ABDUL MAJID TIWANA, J.--1. This judgment shall deal with and dispose of three Constitutional Petitions, namely, Writ Petition No. 655 of 1989, Writ Petition No. 658 of 1989, and Writ Petition No. 663 of 1989, all directed against various orders of Corporate Law Authority, one of the respondents, by which it turned down the request of petitioner(s) in each writ petition for the grant of permission to establish a Stock Exchange at Islamabad, and granted No-Objection Certificate/permission to Mr. Aman Ullah, a respondent in each petition, to set up such exchange under the name and style of 'Islamabad Stock Exchange (Guarantee) Limited'. In addition thereto, Writ Petition No. 663 of 1989 also assails the order, dated 4th December, 1989, by which Secretary, Finance Division, Government of Pakistan (respondent No. 12 in this writ petition) dismissed the revision petition of the petitioners therein against the order of Corporate Law Authority, rejecting their application for permission to set up an exchange.
2. The brief facts leading up to these writ petitions are as under:- "Mr. Ihsan-ul-Haq Peracha, the Federal Minister of State for Finance (hereinafter referred to as the Minister of State) in his Annual Budget Speech delivered in June, 1989, announced the decision of the Federal Government to permit the establishment of a Stock Exchange at Islamabad. On this announcement, certain interested business circles, particularly those whose applications for seeking such permission were already pending before the Corporate Law Authority (hereinafter referred to as the Authority), got into touch with it because it, under the general supervision and control of the Federal Government, administered the Security and Exchange Ordinance, 1969, whereunder the proposed exchange was to be setup. Excepting the aforesaid announcement, since no public notice was given by the Authority for inviting applications from interested persons or organizations, nor there was any provision to that effect in the Ordinance, the petitioner(s) in each writ petition applied for seeking permission on such date as it suited him or them. For instance, Ch. Muhammad Aslam, petitioner in Writ Petition No. 655 of 1989, applied on 26th August, 1989, while Raja Abdul Rehman, petitioner in Writ Petition No. 658 of 1989, made an application to the Authority on 27th November, 1989."
3. It appears that the application of the petitioners in Writ Petition No. 663 of 1989 for seeking permission to establish an exchange known as "Islamabad-Rawalpindi Stock Exchange (Guarantee) Limited" had been pending with the Authority since 31st January, 1989 and that of Mr. Aman Ullah and. His business associates, respondents Nos. 2 to 11 therein, to set up an exchange known as "Islamabad Stock Exchange (Guarantee) Limited" had been pending with the Authority since 1st February, 1989. In addition thereto, Muhammad Iqbal Zaki, an Advocate, had also made an application on 24th June, 1989. Till the aforesaid announcement, since only these three applicants were in the field, the Authority started processing their applications and a Member thereof afforded them personal hearing, as required by law, in order to enable them to support their respective claims for permission to set up the proposed exchange.
4. Eventually, on 8th August, 1989 Mr. Irtiza Hussain, Chairman of the Authority, submitted a comprehensive summary to the Minister of State through Finance Secretary, Government of Pakistan, wherein he, after examining and analysing the experience and the financial position of all the three applicants, dropped Mr. Muhammad Iqbal Zaki, Advocate and recommended the other two applicants, namely, the petitioners in Writ Petition No. 663 of 1989 headed by Syed Sarmad Maqsood Al-Hussaini, and respondents Nos. 2 to 11 therein led by Mr. Aman Ullah Khan, for a joint venture in establishing the proposed exchange. In the concluding paragraphs of the summary he proposed that:-- "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 contacts. 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 Exchange 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 & Exchange Ordinance, 1969, to ensure establishment and smooth operation of Stock Exchange at Islamabad."
5. The Finance Secretary, through whom the summary was routed, forwarded it to the Minister of State under his signatures, which, in the Secretariat working, signified approval of the proposal made by the Chairman of the Authority.
6. The Minister of State on 19th August, 1989, without saying anything about the proposal of the Chairman of the Authority as approved by the Finance Secretary, passed the following order:-- "The sponsors of the group led by Mr. Aman Ullah Khan are allowed to establish and operate the Stock Exchange at Islamabad."
7. The Summary then came back to the Authority through the Finance Secretary and the Authority, in compliance with the said order of the Minister of State, issued 'No Objection' to Mr. Aman Ullah Khan respondent on 27th August, 1989 for establishing the proposed exchange (of course, after rejecting the application of the petitioners in Writ Petition No. 663 of 1989) and then on 6th December, 1989 granted him the Certificate of its Registration. The petitioners, whose application was rejected, filed revision petition against the order of rejection of their application, which was heard and rejected by the same Finance Secretary, Government of Pakistan, vide his order, dated 4th December, 1989. Aggrieved by this order as also by the initial order of the Authority, the petitioners filed Writ Petition No. 663 of 1989.
8. As already indicated, Ch. Muhammad Aslam, petitioner in Writ Petition No. 655 of 1989, who had filed an application for setting up stock exchange on 26th August, 1989, a day prior to the issuance of 'No Objection Certificate' to Mr. Aman Ullah Khan on 27th August, 1989, by an order, dated 16th September, 1989 passed by Authority, was' informed that his application could not be entertained because the permission to set up an exchange had already been granted to a sponsors group.
Similarly, the request of Raja Abdul Rehman petitioner was turned down and he was also informed accordingly by the Authority vide its letter, dated 9th December, 1989. Aggrieved by the rejection of their respective applications, Ch. Muhammad Aslam and Raja Abdul Rehman brought their respective writ petitions, with whom the petitioners in Writ Petition No. 663 of 1989 also joined hands in challenging the grant of permission to the group of businessmen headed by Mr. Aman Ullah for establishing Stock Exchange at Islamabad and all these writ petitions continue to be dealt with together.
9. The main ground of attack common to all these three writ petitions, but more laborately stated in Writ Petition No. 663 of 1989, is that of mala fide. It has been alleged that the group of sponsors (respondents Nos. 2 to 11 in Writ Petition No. 663 of 1989) led by Mr. Aman Ullah, a respondent in all the writ petitions, who was granted Certificate of Registration for setting up the stock exchange, are close business associates of the Minister of State. It has been averred that one of them, namely, Mr. Khalid Waheed respondent, besides being his business partner like Feroz-ud-Din. A Qasim respondent, in Ferozsons Laboratories Ltd., is also his relation, and he (Minister of State) favoured his own henchmen by granting- them the permission for establishing the stock exchange, in preference to them (petitioners) who were better qualified in every respect. In addition, thereto, the petitioners in Writ Petitions Nos. 655 and 658 have also alleged the violation of rule of natural justice on account of not having been provided the opportunity of being heard prior to the rejection of their applications by the Authority.
10. All the three writ petitions have been contested by all the respondents. Pakistan, Secretary Finance, and the Authority are represented by the learned Deputy Attorney- General and the Standing Counsel, while other respondents in each writ petition are represented by Dr. Pervez Hasan and other Advocates. In the written statements/parawise comments they have raised a number of preliminary objections, particularly in the written statements submitted by Mr. Aman Ullah (respondent No. 2) in Writ Petition No. 663 of 1989, regarding incompetency, estoppel, misjoinder of parties, untenability of relief claimed, locus standi, generality of allegations of mala fide, locus Poenitentiae, mala fide and unclean hands of the petitioners. On facts it has been asserted that the group of sponsors led by Mr. Aman Ullah respondent succeeded in obtaining permission for setting up the stock exchange on their own merits and not because of the favour of anybody. It has, however, been admitted in the written statement of Mr. Aman Ullah that one of the sponsors, namely, Mr. Khalid Waheed, respondent in Writ Petition No. 663 of 1989, is a relative of the Minister of State but not his blood relation and in his individual or personal capacity he is not barred from doing business, particularly when the Minister of State has no personal or financial interest in the stock exchange.
11. In the. Replication submitted by the petitioners in Writ Petition No. 663 of 1989, besides reiterating certain facts already stated in the writ petition, it has been stressed that Mr. Khalid Waheed respondent, besides being the brother-in- law {{urdu miss}} of the Minister of State, is also his business partner in Ferozsons Laboratories Ltd. In support of this allegation the Annual Reports of Accounts of certain recent years of this business concern have been attached to the replication.
12. I heard the learned counsel representing the parties at some length. The main thing of the arguments addressed by the learned counsel for the writ petitioners was that in terms of financial soundness, representation of business community territorially, experience, expertise and technical know how they were better qualified for the grant of permission to establish Stock Exchange at Islamabad than the group of sponsors led by Mr. Aman Ullah respondent but they were ignored and he was picked up arbitrarily because-
(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 aggrandisement as well as for the benefit of his close business associates and relations.
13. Elaborating his contention regarding the mala fide of the Minister of State in passing the impugned order, the learned counsel contended that:--
(i) the Minister of State was not a sleeping partner in Ferozsons 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 Ferozsons Laboratories Ltd., was also his brother-in-law (<->;>*'>-) 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 Ferozsons Laboratories Ltd. While the rest of the respondents constituting the group of sponsors headed 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 one lac per member and one can imagine the financial benefits of their joint- venture.
In support of his contention that a mala fide act, like the one done by the Minister of State, was a fraud on the statue and an act without jurisdiction, the learned counsel quoted Abdul Rauf and others v. Abdul Hamid Khan and others PLD 1965 SC 671. He cited The Montgomery Flour and General Mills Ltd., Montgomery PLD 1957 Lah. 914 which was approved in Ikram Bus Service and others v. Board of Revenue, West Pakistan PLD 1963 SC 564 in aid of his argument that if the Minister of State had taken upon himself to take a decision on the controversy between the two contestants for setting up the exchange, then he should have heard both of them and exercising his powers fairly, judiciously and reasonably, recorded his findings in public interest but he acted arbitrarily and capriciously for his personal interest by favouring his own men, thereby rendering his decision without lawful authority. He referred to Yousaf Ali v. Muhammad Aslam Zia and 2 others PLD 1958 SC 104 and Muhammad Idrish v. East Pakistan Timber Merchants Group and another PLD 1968 SC 412 to strengthen his view that Minister of State could not be a judge in his own cause and the impugned order passed by him was void and all subsequent orders passed by the Authority on the basis of his order were also a nullity in law. Reliance was placed on Khawaja Muhammad Sharif v.
Federation of Pakistan through Secretary Cabinet Division, Government of Pakistan, Islamabad and 18 others PLD 1988 Lah. 725 in support of this contention.
14. According to the learned counsel for the writ petitioners, the summary submitted by Mr. Irtiza Hussain, Chairman of the Authority, to the Minister of State for seeking approval of his proposal for establishing a Stock Exchange at Islamabad, was by itself an illegal act because under the Security and Exchange Ordinance, 1969, read with certain Notifications delegating the powers of the Federal Government thereunder, the Authority, being a statutory body, by itself was fully competent to accord permission for setting up of exchange, but if at all the Minister of State came into picture, then he was bound to give reasons for selecting Aman. Ullah's group for establishing the proposed exchange in preference to Syed Sarmad Maqsood Al-Hussaini's group (Petitioners in Writ Petition No. 663 of 1989), especially when in the summary, which had the approval of Finance Secretary as well, a joint-venture between the two contestants had been suggested in the larger interest of the business community. He contended that the Minister of State gave no reason whatever for preferring Aman Ullah's group to Al-Hussaini's group, nor did he give any reason for discarding the proposal of the Authority supported by the Finance Secretary. In this connection, he urged that the law provided a revision against the order of the Authority and Al-Hussaini's group did file a revision to the Finance Secretary, but he was bound to reject it as he could not pass an order against the order of the Minister of State already passed. In fact, he passed contradictory orders, first approving the proposal of the Chairman of the Authority while submitting the summary to the Minister of State, and then on revision supporting the order of Minister of State, who had disagreed with the proposal contained in the summary, the learned counsel added.
15. On the contrary, the learned Deputy Attorney-General, the Standing Counsel, and the learned counsel representing the other respondents, took a firm stand that the impugned order was neither unlawful nor malafide. In fact, the learned counsel representing Aman Ullah's group of respondents took pains to elaborate the position of his clients as also of the Minister of State in respect of their inter se business connections and latter's relationship with one of the respondents of Aman Ullah's group, in his effort to show that there was no collusion amongst them, nor the Minister of State had any personal interest in the Stock Exchange, nor the order passed by him for its establishment by Aman Ullah's group stemmed from any malafide, bad faith or bias. This was his main emphasis though during the course of his arguments he also touched certain preliminary objections raised in the written statement of his clients. For instance, he challenged the competency and maintainability of Writ Petitions Nos. 655 and 658 and locus standi of petitioners on the ground that they had not made their application to the Authority in time that they were also interested in setting up of exchange, especially when from the budget speech of the Minister of State and various news items in the Press they were fully aware that the Government was considering the proposal for establishing the exchange at Islamabad. Similarly, he urged that before filing the writ petitions they should have exhausted the remedy of filing revision petitions before the Finance Secretary but they did not adopt that course. On the question of locus Poenitentiae he contended that after the issue of Certificate of Registration in favour of Aman Ullah's group, the process of setting up of the Stock Exchange was complete, moreso when that group had already rented a building in Islamabad for office accommodation by paying Rs. 15,00,000 as advance rent and had received membership fee at the rate of rupees one lac per member from a number of persons interested to become members of the exchange. He submitted that the petitioners were also welcome to become its members but it was difficult to offer them key-positions in the organisation for which they would have to contest the annual election. He criticised that the sole object of the petitioners behind these writ petitions was to malign the Minister of State by playing up his old business connections with certain respondents who all had a right to do business and to earn their livelihood in a lawful manner as citizens of the State and as such they (petitioners) had not come to this Court with clean hands.
16. Adverting to the principal ground of mala fide urged in the writ petitions, he argued that the Stock Exchange was to be set up for the benefit of all the members of business community of the area and not for the exclusive benefit of Aman Ullah's group which did nothing, except to set the ball rolling for the welfare of all concerned. According to the learned counsel, the Minister of State was no doubt a shareholder in Ferozsons Laboratories Ltd. And had been its Chief Executive for a number of years before taking up his present assignment and Mr. Khalid Wahid respondent was his brother- in-law and he, besides Feroze-ud-Din. A. Qasim respondent, was partner in that firm, but he had a negligible share, therein inasmuch as his total investment was Rs' 10,84,110 out of the paid up capital of Rs. 10.19 millions. He submitted that the Minister of State, while acting as Chief Executive of the said firm, was its employee and his total financial benefits did not exceed Rs. 11,000 per month and after discontinuing this job his financial interest in this firm is only 1.06 per cent and obviously he had no commercial bias with this insignificant share. He contended that when the Minister of State was Chairman of Rawalpindi Chambers of Commerce, Aman Ullah respondent was its member like so many other members and they had ho particular intimacy with each other.
17. The learned counsel further submitted that the order passed by the Minister of State was passed in public interest with no special bias in favour of Aman Ullah's group or against Al-Hussaini's group and for that reason it was not challengeable in a writ petition.
18. Finally, it was urged that under the Rules of Business this case was to be submitted to the Minister of State for approval and the Authority in submitting the case to him did not commit any illegality nor in passing the impugned order he committed any irregularity.
19. Dr. G.S. Khan, Advocate, who also represented certain respondents, contended that the Stock Exchange permitted to be set up by the group of sponsors led by Aman Ullah was a company limited by guarantee, an organization which was purely for promoting the joint interest of entire business community, having no share capital, nor it was profit-oriented and as such there could be no financial benefit of anybody therein, including the Minister of State.
20. Exercising the right of reply, Raja Muhammad Akram, Advocate, the learned counsel representing all the writ petitioners (as by that time Ch. Muhammad Hasan, Advocate for the petitioners in Writ Petition No. 663 of 1989, had already left for Lahore after completing his arguments) submitted that in the first instance the Minister of State himself was not the Federal Government because it was the entire Federal Cabinet headed by the Prime Minister which, constituted the Federal Government and the case should have been submitted to the Federal Cabinet or at least to the Prime Minister for approval if at all the Rules of Business so provided.
According to him, the Authority, under the delegated power of the Federal Government, by itself was competent to grant permission for the establishment of the Stock Exchange and there was no necessity of sending up the case to the Minister of State for decision and by submitting the case to the Minister of State the Authority abdicated or surrendered its own powers which was not permissible by law and the Minister of State misusing his authority passed the impugned order with a mala fide intention of benefiting his own relation and business associates.
21. With reference to Rule 10 of the Rules of Business, 1973, he contended that while sending up the proposal of the Authority to the Minister of State, the Secretary Finance had supported it but the Minister of State did not agree with them and; instead of approving their proposal of joint venture between the two contestants, he preferred his own group of sponsors led by Aman Ullah respondent and thereby created a difference of opinion between him and the Secretary Finance and in that event the matter should have been referred to the Prime Minister for decision but this course was not adopted, rather the Prime Minister was bypassed and for this reason too the impugned order was not sustainable at law.
22. Before proceedings to consider various contentions raised on behalf of the parties, it may be mentioned here that on the conclusion of most of the arguments in the third week of January last, in view of 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 arguments, 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 respondents, 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.
24. Now I take up various contentions raised on behalf of the parties. First of all I proceed to consider the question of competency or maintainability of the writ petitions. The main objection against the maintainability of Writ Petitions Nos. 556 and 558 of 1989 is that the petitioners had filed applications for seeking permission to establish Stock Exchange after the decision of its establishment had already been taken by the Minister of State.
25. Technically speaking, there was a force in this preliminary objection so far as these two writ petitions are concerned because the Minister of State had taken decision for the establishment of Stock Exchange by Amanullah's group on 19th August, 1989 and the petitioners in Writ Petition No. 655 of 1989 had made an application to the Authority on 26th August, 1989 for the permission to set up Stock Exchange, while the petitioners in Writ Petition No. 658 of 1989 had made such application to the Authority on 27th November, 1989 though No-Objection Certificate was issued to Mr. Amanullah respondent on 27th August, 1989. Therefore, the Authority could tell these petitioners that the decision had j already been taken and their applications were not entertainable. This is true that the order of the Minister dated 19th August, 1989 and the issue of 'No-Objection Certificate' to Mr. Amanullah respondent on 27th August, 1989 were kept secret by the authority for sometime and I am inclined to agree with the contentions of the learned counsel for the petitioner in these writ petitions that they had no means of ascertaining as to in whose favour the 'No-Objection Certificate' has been issued till Mr. Amanullah respondent was issued Certificate of Registration sometime in December, 1989 and he disclosed this fact in a. Press conference addressed by him!
Out of these two groups of petitioners, the case of petitioner in Writ Petition No. 655 of 1989 was still better as his application had reached the Authority on 26th August, 1989, a day prior to the issue of 'No-Objection Certificate' to Mr, Amanullah 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 broach the subject again before him.
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 argument is devoid of force for the simple reason that the Minister of 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. .
27. Objection was also raised against the maintainability of Writ Petition No. 663 of 1989 on the ground that the impugned order was passed by the Minister of State in exercise of his discretion in public interest and the writ did not lie. Some case- law was also cited in support of this contention as it was done to strengthen other preliminary objections referred to above. 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.
28. It is an admitted position that the Minister of State was, and even now continues to be, one of the directors in Ferozsons 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 now-a-days 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}} is almost their family concern as other Share-holders 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 Islamabad wherein his business-cum-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. 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.
29. 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 he signified his inability to quote any.
30. As a last resort an effort was made by Dr. G.S. Khan, Advocate, who also represents certain respondents of Mr. Amanullah's group, with reference to the authority known as Sind Industrial Trading Estate Ltd., Karachi v. Central Board of Revenue and 3 others PLD 1975 Kar. 128, that Islamabad Stock Exchange (Guarantee) Limited, being a company limited by guarantee, is quite different from a company limited by shares and it is a non-profit making association of persons, the working capital whereof comes from endowments, grants, fees and Subscriptions, and not from the contribution made by its members in the form of share capital and as such neither the Minister of State nor his business associates and relation would derive any financial benefit out of it personal or financial interest of his own or any of his and the question of his mala fide did not arise.
This argument does not cut 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. 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. 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 joint 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 spurned 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.
31. In my opinion, the grant of the permission by the Minister of State to the group of sponsors led by Mr. Amanullah respondent for setting up of Stock Exchange at Islamabad was a clear act of favouritism and nepotism, having all the attributes mala fide which, according to the Federation of Pakistan etc. v. Saeed Ahmad Khan PLD 1974 SC 151 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. Action taken in colourable exercise of powers, that is to say, for collateral purposes, not authorised by law under which the action is taken or actions taken in fraud of the law are also malafide. It was held in Abdul Rauf and others v. Abdul Hamid Khan and others PLD 1965 SC 611 that "a malafide act is by its nature an act without jurisdiction. No legislature when it grants power to take action or pass an order contemplates a mala fide exercise of power. A mala fide order is a fraud on the statute. A mala fide order means one which is passed not for the purpose contemplated by the enactment granting the power to pass the order, but for some other collateral or ulterior purposes".
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, 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 interconnected and intermingled that it was difficult to separate one from the other.
33. Much stress was laid on behalf of the respondents that the Authority was, under Rules of Business, bound to submit the case to the Minister of State for approval and he had no option except to pass an order and he had to pass the impugned order willy nilly. There is no substance in this contention either. The Authority under S.R.O. No. 1023(I)/81 and S.R.O. No. 1024(I)/81, both dated 10th September, 198l, issued under section 28 of the Security 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 scheme of things. 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 3[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.
34. Much was said by the learned counsel for the respondents on the preliminary objection of locus Poenitentiae and it was urged that after the grant of Certificate of Registration of the Stock Exchange, the group led by Mr. Amanullah respondent has made sufficient investment by spending lacs of rupees for acquiring office accommodation and doing certain other things necessary for its establishment and since it has become a matter past and closed, no order can be passed by this Court for undoing it. There is no force in this argument also. 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 I crumble. In Yousaf Ali v. Muhammad Aslam Zia and others PLD 1958 SC 104 it was held that "if on the basis of a void order subsequent orders have been passed either by the same authority or by other authorities, the whole series of such orders, together with the superstructure of rights and obligations built upon them, must................. Fall to the ground because such orders have as little legal foundation as the void order on which they are founded."
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 from 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.
36. 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 that 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.