Ahmad Khan and others (PLD 1974 SC 151).
According to him the ground pertaining to merits, law and jurisdiction, viz. Non-observance of requirement of section 5(3) of the Ordinance was neither taken up in the petitions, nor argued in the High Court, nor dealt with by the High Court. A point emphasised in the written submissions of the learned counsel is that once permission had been granted to Amanullah Group on 19th August, 1989, none had the locus standi to seek or obtain permission for setting up another Stock Exchange at Islamabad. On merits, the learned counsel supported the decision of the Minister of State, stating that he kept relevant consideration (local participation and avoidance of monopoly) fully in view while passing the Order. In the written submissions, the learned counsel took up the plea as hereunder:- "The grant of permission to the petitioners to establish Islamabad Stock Exchange was purely a matter within the administrative discretion of the Federal Government and the Minister was acting purely in his administrative capacity. As such his decision cannot be measured with the yardstick of judicial propriety."
On the question of hearing to the party whose application is refused, the following submission was made:-- "That before the learned High Court the respondents made no grievance that they were not heard in view of section 5, sub-clause (3) of the Ordinance. In any case, no prejudice is caused to them as summary prepared by the members and signed by the President CL.A. Gave the total facts which were placed before the Minister who passed the order. Hearing is only required if application for setting up Stock Exchange is disallowed, which is not the case here, and the Minister has passed the order that Islamabad Stock ''Exchange is to be established in the interest of the trade and also in the public interest and therefore, no hearing was necessary."
As regards the protection of Article 248 of the Constitution, the learned counsel took up the position as hereunder:-- "The Minister was only asked to explain his position regarding the allegations of his relationship with three sponsors. The Minister replied that whatever was done by him was in his official capacity as a Minister of State and since it was not his personal matter, he had nothing to add to the defence already taken by or on behalf of the Federal Government. Article 248 gives full protection to the Minister from the process of the Court. Article 199 is subject to the Constitution, therefore, no process could be issued to the Minister. This can be the only constitutional interpretation otherwise Article 248 will become redundant."
28. Mr. Abid Hasan Minto, Advocate, in his Written Arguments, submitted on behalf of the applicant/Minister of State for Finance, Mr. Ehsanul Huq Paracha, stated as hereunder:- "The applicant passed the order to which exception was taken in the Writ Petition on 19th August, 1989. At that time, the applicant had before him only three applications for registration under SEO.
The three applicants at that time were (i) Sarmad Maqsood-ul-Hussaini group, (ii) Major Aman Ullah group and (iii) Iqbal Zaki group. Raja Abdur Rahman and Ch. Mohammad Aslam were not before the applicant as they had not applied at the relevant time. It is, therefore, clear that the applicant did not deal with the cases of Raja Abdur Rehman and Ch. Muhammad Aslam at any stage of the proceedings before he passed the order dated 19th August, 1989."
As to why the case was submitted to the Minister of State and not disposed of at a lower level by an equally competent delegate, the explanation offered was as follows:- "In view of the fact that the Government had taken Policy decision for establishing the Stock Exchange at Islamabad and the Minister had from time to time given instructions to the CLA for expediting this matter. The Member CLA deemed it appropriate to keep the Minister informed of the various steps taken by it in this connection. It was in this background that the Member CLA did not take a final decision in this matter and referred the case to the Minister for a final determination."
As regards the merits of the decision taken, the following explanation was offered:-- "It may be mentioned that the policy of the Government all along had been to establish the Stock Exchange at Islamabad for development of and for encouraging the business and commercial community of the area. The Minister, who was in fact keenly interested in establishing Stock Exchange for Islamabad and Rawalpindi area and had been instrumental in formulating Government policy in that regard, was of the view that the best way of releasing the policy of the Government in practice was to encourage the local business community in the matter of establishing a Stock Exchange at Islamabad. Such a policy was consistent with the requirement of section 5(2) (ii) of the SEO. It may also be mentioned that the Minister himself belongs to the business and industrial community. He has been closely associated with the Rawalpindi Chamber of Commerce as its Member and Chairman for a long period of time. Keeping in view the policy of the Government and considering the statement contained in the Summary of 8th August, 1989, the Minister decided to grant registration to Amanullah's group which represented the local Trading Community and whose Members are leading industrial and trading parties of the area. Two of its members, namely, Feroze A. Cassim and Latif I. Jamal had extensive experience in running the Stock Exchange at Karachi."
The allegations of mala fide were met by making the following submission:- "It is submitted that the Minister's relationship with Khalid Waheed and his being a shareholder in Ferozsons Laboratories Ltd., is not denied. It is also not denied that he himself is a businessman and industrialist and having been associated with the Rawalpindi Chamber of Commerce, he knew most of the traders and industrialists in' the area. It is, however, submitted that such connection alone cannot be made basis of plea of malafide."
About the omission to implead him in the proceedings and the consequences of it, the following submission was made by him:~ The applicant was not made a party to the proceeding though it appears from the final judgment that it was his order which was struck down and it was his conduct, which was called in question (This is being submitted notwithstanding the plea of protection available to the applicant under Article 248 of the Constitution). If the High Court thought that the applicant .Has to show cause with regard to certain matters, it was only necessary that the Writ Petitioner should have been called upon to implead the applicant as a party to the case."
As regards the constitutional provisions (Article 248), the following interpretation of it was provided:- "Having made the submissions as above, the applicant submits additionally that in view of Article 248 of the Constitution, the action of the applicant in discharge of his duties as Minister is protected and that he is not answerable to any Court in that behalf."
On the question of mala fide, the following submission was made on behalf of the applicant:- "That the applicant relies on the Federation of Pakistan v. Saeed Ahmad Khan PLD 1974 SC 151 at page 171 and on Fauji Foundation's case PLD 1983 SC 457 for the view that mala fides cannot be implied unless it is alleged positively and is proved by substantial evidence. In the present case, the entire basis of the plea of mala fide is on assumption and on inferences supported only by conjectures."
29. Raja Muhammad Akram, Advocate, representing the writ petitioners Ch. Muhammad Aslam (W.P. No. 655/89), and Raja Abdur Rehman (W.P. No. 658/89) now arrayed as respondent in four appeals out of six (C.A.- Nos. 677/90, 678/90, 680/90 and 681/90), reiterated his grounds of mala fide of fact. In the written submission, the learned counsel has provided more factual details of it.
For example, he mentioned as follows:-- The notice is not difficult to ascertain if one goes to the details of the persons who composed this group and a respectful analysis is given below person-wise: A. (i) Mr. Khalid Wahid} of Ferozsons Laboratories
(ii) Mr. Feroz Qasim;} Limited Mr. Paracha has been the President and Chief Executive of the said Company viz. Ferozsons Laboratories limited since 1968 up to the time that he became the Minister of State. In the case reported as PLD 1986 SC 200 (Sh. Ehsanul Haq Paracha v. Mr. Wasim Sajjad) at page 205, Mr. Paracha himself produced this evidence. Even in the latest balance sheet of the Company, produced before the High Court in the List of Directors of the Company, Mr. Paracha is shown as a Director "on leave". Thus his connection with the Company is deep and long. Mr. Khalid Wahid has been the Chairman of this Company and Mr. Qasim, a Director. Thus these two persons have close business relations with Mr. Paracha. Also admittedly Mr. Khalid Wahid is a brother-in-law of Mr. Paracha."
More details were provided of the Rawalpindi Chambers of Commerce and Industry (RCCI) and its Committees and of the activities of its members to conclude as hereunder:-- "... The above enumeration will amply testify to the fact that all these persons i.e. Mr. Aman Ullah Khan, Mr. Parvez Aslam, Mr. S.M. Hassan, Haji Muhammad Yaqoob and Sh. Abdul Ghafoor were close associates of Mr. Paracha in the Rawalpindi Chambers of Commerce and Industry till he became a Minister of State in the Federal Government.
It is thus submitted that the only reason for Mr. Ehsanul Haq Paracha to give sanction for establishment of the Stock Exchange to the group sponsored by Mr. Aman Ullah Khan was that it consisted of his relatives, business partners and other close associates of the Rawalpindi Chambers of Commerce and Industry. Thus his act clearly amounts, both to nepotism and favouritism. Action of Mr. Ehsanul Haq Paracha was mala fides (malice in fact). Mala fides or bad faith means dishonest intention or corrupt motive."
Relying on the decision in The State of Punjab v. Ramji Lal and others (AIR 1971 SC 1228), Lal Komal Das v. The State of West Bengal (AIR 1975 SC 753), Noor Chand Sheikh v. State of West Bengal (AIR 1974 SC 2120) and S.G. Jaisinghani v. Union of India and others (AIR 1967 SC 1427) it was urged that strict proof of malafide cannot be insisted upon from the party who is at a disadvantage but can be as well inferred from improper or perverse exercise of discretionary power.
30. The learned counsel has attempted an interpretation of Article 248 of the Constitution in the context of Article 199, Article 4 and Article 184(3) and the principles of natural justice, in the following words:- Thus the restricted scope of Article 248 of the Constitution is only to the extent that a Minister or Minister of State may not be 'compelled' by the Court to make an answer to it for exercise of his power and performs all his functions or for any act done or purported to be done in the exercise of those powers and performance of those functions. However, if on the facts of a case it is proved to the satisfaction of the Court that the Minister has acted in a mala fide manner, abused his discretionary powers and the functions performed by him are only a colourable exercise of powers, the Court will be entirely justified in striking down those acts......... Thus the Court would be not only justified but be bound in law to give the Minister/Minister of State an opportunity of rebutting the allegations against him. This will not be any contravention of Article 248 of the Constitution which says that "a Minister shall not be answerable...."because once the allegations against him are brought to his notice, he may like to rebut them, or leave the matter there. If he does not rebut them, obviously he will be doing so at his. Own risk and his refusal to do so in spite of full opportunity would not affect the power of the Court in pronouncing upon the legality of his actions and the allegations of mala fides in fact....... It re-affirms the basic rule of interpretation that the protection provided to the Minister/Minister of State should be construed very strictly and also when the right of any person is not to be restricted by Article 248(1), his remedy can also not be restricted and the remedy is provided in Article 184(3) and Article 199 of the Constitution of Pakistan which Articles would have full play qua the actions of Minister assailed on the grounds Of mala fides in fact, abuse of power and discretion, and colourable exercise of power."
For reference and comparison, the learned counsel has mentioned Article-361. Of the Indian Constitution and decisions given in Union of India v. Jyoti Prakash Mitter A IR 1971 SC 1093 and H.H.
Maharajadhiraja Madhav Rao Jivaji Rao Scindia Bahadur and others v. Union of India AIR1971 SC 530.
31. Ch. Muhammad Hassan, Advocate, the learned counsel representing the writ petitioner Syed Sarmad Maqsood Al- Hussaini Group (W.P. No. 663/89) now arrayed as respondents in two appeals (C.A. Nos, 679/90 and 682/90) has also submitted his Written Notes/Arguments.
32. Mr. Sarmad Maqsood Al-Hussaini and his associates (writ petitioners in W.P. 663/89) represented by Ch. Muhammad Hasan, Advocate, claim to have applied on 20th November, 1984 through Secretary, Lahore Stock Exchange to the Capital Development Authority, for allotment of land for establishment of a Stock Exchange at Islamabad. This Group claims to be the first to have formally applied to Registrar, Government of Pakistan, Companies Registration Office, Rawalpindi and to the Corporate Law Authority on this subject. The Order rejecting its application did not either give any reasons for the same or disclose that the order of rejection was passed by the Minister of State or the Government. This group was denied the certified copy of the .Order and was not allowed to inspect the file on the ground that there was no provision of law authorising such inspection. This group filed a revision under section 26 of the Ordinance before Chairman, Corporate Law Authority which was heard and disposed of by the Secretary, Ministry of Finance.
From these facts and this background the learned counsel for the respondents Syed Sarmad Maqsood Al-Hussaini and his associates, for the purposes of argument inferred as hereunder:-- "........ Neither the Member, Corporate Law Authority nor the Chairman, Corporate Law Authority nor the Secretary Finance had the courage to disclose that the Minister of State for Finance had passed the order in the case and it establishes the extent of pressure upon them of the Minister to keep his order a secret, as otherwise at least the Secretary Finance ought to have-disclosed in his revisional order dated 4th December, 1989 (pages 11 to 13 of the Paper Book of additional documents) that Minister of State had passed the order and as such no revision was competent before him or the Chairman, Corporate Law Authority and that Sarmad Maqsood Al-Hussaini . And his group, if so advised, were to seek a review of the orders of the Minister of State as provided under section 26 of the Ordinance."
The fact that the Minister of State finally dealt with the case of sanction though Member, Corporate Law Authority was equally empowered to deal with the matter as a delegate has led the learned counsel representing the respondents to submit as hereunder:-- ".....a Stock Exchange is a potential source of economic and political power and Mr. Ehsan-ul-Haque Paracha, Minister of State (in spite of the fact that Mr. Shameem Ahmad, Member, Corporate Law Authority himself had the necessary powers of the Central Government delegated to him under S.R.O. No. 1024 (I)/81, dated 10th September, 1981 (page 130 of the Paper-Book of Additional documents) to allow or refuse application for registration of a Stock Exchange and Mr. Irtaza Husain, Chairman, Corporate Law Authority had also been delegated the revisional powers of the Central Government, managed a reference to him through the Chairman, Corporate Law Authority and took upon himself to pass the impugned order dated 19th August, 1989 not without larger eyes of personal reasons and motives to benefit himself and his dose relation, business associates and old colleagues in the economic and political Geld. This was a dear case of abuse and misuse of his powers-and status as Minister of State."
As regards the bar of Article 248 of the Constitution the learned counsel has taken up three grounds: First that notwithstanding the bar the illegal and mala fide acts of the exempted functionaries can still be declared as without lawful authority and of no legal effect. The other two grounds are expressed in the following words:-- "-as submitted earlier in para No. 4 (xii) Mr. Ehsan-ul-Haque Paracha, although hot formally impleaded as a party, was given full opportunity by the learned Judge of the High Court to explain the allegations and facts against him as is given to a party to the case but he failed to do so and as such no prejudice was caused to him. Secondly, even this formal defect of Mr. Ehsan-ul-Haque not having been impleaded as a party to the writ petitions in the High Court, stands amply rectified by the fact that Mr. Ehsan-ul-Haque Piracha has got himself impleaded in the Supreme Court.Itself in the six appeals from the impugned judgment of the High Court and has not even in his application for being impleaded as a party and also in his application for expunction of the remarks against him 'denied or explained the allegations against him in the Writ Petitions."
33. In order to decide the question of competency of the Writ Petitions filed in the High Court in a manner to deal with the preliminary objections taken by Raja Muhammad Anwar, Advocate, one has necessarily to go to the specific orders impugned in those Petitions. Ch. Muhammad Aslam (Writ Petitioner in W.P. No. 655/89) challenged the following order dated 16th September, 1989, reproduced in extenso:- "GOVERNMENT OF PAKISTAN, CORPORATE LAW AUTHORITY (CORPORATE REGULATION WING), STATE LIFE BUILDING, 7-BLUE AREA No. 2(205)CF/SE/89 Islamabad, the 16th September, 1989.
Ch. Muhammad Aslam, Flat No.1, Block 12-C, Jinnah Super Market, Islamabad.
SUBJECT: ESTABLISHMENT OF A STOCK EXCHANGE AT ISLAMABAD Dear Sir, Please refer to your application dated 26th August, 1989, for permission for opening of a stock exchange at Islamabad.
It is advised that No-Objection for the incorporation of a company limited by guarantee for establishment of a stock exchange at Islamabad has already been granted to one of the sponsors group. As such your application cannot be entertained for consideration.
Yours faithfully, (Sd.)
(M. JAVED PANNI), Deputy Chief."
34. Raja Abdul Rehman (writ petitioner in W.P. 658/89) had approached the High Court at a stage when his application for the registration of a Stock Exchange was not being entertained or attended to by the Corporate Law Authority or its Member. No order was passed or communicated to him but in the comments submitted, the Corporate Law Authority took up the plea as hereunder:-- "Application from Raja Abdul Rehman was received by the CLA on 20th November, 1989. The application could not be entertained as the Government had approved the group lead by Mr. Amanullah Khan for establishment of a Stock Exchange at Islamabad on 19th August, 1989.....The application of petitioner could not be entertained as only one stock exchange could be established at Islamabad."
35. In the third writ petition (W.P. No. 663/89), the following communication Was received by the writ petitioners which is reproduced in extenso:- GOVERNMENT OF PAKISTAN, CORPORATE LAW AUTHORITY (CORPORATE REGULATIONS WING), STATE LIFE BUILDING, 7-BLUE AREA, ISLAMABAD No. 2(181)/CF/SE/87, Dated the 27th August, 1989.
Mr. Sarmad Maqsood Al-Hussaini, Promoter, Islamabad-Rawalpindi Stock Exchange (Guarantee) Limited (Proposed), C/o Lahore Stock Exchange, 17-Bank Square, Lahore.
SUBJECT: ESTABLISHMENT OF A STOCK EXCHANGE AT ISLAMABAD.
Dear Sir, Please refer to your application dated 28th January. 1989 for registration of Islamabad- Rawalpindi Stock Exchange (Guarantee) Limited (Proposed) under section 5 of the Securities and Exchange Ordinance, 1969.
2. In the light of the hearing held on 10th July, 1989 and the information furnished by you in respect of your application, it has not been possible to agree to allow registration of the company sponsored by you along with others for establishment of a stock exchange at Islamabad.
Yours faithfully, (Sd.)
(M. JAYED PANNI)
Deputy Chief."
He, alongwith his associates, preferred a Revision Petition under section 26 of the Ordinance (Securities and Exchange Ordinance, 1969 (Ordinance No. XVII of 1969), which was disposed of by the Finance Secretary on 4th December, 1989 treating the Order of rejection to be of Corporate Law Authority and a revision against it being competent under section 26 of the Ordinance.
36. The scheme of the Ordinance clearly shows that the Corporate Law Authority does not find a mention in it. It is mentioned and find a place in the definition of "Authority" contained in Rule 2 (a) of the Securities and Exchange Rules, 1971. The Chairman, 'Corporate Law Authority' has also been delegated, under section 28 of the Ordinance, all powers and functions of the Federal Government under sections 26, 27 and 29 of the Ordinance, (Notification dated 10th September, 1981 refers). The Chairman, as a delegate could, therefore, exercise the powers of the Government where an Order was passed by an authority subordinate to the Government (section 26). The Chairman, Corporate Law Authority has also under this delegation, power to constitute an advisory committee (section 27) and to grant "by Notification in the official Gazette" exemption" to person or class of persons or any security or class of securities or any transactions or class of transactions from the operation of all or any of the provisions" of the Ordinance (section 29). Therefore, the Chairman or the Corporate Law Authority could not deal with the applications under section 5 of the Ordinance. Power under section 5 (all powers of Government excepting the above enumerated) was delegated to the Member, Corporate Law Authority (Corporate Law Wing).
37. In the first and the third Writ Petitions, the intervention of Corporate Law Authority in the matter of entertaining and also of disposing of an application under section 5 of the Ordinance was wholly without jurisdiction finding no support from the statute. Such orders, therefore, could on the law laid down by this Court be challenged by recourse to constitutional jurisdiction without availing of or exhausting the departmental remedies. The decisions of the Supreme Court permitting challenge of Orders completely lacking in jurisdiction and lawful authority are Messrs S~A Haroon and others v. The Collector of Customs, Karachi and Federation of Pakistan PLD 1959 SC (Pali) 177, It.-Col Nawabzada Muhammad Amir Khan v. The Controller of Estate Duty and others PLD 1961 SC 119, Nagina Silk Mill, Lyallpur v. The Income-tax Officer, A- Ward, Lyallpur and another PLD 1963 SC 322 and Abdullah Muhammad Peer Mohamed v. Karachi Municipal Corporation and 3 others PLD 1971 SC 130.
38. As regards the second Writ Petition, it was a case where a refusal to entertain the application had taken place on a ground not warranted by law. In the discussions that will follow with regard to the provisions of the Ordinance in the context of the Fundamental Right with regard to profession and trade, the ground that there exists one Stock Exchange, is no ground to refuse to entertain the application with regard to subsequent one. Therefore, if the handling of the application by the competent authority is assumed, even then the ground given for refusing the consideration of the application is wholly unjustified. The fact remains that the Writ Petitioner in that case was not informed at all about the fate of the application. The disclosure of the reason had taken place during the hearing of the Writ Petition in the High Court.
39. There are four legal concepts, the lack of clarity and precision in comprehending which, has led to serious errors in the impugned judgment. The oral arguments and those submitted in writing have not been so useful as they could have been if these concepts had been kept in view and proper place given to them. The first is about the functions of a Stock Exchange. The impugned judgment takes it to be like any other investment company capable of minting money quickly, exorbitantly, recklessly and at the cost of others. The second concept which required attention was that of a public company limited by Guarantee, which the Islamabad Stock Exchange happened to be. The third concept, and much confusion has resulted from it, is the legal identity of the sponsors, promoters and directors of a public limited company and of the company itself. In the impugned judgments, the sponsors, promoters, and Directors of the Company have been taken to be the proprietors or owners of the company, they and the company being interchangeable persons, one representing the other. Finally, the provisions of the Ordinance had to be understood, implemented and expounded in the background of Fundamental Right 18 relating to freedom of trade, business or profession which was effectively in force when the applications were made, the impugned orders were passed and even when the Writ Petitions were filed and came to be decided.
40. In the Ordinance, "Stock Exchange" has been defined in clause (m) of section 2 as hereunder- " 'Stock Exchange' means any person who maintains or provides a market place or facilities for bringing together buyers and sellers of securities or for otherwise performing with respect to securities the functions commonly performed by a Stock Exchange, as that term is generally understood, and includes such market place and facilities."
A somewhat general definition of Stock 'Exchange' is contained in 73 American Jurisprudence, 2nd Edition in the following words:-- "An exchange is a voluntary association (Nicol v. Ames, 173 US 509, 43L Ed. 786, 19 S Ct 522) or corporation organised for the purpose of furnishing to its members a convenient and suitable place to transact their business, of promoting uniformity in the customs and usages of merchants, of inculcating principles of justice and equity in trade, of facilitating the speedy adjustment of business disputes, of acquiring and disseminating valuable commercial and economic information, and generally of securing to its members the benefits of co-operation in the furtherance of their legitimate pursuits."
In the McGraw-Hill Dictionary of Modern Economics (Third Edition) at page 440 'Stock Exchange' has been described as hereunder: ~ "An organised market-place in which securities (mainly stocks) are brought and sold. In the United States, the term refers to eleven centrally located trading places where brokers and dealers regularly meet to transact business for their own accounts and for their customers. These stock exchanges must register with the Securities and Exchange Commission (SEC) as national securities exchanges unless they have been specifically exempted by the SEC. As of December 1982, there were eleven national securities exchanges in the United States; one stock exchange was - exempted from registration. The SEC regulates the stock exchanges, the securities listed on the exchanges, and the brokers and dealers doing business on the exchanges. The New York Stock Exchange is the largest stock exchange in the United States, accounting for about 80% of the share-trading volume and nearly 84% of the dollar volume of trading on all national securities exchanges."
41. The role of 'Stock Exchange' in the economy of the country was considered in an Indian case of Madhubhai Amathalal Gandhi v. Union of India AIR 1961 SC 21, in the following words:- "The history of stock exchanges in foreign countries as well as India, shows that the development of joint stock enterprise would never 'have reached its present stage but for the facilities which the stock exchanges provided for dealing in securities. They have a very important function to fulfil in the country's economy. Their main function, m the words of an eminent writer, is "to liquify capital by enabling a person who has invested money in, say, a factory or a railway, to convert it into cash by disposing of his share in the enterprise to someone else". Without the stock exchange, capital would become immobilised. The proper working of a stock exchange depends upon not only the moral stature of the members but also on their calibre. It is a trite saying that a jobber or dealer is born and not made. In the words of the same author, a jobber must be a man of good nerve, cool judgment, and ready to deal under any ordinary conditions, and he must be a man of financial standing, considerable experience, with an understanding of market psychology. There are three modes of dealing in shares and stocks, namely, (1) spot delivery contract, i.e., a contract which provides for the actual delivery of securities on the payment of a price thereof either on the day of the contract or the next day, excluding perhaps the period taken for the despatch of the securities or the remittance of money from one place to another; (2) ready delivery contract, which means a contract for the purchase or sale of securities for the performance of which no time is specified and which is to be performed immediately or within a reasonable time; (3) forward contracts, i.e., contracts whereunder the parties agree for the performance at a future date. If the stock exchange is in the hands of unscrupulous members, the second and third categories of contracts to buy or sell shares may degenerate into highly speculative transactions or, what is worse, purely gambling ones. Where the parties do not intend while entering into a .Contract of sale or purchase of securities that only difference in prices should be paid, the transaction, even though speculative, is valid and not void, for "there is no law against speculation as there is against gambling". But, if the parties do not intend that there should be any delivery of the shares but only the difference in prices should be accounted for, the contract, being a wager, is void. More often, than, not it is difficult for a Court to distinguish one from the other, as a wagering transaction may be so cleverly camouflaged as to pass off as a speculative transaction. These mischievous potentialities inherent in the transactions, if left uncontrolled, would tend to subvert the main object of the institution of stock exchange and convert it into a den of gambling which would ultimately upset the industrial economy of the country."
42. Raja Muhammad Akram, Advocate has by reference to Edeard D. Page (Bankrupt) v. Charles W.
Edmunds (47 U.S.L.Ed 596), Citizens National Bank of Cincinnati v. Peter W. Durr (66 U.S. Led. 107) and para 12, page 574 of 73 American Jurisprudence (2nd ed), tried to demonstrate that membership of a stock exchange, a seat on the stock exchange is property, a very valuable one for that matter, capable of being transferred or disposed of on certain conditions. True, but the membership of Stock Exchange is not limited to promoters, sponsors or Directors. In what manner the sponsors, the Directors and the promoters are more privileged or distinguished as against the members is not shown.
43. A Company, limited by guarantee, as is the Stock Exchange in dispute, is characterised by the following traits as noted by Robert R. Pennington, in the Company Law (Fourth Edition) at page 666:-- "A company limited by guarantee is one whose memorandum of association contains an undertaking by its members to contribute a specified amount towards the payment of its debts and the expenses of winding it up if it is wound up while he is a member or within one year after he ceases to be a member. The rest of the companies memorandum is similar to that of a company limited by shares, and in particular it states that the liability of its members is limited------------- -- Companies limited by guarantee are mostly formed for charitable, social or other non-trading.
Purposes, and it is not uncommon for their articles to provide that certain persons shall be members of them ex officio. This does not make such persons members of the company for the purpose of company law, however, and so unless they have specifically requested that they should be treated as ordinary members and their names have been entered on the company's register of members, they are not liable to contribute toward payment of the company's debts, nor may they exercise the rights of members, such as attending general meetings and voting."
44. It is necessary in the context of the dispute raised by the -- Writ Petitioners to keep in view the distinction between a Director, a Promoter, a sponsor of the company and the company itself.
There are a series of decisions, some of them of this Court, which clearly deal with this question, the basic law being contained in Aron Salomon (Pauper) v. A. Salomon and Company Limited 1897 A.C.
22, followed by Aveline Scott Ditcham v. James J. Miller AIR 1931 Privy Council 203, and E.B.M.
Company Ltd. v. Dominion Bank AIR 1937 Privy Council 279. In /Aram Bus Service and others v. Board of Revenue, West Pakistan and others PLD 1963 SC 564, the following summation of the law occurs at page 595:- "If authority is needed for this proposition, reference may be made in the decision of the House of Lords in England in the case of A. Salomon and Company Limited v. Aron Salomon 1897 A.C. 22, where Lord Macnaghten observed that "the company is at law a different person altogether from the subscribers to the memorandum; and, though it may be that after incorporation the business is precisely the same as it was before, and the same persons are managers, and the same hands receive the profits, the company is not in law the agent of the subscribers or trustees for them. Nor are the subscribers as members liable, in any shape or form, except to the extent and in the manner provided by the Act". This view has been consistently followed in England and even adopted by the Judicial Committee of the Privy Council, in the case of Avolin Scott Ditcham v.
James J. Miller AIR 1931 P.C. 203, where the general notion that a private company need not be regarded as a corporation distinct from the person composing it was dispelled in the following words:-- "It is necessary in their Lordships' opinion that this view should be once for all dispelled. The duties and responsibilities of the liquidator are as serious in the liquidation of a private company as any other."
Again in another case from Ontario the view taken by the House of Lords in the case of A. Salomon & Co. Ltd. v. Aron Salomon was reiterated and it was pointed out in the case of E.B.N. Company Limited v. Dominion Bank AIR 1937 PC 279, that:- "They believe it to be of supreme importance that the distinction should be clearly marked, observed and maintained between an incorporated company's legal entity and its actions, assets, rights and liabilities on the one hand, and the individual shareholders and their actions, assets, rights and liabilities on the other hand."
In this view of the matter it is idle to suggest that the grant of the permit in the name of the company was really a grant in favour of the individual applicants who had agreed to promote (he company. If that had really been so then a transfer of the permit would have had to be effected, in accordance with the provisions of section 61 of the Act, in favour of the company with the permission of the Regional Transport Authority. No such transfer of the permit has so far been made, for the order of the Transport Authority clearly shows that the permit was in fact granted in the name of the respondent "Ittehad Transport Service Company Limited."
45. When the Ordinance was promulgated, the Fundamental Rights were suspended and the Constitution of Pakistan itself was kept in abeyance. However, when the applications were dealt with, Fundamental Rights were in force. Fundamental Right 18 provides as hereunder:-- "18. Freedom of trade business or profession.~Subject to such qualifications, if any, as may be prescribed by law, every citizen shall have the right to enter upon any lawful profession or occupation, and to conduct any lawful trade or business: Provided that nothing in this Article shall prevent-
(a) the regulation of any trade or profession by a licensing system; or
(b) the regulation of trade, commerce or industry in the interest of free competition therein; or
(c) the carrying on, by the Federal Government or a Provincial Government, or by a corporation controlled by any such Government, of any trade, business, industry or service, to the exclusion, complete or partial, of other persons."
Its equivalent in the Indian Constitution is Fundamental Right 19(l)(g).
46. Section 3 of the Ordinance provides as hereunder:- "3. No Stock Exchange to operate without registration.-No Stock Exchange shall operate or carry on its functions, and no person shall use or utilize, for the purpose of any transaction or dealing in any security, the facilities or services of a Stock Exchange, unless such Stock Exchange is registered under this Ordinance."
Section 5 which deals with 'registration', is as hereunder:-- "(1) Any Stock Exchange which is eligible for registration under section 4 may, in such form and manner as may be prescribed, apply to the Central Government for registration.
(2) The Central Government, if it is satisfied, after such inquiry and after obtaining such further information as it may consider necessary,-
(i) that the Stock Exchange is eligible for registration; and
(ii) that it would be in the interest of the trade and also in the public interest to register the Stock Exchange; may grant a certificate of registration to the Stock Exchange.
(3) No application for registration shall be refused except after giving the applicant an opportunity of being heard."
Section 4 provides that a "Stock Exchange which fulfils such conditions or complies with such requirements as may be prescribed to ensure fair dealings and to protect investors shall be eligible for registration under this Ordinance"
47. We have been told that the Government has not prescribed the eligibility conditions so far by declaration of its Policy in the matter or by framing rules or regulations, under the Ordinance.
Hence, any person desirous of embarking upon this business, profession or trade is at a loss to determine what are the requirements. The application form prescribed under- the Securities and Exchange Rules for the purpose is an elaborate document directed at obtaining all the relevant information from an applicant for a registration of a Stock Exchange. In this background, the right of hearing prescribed in sub-section (3) of section 5 of the Ordinance acquires importance.
48. The business of dealing in securities has been considered all over the civilised world affected with public interest and its regulation and control has been ensured in United Kingdom by Prevention of Fraud (Investment) Act, 1958 and in India by Securities, Contract Regulation Act, 1956.
This duty of registration of Stock Exchange is a purely administrative function. It is neither quasi- judicial nor judicial. There is no lis between the parties. There is no adversary hearing. There is no adjudicatory exercise undertaken in determining the satisfactions of the conditions of eligibility which are yet to be prescribed, had to be determined and thereafter the element of public interest.
Nowhere the law provides that if there is one Stock Exchange, there will be not another. To that extent, the view taken by the Corporate Law Authority that any application received had to be put in the cold storage without hearing the applicant, without examining his eligibility and merit as supported by Raja Muhammad Anwar, Advocate, is untenable and amounts to refusal to exercise jurisdiction and duties conferred by the statute. Unless a policy decision "is taken and is either entrenched in the rules or the Regulations that such restriction will exist and apply, it cannot be imported..
49. The provisions of the Ordinance regarding registration of Stock Exchange being regulatory in nature, concerning the Fundamental Right of freedom of trade, business or profession have to be construed strictly and beneficially. For that reason, wherever a hearing has been provided it has to be meaningful wherever the competent authority has been given the power of refusing registration after hearing, the reason for it has to be recorded and communicated to the party adversely affected so that it can promptly and meaningfully secure its remedies of revision or review.
50. In the impugned judgment, the learned Judge confined his attention only to allegations of mala fide, the proof thereof and the vitiation of the impugned order of the Minister of State on account of it. Cognizant of the bar of Article 248 of the Constitution, the Court exacted the answerability of the Minister by recourse to the principles of natural justice- as if the provisions of natural justice are to prevail over the express provision Of the Constitution. The bar of Article 248 is couched in the following words:- "248. Protection to President, Governor, Minister, etc.-(l) The President a Governor, the Prime Minister, a Federal Minister, a Minister of State, the Chief Minister and a Provincial Minister shall not be answerable to any Court for the exercise of powers and performance of functions of their respective offices or for any act done or purported to be done in the exercise of those powers and performance of those functions: Provided that nothing in this clause shall be construed as restricting the right of any person to bring appropriate proceedings against the Federation or a Province.
(2) No criminal proceedings whatsoever shall be instituted or continued against the President or a Governor in any Court during his term of office.
(3) No process for the arrest or imprisonment of the President or a Governor shall issue from any Court during his term of office.
(4) No civil proceedings in which relief is claimed against the President or a Governor shall be instituted during his term of office in. Respect of anything done or not done by him in his personal capacity whether before or after he enters upon his office unless, at least sixty days before the proceedings are instituted, notice in writing has been delivered to him, or sent to him in the manner prescribed by law, stating the nature of the proceedings, the cause of action, the name, description and place of residence of the party by whom the proceedings are to be instituted and the relief which the party claims."
51. Raja Muhammad Akram, Advocate has referred to a number of decisions from the Indian jurisdiction wherein the Courts have dealt with the allegations of mala fide of fact against the Ministers and/or Chief Ministers and in this context particular reference can be made of C.S. Rowjee and others v. The State of Andhra Pradesh and others 'AIR 1964 SC 962, wherein mala fide against the Chief Minister was alleged and found proved. The Indian decisions are not relevant in our context because the Constitution of India (Article 361) grants such a protection only to the Governor and the President and not to the Chief Minister, Ministers or to Ministers of State. The law laid down by this Court has been consistently that no adverse comments are to be made against a statutory functionary unless it is impleaded as a party in the proceedings or appears as a witness in the proceedings. The Lahore High Court in its judgment in the matter of expunction of remarks from a judgment, laid down the law in PLD 1950 Lahore 34, at page 41 as hereunder:- "Disparaging remarks in a judgment, whether they amount to a verdict or not, imputing crime, moral delinquency or improper conduct to a person are a constant source of uneasiness and irritation to him. They lower him in the public estimation and haunt him like a specter for life, invariably visiting him whenever he enters the precincts of a Court of Justice as a witness or a party. Being fraught with such serious consequences they should only be made where any hesitation or reluctance in making them would impede the ends of justice.- Persons making or publishing such remarks, whether true or not, are not liable for libel or for defamation because in the former case they are protected by common law and in the latter by statute, the reason being that unless Judges had the power to make bold and fearless comments on the evidence given before them they would not be able effectively to discharge their functions. These two conflicting considerations must always be present to the mind of a Judge whenever he is called upon to criticise the character and conduct of a person. On the one hand he should weigh the gravity of the damage that his remarks would cause to the person concerned and on the other he must realise that he owes a duty to the parties, the public and the appellate Court of stating in full his reasons for the view he takes of the evidence. It is again a rule, as ancient as the law itself and based on common sense and fairplay, that when a Judge decides to condemn a man whether a party or witness the facts on which condemnation is intended to be based must be put to him so as to give him an opportunity to explain the condemnatory facts and thus, to remove the Judge's suspicion about his conduct. A Judge who condemns a man unheard acts as unfairly as if he were to convict a man without hearing him in his defence. Persons who are attributed ignominious or improper conduct in judicial determinations, though they were neither parties nor witnesses in the cause, have, therefore, a just cause for complaint against this unfair treatment and the law reports are full of precedents where in the circumstances mentioned High Courts expunged the offending remarks. The need for caution in making such remarks is much greater where the person disparaged is a public servant acting in his own independent sphere. In such cases it is absolutely necessary that the Judge's suspicion about his conduct be communicated to him and an opportunity given to him to show cause against the view that the Judge is inclined to take of his conduct. If the officer concerned has not at all appeared before the Judge and has had no opportunity to vindicate himself, the Judge acts most unfairly, if not actually without jurisdiction, in commenting adversely on his conduct. And a Judge who makes his position in Court a mere pretext to condemn another person for personal reasons does not act as a Judge at all; he is a mere party who has arrogated to himself the position of a Judge."
This decision was followed by the Lahore High Court in Sh. Inayatullah Butt v. Cantonment Board, Rawalpindi and another PL D 1957 Lahore 583 in the following words:-- "It is well-settled' that Courts should say nothing that is likely to prejudicially affect a person without hearing that person. The reason for this rule is that remarks made by Courts are likely to be used by interested persons against the person about whom they were made, and consequently it has been laid down in a large number of cases decided by High Courts that disparaging remarks should not be made by Courts against persons who are neither parties nor witnesses before them. The petitioner was not a party to the suit and the fact that his wife was the plaintiff does not, to my mind, make any difference for our present purpose. The petitioner was not a witness either and condemning him without hearing him offends against the salutary rule followed by Courts in this respect. If a Court makes disparaging remarks against a person who is neither a party nor a witness in the case, it can be said to have exercised a jurisdiction not vested in it by law or at least to have acted illegally or with material irregularity in the exercise of its jurisdiction."
In the case of Malik Firoz Khan Noon, Prime Minister's House, Karachi v. The State PLD 1958 SC (Pak.)
333, the law laid down by the Lahore High Court was emphatically reiterated in the following words:- "In all cases which have come before the Courts, where an aggrieved person asks for expunction of objectionable remarks made against him in -a judgment, one point has consistently been emphasized, namely, that a Judge ought not to make any disparaging remarks against a person who is neither a party nor a witness in the case."
52. The insistence of the Courts to have the person against whom the remarks are made either as a party or as a witness is intelligible. In both the cases it offers the fullest opportunity to the person concerned as well as to the Court to take a full and a complete view of the conduct alleged before adjudging its correctness or incorrectness by imputing personal motives. In the case in hand, the learned Judge proceeded on the assumption, without examining its correctness, that on the findings which he was going to record against the Minister of State, he could not be impleaded as a party in view of Article 248 of the Constitution. It was not the pleading alone which prompted the Court to obtain satisfaction of the requirement of natural justice but it was the amplitude of mala fide as brought out during the course of the arguments which prompted the learned Judge to send a copy of the pleadings for getting the comments of the Minister of State. In the first place, what the Constitution expressly prohibits could not be indirectly achieved by recourse to the principles of natural justice. The principles of natural justice yield to a Constitutional provision and what the Constitution prohibits, directly and expressly, could not be accomplished indirectly and by implication. In the second place, it is the argument which impressed the learned Judge more than the pleadings; and the arguments were not communicated to the Minister of State for comments.
He was, therefore, taken into confidence with regard to only a part of the proceedings in Court leading to the prejudicial observations.
53. On merits too, the conclusions are not quite sound. If Mr. Khalid Wahid is a relative of his; if such a relative happened to be a Director of public limited compare (Ferozsons Ltd.) and also promoter of the Islamabad Stock Exchange, that did not transfer the taint or relationship of Mr. Khalid Wahid to the public company limited by guarantee, in view of the legal identity of the company and its promoter and Director being quite distinct and separate. Similar is the position with regard to other persons, who have been Directors or associates on Trade. Organisations like Rawalpindi Chamber of Commerce and Industry or other Public Companies. Even on the facts established, and in view of the public company or Trade Organisation status intervening in every case, such a relationship or contact cannot be termed as taint attaching to a Minister of State preventing him from taking a decision with regard to administrative matter having predominately a policy content.
54. The law laid down by the Courts in Pakistan is that the expression "exercise of powers and performance of functions of their respective offices or for any act done or purported to-be done in the exercise of those powers and performance of those functions" has to be given a very strict meaning. This Article (Article 248) of the Constitution came up for consideration in Ch. Zahur Ilahi v.
Mr. Zulfikar Ali Bhutto and 2 others PLD 1975 SC 383, where the following observations were made:-- "We are also in agreement with the learned counsel for the petitioners that the immunity provisions must, in accordance with the accepted principles of interpretation, be construed strictly and unless persons claiming the immunity come strictly within the terms of the provisions granting the immunity, the immunity cannot be extended. The immunity is in' the nature of an exception to the general rule that no one is above the law. It is, nevertheless, not possible to lay down any hard and fast rule as to what is or what is not within the powers and functions of a Minister or a Prune Minister but each case will have to be judged on its own facts and circumstances."
In the case of H.B. Gill and another v. The Fang AIR 1948 Privy Council 128, while considering such protective provisions, the Privy Council laid down the law as hereunder:-- "Their Lordships, while admitting the cogency of the argument that in the circumstances prevailing in India a large measure of protection from harassing proceedings may be necessary for public, officials cannot accede to the view that the relevant words have the scope that has in some cases been given to them. A public servant can only be said to act or to purport to act in the discharge of his official duty, if his act is such as to lie within the scope of his official duty. Thus, a Judge neither acts nor purports to acts as a Judge in receiving a bribe, though the judgment which he delivers may be such an act: nor does a Government medical officer acts or purport to act as a public servant in picking the pocket of a patient whom he is examining, though the examination itself may be such an act. The test may well be whether the public servant, if challenge, can reasonably claim that, what he does, he does in virtue of his office."
55. More recently, in the State v. Zia-ur-Rahman and others PLD 1973 SC 49, the following law was laid down by the Supreme Court:- It will thus, be seen that, so far as this Court is concerned, it has consistently held the view that a mala fide act stands in the same position as an act done without jurisdiction, because, no Legislature when granting a power to do an act can possibly contemplate the perpetration of injustice by permitting, the doing of that act mala fide I am, therefore, of the opinion that the words "purported to be done or done in the purported exercise of powers" cannot cover acts which were not done by persons empowered under the statute or the legislative measure to so act or were clearly beyond the scope of the powers given by the statute or were done malafide or by practising a fraud upon the statute for a colourable purpose."
In the case of Fauji Foundation and another v. Shamim-ur- Rehman PLD 1983 SC 457 it was held that "mala fides is not different from other imputations such as crime, moral delinquency and improper conduct, and the rule for establishing it is also the same."
56. If mala fide of fact was pleaded by a party then it had to decide for itself whether on the material with it, the Minister has to be impleaded in spite of the protecting provisions of the Constitution; because if his act does n6t fall within the purview of the provision so interpreted, then he can be impleaded as a party and all the objections to such impleadment dealt with in the proceedings. In the absence of the party, no finding with regard to malafide of fact (as distinguished from malafide of law) can be recorded, should be recorded and should have been recorded. Recourse to the principles of natural justice to overcome the prohibition contained in Article 248 of the Constitution is not permissible.
57. The order passed by the Minister of State has three infirmities. The first was that he did not grant a hearing to the applicant when he was refusing registration. The second was that he did not record any reasons exercising satisfaction of the requirements contained in sub-section (2) of section 5 of the Ordinance namely, the eligibility and the public interest and the interest of the trade. Thirdly, the order passed by the Minister of State was not communicated in proper-form for enabling the applicants to seek appropriate relief against the refusal.
58. As regards the first defect, sub-section (3) of section 5 of the Ordinance itself provides that no application for registration shall be refused except after giving the applicant an opportunity of being heard. The Minister of State did not hear anyone of the parties whose application was being refused. The law on the subject has been very clearly laid down by this Court in the case of Collector, Sahiwal and 2 others v. Muhammad Akhtar 1971 SCMR 681 in the words that follow:- "The Courts in Pakistan have, however, taken the view that where the giving of a notice is provided for by the statute itself, then the failure to give such a notice is fatal and cannot be cured. But where there is no specific statutory provision and reliance is only placed on the principles of natural justice and audi alteram partem, there if at some stage or other the person aggrieved has been given a fair opportunity of representing his point of view, then the defect, if any, in the initial order may be deemed to have been cured. Thus, in the case of Muhammad Ishaq v. Dr. Saiduddin Swaleh PLD 19S9 Kar. 669 it was pointed out that each case will have to be determined on its own facts. If the statutory provision for notice be of a mandatory nature, then an order without any notice would be wholly void; but if there be no such provision or if the provision be merely of a directory nature, then, wherever a violation of this principle of natural justice is alleged, the Court may call upon the partyalleging the same to prove prejudice before it sets aside the order. Such prejudice would obviously not be there if it is found that the party had been actually given a full hearing by the appellate or revisional authority and afforded every opportunity of showing cause against the allegations made. To the same effect is the view of the Peshawar High Court in the case of Otarsadda Sugar Mills Ltd. v. Government of Pakistan PLD 1971 Pesh. 210.
This Court, too, has consistently taken the same view vide-, The Commissioner of Income-tax, East Pakistan v. Fazlur Rahman PLD 1964 SC 410, Abdul Latif Niazi v. Government of West Pakistan PLD 1967 SC 62 and Mansab Ali v. Amir PLD 1971 SC 124............ The principle so far as this country is concerned, is accordingly well- settled that where notice required to be given by the statute is mandatory notices, then the failure to comply with such mandatory requirement of the statute would render the act void ab initio as being an act performed in disregard of the provisions of the statute. Furthermore any further action taken on the basis of such a void order would also be vitiated and the defect at the initial stage would be incurable by a hearing at a subsequent stage."
59. Raja Muhammad Anwar, Advocate, the learned counsel for the Islamabad Stock Exchange/Amanullah Group has contended that the statutory requirement of a hearing was amply satisfied in this case as the hearing had admittedly been granted to all the applicants in the first round by the Member, Corporate Law Authority who also happened to be a delegate exercising the same powers as was available under section 5 of the Ordinance to the Government. In support of this submission he has relied on the cases of the Tariq Transport Company PLD 1958 SC (Pak.) 437 and Franklin and others v. Minister of Town and Country Planning (1948) Appeal Cases (House of Lords) page 87. In the case of Tariq Transport Company, substantial compliance with the provisions of the law had taken place inasmuch as the party had been granted a hearing by a statutory functionary. The objection was that he was not heard in adversary proceedings in presence of the other party.. In the case of Franklin and others, the Minister had conferred an express authority on the Inspector to hold a public inquiry. The report submitted contained all the submission of the objectors including a complete transcript of the proceedings. There was no authorisation by the Minister of State, in the case, in hand, to the Member, Corporate Law Authority, nor has the Member conducting the hearing in this case in the first round recorded under the signatures the result of the hearing. He did not act either as a functionary or as a delegate. Instead, the Chairman, Corporate Law Authority who could administer the law but enjoyed no statutory position as such in that matter had submitted the report about the hearing which was held by someone else. Therefore, clear non-compliance had taken place with a statutory provision which is salutary and mandatory because the restrictions and the controls envisaged by the Ordinance impinge on the Fundamental Right of a citizen.
60. In according permission, the Minister of State has recorded no reason. In this context, case of Securities and Exchange Commission v. Chenery Corporation (318 US 80-100 at 94) is relevant wherein it was observed that:- "In either event the orderly functioning of the process of review requires that the grounds upon which the administrative agency acted be clearly disclosed and adequately sustained. 'The administrative process will best be vindicated by clarity in its exercise.'."
This observation made in 1942 led to the incorporation of that requirement in section 557 in the United States Administrative Procedure Act, when it came to be enacted in 1946. It reads as under:- - "..... .All decisions, including initial, recommended, and tentative decisions, are a part of the record and shall include a statement of-
(a) findings and conclusions, and the reasons or basis therefor, on all the material issues of fact, law, or discretion presented on the record; and
(b) the appropriate rule, order, sanction, relief, or denial thereof."
61. Section 26 of the Ordinance provides the remedy of a revision to the Central Government upon an application being made by any aggrieved person within ninety days from the date of such order. Sub-section (2) of the same section provides a period of six months for review from the date of any order passed by the Government on an application being made to it. Both these provisions are remedial and beneficial to a person who is denied registration under section 5(3) and kept out' of the trade or business. In order to. Make the exercise of these remedies meaningful and purposive, it is necessary that he is communicated in proper form and promptly, the result of his application containing the reasons for refusal.
62. Not with a view to interpret or to limit or to extend the language of the provisions contained in the Ordinance but with a view to understand how others more entrenched in rule of law, have dealt with the same situation and the same problems, one can refer to similar legislation elsewhere. As pointed out, in the United Kingdom, Prevention of Fraud (Investment) Act, 1958, makes the matter of grant of registration referable to a Tribunal whose recommendation is made bidding on the Board of trade which administers the law. In India, in the Securities Contracts (Regulation) Act, 1956, instead of registration of the stock exchange, the words 'recognition of stock exchanges' has been used and in sub-section (4) of section 4 provision is made that "no application for the grant of recognition shall be refused except after giving an opportunity to the stock exchange concerned to be heard in the matter and the reasons for such refusal shall be communicated to the stock exchange in writing". Wherever wide-worded powers conferring discretion exist, there remains always the need to structure the discretion and it has been pointed out in the Administrative Law Text by Kenneth Culp Davis (page 94) that the structuring of discretion only means regularising it, organising it, producing order in it so that decision will achieve the high quality of justice. The seven instruments that are most useful in the structuring of discretionary power are open plans, open policy statements, open rules, open findings, open reasons, open precedents and fair informal procedure. Somehow, in our context, the wide worded conferment of discretionary powers or reservation of discretion, without framing rules to regulate its exercise, has been taken to be an enhancement of the power and it gives that impression in the first instance but where the authorities fail to rationalise it and regulate it by Rules, or Policy statements or precedents, the Courts have to intervene more often, than is necessary, apart from the exercise of such power appearing arbitrary and capricious at times.
63. There are three findings or observations made by the learned Judge which are incidental to the decision of the main controversy involved in the case. They have to be dealt with because legally those findings or observations are not sound and have to be taken care of in the appellate judgment. In paragraph 20 of this judgment the relevant portion has been reproduced where the learned Judge observed "in referring the matter to him it abdicated or surrendered its own powers to him which by itself was an illegality in the schemes of things". The order delegating the powers of the Government under section 5 has no such characteristics. The relevant order delegating the power is SRO 1024(I)/81, dated 10th September, 1981 which is reproduced hereunder:- "In exercise of the powers conferred by section 28 of the Securities and Exchange Ordinance, 1969 (XVII of 1969) and in supersession of the Ministry of Finance Notification No. SRO 261(I)/70, dated the 26th October, 1970, the Federal Government is pleased to direct that all powers and functions of the Federal Government under the said Ordinance, other than those under sections 26,27,28,29 and so much of section 33 thereof as relates to the making of rules for regulations of the business mentioned in section 32 thereof, shall, subject to such directions relating to questions of policy as may be issued from time to time by the Federal Government, be exercised or performed also by the Member, Corporate Law Authority (Corporate Law Wing)."
The use of the word 'also' makes both the authorities concurrently empowered to exercise this power. The delegation has not the effect of making the delegate the sole repository of power nor can the delegate be held to have surrendered his own power by reserving the decision in a particular case for the delegator. The delegator did not by such delegation denude himself of such power nor the failure to exercise the power in a particular case by a delegate amounts to abdication or surrender, such as to vitiate the exercise of the power. It is true that the exercise of that power by both the delegator and the delegate was not possible and the exercise of it by either exhausted the power.
64. In this judgment in paragraph 20 has also been reproduced an observation of the Court that "if under some compulsion, it chose to submit the matter to the Minister of State for decision through Secretary Finance, he (Secretary) could and should have avoided to handle it at his own level while sending it up to the Minister of State but he did not do so. If he wanted to avoid his coming into picture at that stage he could do so by asking one of his Additional Secretaries to forward the case to the Minister of State instead of putting his own signatures on it". If a matter of importance or having policy or public interest overtones, had to be submitted to the Minister or Minister of State, it was in the schemes of Rules of Business obligatory for the Secretary to record his opinion and not to avoid it or pass on the responsibility to someone else. Between the Secretary and the Additional Secretary, there is a scheme of distribution of business and that has by and large to be observed except for the discretion to be exercised by the Secretary in- handling himself the important cases and by Additional Secretary in routing through him. There is no question of Secretary, avoiding to come in the picture. It is his duty to remain in the picture and to discharge his duty in accordance with the law by recording his opinion on the subject.
65. The learned Judge has further observed as reproduced in paragraph 20 of this judgment, that "Under rule 10 of the Rules of Business, 1973 a difference of opinion had arisen between him and the Minister of State and it was his duty to request the Minister for reconsideration of his decision and if he stuck to his decision, then the matter should have been referred to the Prime Minister for her decision. This procedure was not adopted by the Secretary Finance and he did not perform his statutory duty". The Rule of Business relied upon is not 10 but Rule 5, sub-rule (10) of the Rules of*'
Business. It reads as hereunder:-- "When the Secretary submits a case to the Minister, the latter may accept the proposal or views of the Secretary or .May overrule him. The Secretary will normally defer to the decision of the Minister and implement it. In case, however, the Secretary feels that the decision" of the Minister requires reconsideration, he may state his .Reasons and resubmit the case to the Minister. If the Minister still adheres to his earlier decision and the Secretary feels that the matter is important enough in the national interest to require further reconsideration, he shall request the Minister to refer the case to the Prime Minister for orders."
66. It was a case where the views of the Secretary were overruled by the Minister. The rule prescribes that the Secretary will normally defer to the decision of the Minister and implement it. It is only when the Secretary feels that the Minister's decision requires reconsideration that he is to resubmit the case. It is only in a resubmitted case that if the difference of opinion persists and still the Secretary feels that the matter is important enough, in the national interest, to require further consideration that the Secretary is required to request the Minister to refer the case to the Prime Minister for orders. It is not ordinarily for the Court to determine when a Secretary should "submit to the decision of the Minister or when he should resubmit the case for reconsideration, or when he should take the controversy to the Prime Minister. It is his domain and exclusively his own, not for the Court's intervention.
67. A reference to Schedule III under rule 4(4) of the Rules of Business will show that at serial Number 32, Securities and Exchange Authority of Pakistan happens to be an Attached Department under the Finance Division. In 1981, at serial number 33, the Department of Corporate Law Authority was also introduced as an Attached Department of the Finance Division. In such circumstances any proposal or case coming from the Corporate Law Authority had to be routed through the Finance Division. For that reason, the Secretary, Ministry of Finance, had a role to play and he has played it. No illegality or infirmity, as such, was there in handling of the case except to the extent that he proceeded to deal with the revision under 1[rule 26(1) of the Rules] as a revision against the order of the Corporate Law Authority when in fact it should have been a review against the order of the Minister of State, which he could not have competently disposed of but should have resubmitted to the Minister of State.
68. Hereunder are our precise conclusions summarised for the purposes of clarity in comprehension--
(i) Notwithstanding the preliminary objections to the competence of the three writ petitions filed in the High Court, these are found to be competent:
(a) Writ Petition No. 655/1989 filed by Ch. Muhammad Aslam, for the reason that Corporate Law Authority had refused to entertain his application on the ground that another Company had been granted the 'No-Objection Certificate'. The Corporate Law Authority had no such power under section 5. The reason disclosed was also extraneous to the law. It was an action completely lacking in jurisdiction;
(b) Writ Petition No. 658/1989 filed by Raja Abdul Rahman, for the reason that a non-statutory Authority (Corporate Law Authority) intervened to consign the application instead of passing it on to the Statutory .Functionaries competent to deal with it after hearing the applicant, viz. Government or Member, Corporate Law Authority. This action of the Corporate Law Authority was also completely lacking jurisdiction;
(c) Writ Petition No. 663/1989 filed by Syed Sarmad Maqsood Al-Husainy and his associates, for the reason that the order of refusal was given out to have been passed by Corporate Law Authority and dealt with in Revision by Secretary Finance as that of Corporate Law Authority. The Corporate Law Authority possessing no such power under the law the action was completely without jurisdiction.
(ii) The departmental view that where there exists a Stock Exchange another cannot be registered is unsupportable by law as it exists today.
(iii) The provisions of the Ordinance being Regulatory of Fundamental Right No. 18 have to be interpreted strictly and beneficially.
(iv) The hearing of an applicant, who is refused registration prescribed in section 5(3) is mandatory, has to be by an authority, competent to and in fact, taking a decision unless for reasons recorded that power is delegated and the delegate records the minutes of the hearing to facilitate the decision-making authority.
(v) Constitutional bar to answerability of a Minister to. a Court of Law (Article 248) cannot be avoided by recourse to principles of natural justice.
(vi) Protection under Article 248 of the Constitution is not available to the designated functionaries if their actions suffer from mala fide of fact.
(vii) Where the allegation against the protected functionaries is one of mala fide of fact, they have to be personally impleaded as a party to the proceedings; without which no finding on that issue can be recorded.
(viii) Relationship, professional or personal, with promoters, directors, sponsors of a public company or Trade Organisation does not disqualify an administrative decision maker in dealing with such public company or trade organisation.
(ix) The order of granting registration to Amanullah Group passed by the Minister of State suffers from three infirmities; of denial of hearing to those who were refused registration, of failure to record reasons as prescribed in section 5 for registration, and failure to communicate the refusal and the reasons to the affected persons.
69. In view of the findings recorded which are altogether different from those recorded by the High Court in the impugned judgment, the order of the High Court, declaring the impugned order, dated 19th August, 1989 passed by the ex- Minister of State (wrongly stated in the High Court's judgment to be of 27th- August, 1989) and all subsequent orders passed on the basis of that order, is affirmed. But for these findings and the reversals of the findings and observations recorded by the High Court, all the six appeals are dismissed.
70. The two applications filed by the ex-Minister of State are allowed. The judgment of the High Court, so far as it attributes personal motives to the Minister of State, holds his conduct amounting to favouritism, nepotism and motivated by advancement of his political and economic interests to make him a Judge in his own cause, is set aside. The remarks as prayed for, are expunged from the judgment of High Court.. No part of it shall be published or republished in any official or non-official document. This prohibition shall exclude this judgment of the Supreme Court if published in its entirety, as it lays down the law for the country in its proper context.
71. Parties are left to bear their own costs throughout.
72. The result of this judgment shall be that the registration granted to Amanullah and his associates/Islamabad Stock Exchange, shall not be of avail to them, and all the applications shall be considered afresh in accordance with the law on the subject by the competent authority.
(Sd.)
Shafiur Raman, J.
NASIM HASAN SHAH, J.--73. Subject to the observation that. I generally agree and am appending my own note also attached herewith.
(Sd.)
Nasim Hasan Shah, J.
(Sd.)
Zaffar Hussain Mirza, J.
(Sd.)
Ali Hussain Qazilbash, J.
(Sd.)
Abdul Qadeer Chaudhry, J.
NASIM HASAN S.HAH, J.--74. I agree with the main conclusion arrived at by my learned brother upholding the High Court's view that the order, dated 19th August, 1989 passed by Mr. Ehsan-ul-Haq Piracha, the then Minister of State for Finance, Government of Pakistan and all subsequent orders passed on its basis are untenable and, accordingly, the registration granted to Amanullah and his associates was not of any avail to them. ' Consequently, all the applications for registration would have to be considered afresh in accordance with law, by the competent authority. But regret that I cannot subscribe to some of the other conclusions expressed in para 68 of the draft judgment, especially the conclusion contained in items (v) and (vii) of the said paragraph.
Items (v) and (vii) are as follows:
(v) Constitutional bar to answerability of a Minister to a Court of Law (Article 248) cannot be avoided by recourse to principles of natural justice; and
(vii) Where the allegation against the protected functionaries is one of mala fide of fact, they have to be personally impleaded as a party to the proceedings; without which no finding on that issue can be recorded.
75. Undoubtedly the main reason given by the High Court for finding that the order of the Minister was without lawful authority was because it held the view that his order was mala fide. This is manifest from the following; "In the light of these definitions of mala fide and certain admitted facts already stated above, the order, dated 27th August, 1989 passed by the Minister of State, granting permission to set up stock exchange at Islamabad was clearly an order stemming from mala fide or bad faith, with a view to favour his own business associates, one of whom was even his relation, through whom he wanted to safeguarded and promote not only his business and commercial interests but also his political stature and influence, both of which were so inter-connected and intermingled that it was difficult to separate one from the other."
76. The question is whether without having impleaded the Minister as a party to the proceedings these findings and the other critical comments made against him could not be recorded?
77. According to the learned Judge in the High Court, the comments on the conduct of the Minister could be made after affording him an opportunity of explaining his position. This is evident from the orders passed by him on 24th January, 1990, 27th January, 1990 and 6th February, 1990. The order recorded on 24th January, 1990 reads as follows:-- "On the conclusion of arguments on 22th January, 1990 the judgment was reserved but at the time of writing the judgment it has been felt that in the writ petition there are certain allegations of somewhat personal nature against the Minister of State for Finance, Government of Pakistan and in the absence of his explanation it may not be possible to record any findings on those allegations.
Besides, in view of nature of allegations and keeping in view the requirements of rule of natural justice, even otherwise it appears to be in the fitness of things that he should be given an opportunity to explain his position through some of the respondents, who are allegedly his business partner in Ferozsons Laboratories Limited, have filed sworn affidavits in his defence. Therefore, the matter needs to be further considered for which it should be listed on 27th January, 1990 and the Deputy Attorney-General should also be asked to appear."
The order recorded on 27th January, 1990 is as follows:-- "For the reasons stated in the preceding order, a copy of the writ petition alongwith the copy of that order should be sent to the Minister of State for Finance, Government of Pakistan, Islamabad, with a view to enable him to explain his position, at his option in view of the provisions of Article 248(1) of the Constitution of Pakistan, 1973, in relation to certain allegations of somewhat personal nature against him and if he so wishes he may avail of the opportunity of being heard before this Court on 6th February, 1990 either personally or through some attorney or through some counsel.
(2) The learned Standing Counsel is also directed to contact the said Minister and convey him this order and get instructions from him, if any, for the next date of hearing."
The order recorded on 6th February, 1990 states:-- "The office has, in compliance with the orders, dated 24th January, 1990 and 27th January, 1990, conveyed the directions/observations of this Court to the Minister of State for Finance, Government of Pakistan, vide registered letter No. 1139, dated 29th January, 1990, alongwith the relevant document.
(2) The learned Standing Counsel for the Federal Government vide paragraph 2 of the preceding order, was also directed to contact the Minister and convey the relevant order of this Court to him and get instructions, if any, from him for this date of hearing.
(3) The learned Standing Counsel states that he met the Minister and conveyed the relevant orders of this Court in order to enable him to put in his point of view, if any, and he stated that whatever he did was done in his official capacity as a Minister of State for Finance of the Federal Government and since it was not his personal matter, he had nothing to add to the defence already taken by or on behalf of the Federal Government.
(4) Since the legal formality of affording an opportunity of being heard, as it appears from the statement of the learned counsel for the Federal Government, has been complied with and final arguments on the writ petition have already been heard, the judgment is reserved."
78. Notwithstanding the above opportunity of being heard afforded to the Minister, my learned brother considers that the offending remarks could not be made. According to my learned brother as the remarks made by the learned Judge are to the effect that the order of the Minister was vitiated by malice of fact i.e. The order was passed for personal motives to benefit some persons in whom the Minister was personally interested, the only way in which such a finding of malafide of fact could be recorded was when the person against whom the remarks were made had been formally impleaded because the prohibition contained in Article 248 of the Constitution cannot be overcome merely by recourse to the principles of natural justice.
79. A "party" in general terms, means one having right to control proceedings, to make defence, to adduce and cross- examine witnesses and to appeal from the judgment. All these ingredients are in essence contained in the order, dated 27th January, 1990 passed by the learned Judge of the High Court. The copy of the writ petition was sent to the Minister with a view to allowing him to explain his position both with regard to the allegations of personal nature made against him as also in the light of Article 248 of the Constitution; he was allowed to be .Heard personally if he so desired or through some attorney or counsel as he wished, that he had a right of appeal under the law laid down by this Court (see H.M. Saya v. Wazir Ali Industries Ltd. PLD 1969 SC 69) if he was affected by the judgment. But he declined to avail of all these facilities on the ground that whatever he did was done in his official capacity as a Minister of State for Finance of the Federal Government and since it was not his personal matter he had nothing to add to the defence already taken by or on behalf of the Federal Government.
80. The position taken by him clearly indicates the stance of the Minister in all its amplitude and, therefore, the fact that he was not formally impleaded as a party did not, as a matter of fact, make any difference.
81. Now the only question is whether the prohibition contained in Article 248 of the Constitution afforded the requisite immunity to his being impleaded as a party? Article 248(1), to the extent relevant, lays down: "248. Protection to President, Governor, Minister, etc.-(l) The President, a Governor, the Prime Minister, a Federal Minister, a Minister of State, the Chief Minister and a Provincial Minister shall not be answerable to any Court for the exercise of powers and performance of functions of their respective offices or for any act done or purported to be done in the exercise of those powers and performance of those functions."
82. This Court in Ch. Zahur Ilahi v. Mr. Zulfikar Ali Bhutto PLD 1975 SC 383 has laid down that the immunity provided by this Article must be construed strictly, as the immunity provided is in the nature of an exception to the general rule that no one is above the law. Accordingly, unless the person claiming the immunity comes strictly within the terms of the provisions granting the immunity, the immunity will not come into play.
Now the immunity to a Minister extends only to the exercise of powers and performance of functions of his office or for any act done or purported to be done in the exercise of those powers and performance of those functions. A-Minister can be said to be acting in exercise of the powers and functions of his office, if his acts are such which not only lie within the scope of the powers and functions conferred on him by law but are performed bona fide and for carrying into effect the intention and purposes of the statute under which he is acting. If on the other hand his acts are performed with malafide intent or for a colourable purpose, such acts will not be deemed to have been performed in the lawful exercise of the powers and functions vested in him and will not, therefore, be covered by the immunity. Accordingly, where it transpires that a Minister has acted illegally and abused his discretion and the illegality committed was not in the bona fide exercise of his powers and functions but on account of malafides the immunity contained in Article 248(1) would not extend to protect such an act.
83. The question, now is whether the prohibition contained in Article 248 of the Constitution can be overcome without impleading the Minister as a party but only by recourse to the principles of natural justice. In other words could a finding that the order of the Minister suffers from malice in fact be given without impleading the Minister as a party because the mere fact that he was allowed to explain his position on the basis of the principles of the natural justice was not enough. I have already said enough to indicate that in the facts and circumstances of this case although the Minister was not formally impleaded as a party to the proceedings but the course followed by the learned Judge of the High Court was sufficient to show that he was being treated as a party for all practical purposes; hence the finding that the Minister's order was vitiated by mala fides of fact could have been recorded in the facts and circumstances of this case. I would, therefore, not agree with the broad propositions laid down in items Nos. (v) and (vii) of para 68 of the judgment of my learned brother as each case will have to be examined on its merits for determining whether in the facts and circumstances of the given case a finding of mala fides of fact could or could not be recorded.
84. Subject to these observations I would concur with my learned brother that the order of the Minister, dated 19th August, 1989 is liable to be set aside and that the applications for registration submitted by all the parties will be deemed to be pending decision afresh in accordance with law, by the competent authority.
85. I would leave the parties to bear their own costs.