FIDA MUHAMMAD KHAN, J.--By this Shariah Suo Motu, Rules 251, 252, 253, 253-A, 256, 257, 259 and 263 of the General Financial Rules of the Central Government read with paras 5.68, 5.69, 5.71, 5.76, 5.77, 5.78, 5.79, 5.84, 5.86, 5.91, 5.93 and 5.95 of the Drawing and Disbursing Officers Book which regulate the procedure of grant to the Government's servants on interest for building houses and purchase of conveyances and its recovery with interest from them. These rules are as under:-- 251:Simple interest at the rate fixed by Government for the purpose should be charged on advances granted to the Government servants for building houses and for the purchase of conveyances under paras 253-A and 256 to 263 and for passages the grant of which is regulated by the rules in para 264. The interest should be calculated on balances outstanding on the last day of each month, 252: All advances are subject to adjustment by the Government servants receiving them in accordance with the rules applicable to each case. When an advance is adjustable by recovery, the amount to be recovered monthly should not be affected by the fact of the borrowing Government servant going on leave of any kind with leave salary or his drawing subsistence grant.
The sanctioning authority may in exceptional cases order a reduction in the amount of the monthly instalment, provided that in the case of interest bearing advances to Government servants, the whole amount due should be completely recovered within the period originally fixed.
253: In the case of interest-bearing advances to Government servants, an authority empowered to deal with an application for an advance should not issue an order of sanction until the Accountant-General has certified that funds are available in the year in which the payment of the advance will be made, 253-A: Advances to Government servants for the construction of houses are regulated by the following rules:--
1. Advances may be made under the sanction of Ministries of the Government of Pakistan, Heads of Departments, and Heads of Circles in the Pakistan Post Office and Telegraphs and Telephone Department, to Government servants, who desire to build houses, for occupation by themselves, at any place in Pakistan. No advance is ordinarily permissible to a Government servant who is likely to retire before complete recovery can be effected.
Government decision.--House Building Advance for the purchase of flats in -multi-storeyed buildings may be granted to Government servants to the extent and subject to the usual conditions prescribed for the admissibility of house building advance. This shall be subject to the following further provisions:--
(a) before receiving the amount of the advance, or payment of the amount of the construction agency direct (vide para 2 below), the Government servant concerned shall be required to execute an Agreement in the prescribed form attached; and after the purchase of the flat is complete to execute and register the Mortgage Deed in the prescribed form as security for repayment of the amount advanced with interest;
(b) Satisfactory evidence shall have to be produced within 3 months of the drawal of the advance to show that the amount has been spent on the purchase of flat. This can be done by showing the valid legal receipt issued by the Construction Agency concerned in token of the purchase deed.
2. Where a Government servant desires that the payment of the advance sanctioned under the above orders be made direct to the construction agency, he may indicate it in his application for the grant of advance. In such a case, the Drawing and Disbursing Officer shall arrange for the direct payment of the sanctioned amount to the agency concerned and obtain a valid receipt in the name of the Government servant from that agency and hand over the same to him.
256: Subject to the general provisions of para 254 above and the orders of the Government of Pakistan issued from time to time, a competent authority may sanction an advance to a Government servant for the purchase of a motor car or a motor boat, provided that the following conditions are fulfilled:-- -
(i) the total amount to be advanced to a Government servant should not exceed Rs. 35,000 or nine months' pay, or the anticipated price of the car or boat, whichever is less. If the actual price paid is less than the advance taken, the balance must be forthwith refunded to Government.
In the case of officers who have to serve for a period of less than four years before they retire at the age of superannuation, the following principles should be followed:--
(a) If the nine months' pay of the officer is less than Rs.10,000 the amount of the advance should not exceed the amount which can, together with the interest thereon, be recovered in full by the time of his retirement, in monthly instalments not exceeding 18th of his pay.
(b) In case the nine months pay of the officer exceeds Rs.10,000 he may be followed Rs.10,000 and no reduction of the amount need be made if he can repay the whole amount with interest within the remaining period of the service by monthly recoveries not exceeding 1/8th of his pay; otherwise the amount should be reduced proportionately as at (a) above.
(ii) A Government servant w o is on leave or is about to proceed on leave and for whom an advance has been approved will not be allowed to draw the advance earlier than a week before the expiry of the leave.
(iii) The grant of motor car advance to officers, who are deputed temporarily to a foreign country or are on leave there, is not permissible. The officers, who are transferred to a foreign country (within the meaning of the term "transfer" as defined in rule 2(18) of the Supplementary Rules) or who are deputed on training to a foreign country may, however, be granted motorcar advance in the currency of the country of their posting, subject to the following conditions:--
(a) The period of stay abroad of the officer concerned it two years or more;
(b) The Head of the Mission, Ministry or Department concerned certifies that it would be in the public interest for the officer to maintain a private car there; and
(c) The instalments for the recovery of the advance are so fixed in each case as to ensure that the full amount advanced is recovered in foreign exchange before the officer returns to Pakistan.
(iv) Recovery will be made by deducting monthly instalments equal to forty-eighth part of the advance from the pay bill of the Government servant concerned. It will commence with first issue of pay after the advance is drawn. The authority sanctioning an advance may, however, permit recovery to be made in a smaller number of instalments if the Government servant receiving the advance so desires. The amount of interest calculated in accordance with Para 251 will be recovered in one or more instalments, each such instalment being not appreciably greater than the instalment by which the principal was recovered. The recovery of interest will commence from the months following that in which the repayment of the principal has been completed.
(v) Except when a Government servant proceeds on leave not being leave on average pay not exceeding four months (or privilege leave, earned leave not exceeding 90 days or any other leave which is treated as equivalent to leave on average pay not exceeding four months), or retires from the service, or is transferred to an appointment the duties of which do not render the possession of a motor car or motor boat necessary, previous sanction of competent authority is necessary to the sale by him of a car or a boat purchased with the aid of an advance which with interest accrued, has not been fully repaid. If a Government servant wishes to transfer such a car or boat to another Government servant who performs the duties of a kind that render the possession of the conveyance necessary he may be permitted under order of competent authority to transfer the liability attaching to the car or boat to the latter Government servant, provided that he records a declaration that he is aware that the conveyance transferred to him remains subject to the mortgage bond and that he is bound by its terms and provisions.
(vi) In all cases in which a car or a boat is sold before the advance received for its purchase from Government with interest has been fully repaid, the sale proceeds must be applied so far as may be necessary, towards the repayments of such outstanding balance, provided that when the car is sold only in order that another car or boat may be purchased, the authority sanctioning the sale may permit a Government servant to apply the sale proceeds, towards such purchase, subject to the following conditions:--
(1) the amount outstanding shall not be permitted to exceed the cost of the new car or boat;
(2) the amount outstanding shall continue to be repaid at the rate previously fixed; and
(3) the new car or boat must be insured and mortgaged to Government as required by these rules.
257: A Government servant who draws an advance in Pakistan for the purchase of a motor car or motor boat is expected to complete his negotiations for the purchase of, and pay finally for the car or boat, within one month of the date on which he draws the advance; failing such completion and payment, the full amount of the advance drawn, with interest thereon for one month, must be refunded to Government. This condition should always be mentioned in letters sanctioning such advances.
259: When an advance is drawn, the sanctioning authority should furnish to the Accountant- General, a certificate that the Agreement in form G.F.R. 16 has been signed by the Government servant drawing the advance and that it has been examined and found to be in order. The sanctioning authority should see that the conveyance is purchased within one month from the date on which the advance is drawn and should submit the mortgage bond promptly to the Accountant---General for examination before final record.
The mortgage bonds should be kept in the safe custody of the sanctioning authority. When the advance has been fully repaid, the bond should be returned to the Government servant concerned, duly cancelled, after obtaining a certificate from the Accountant-General as, to the complete repayment of the advance and interest.
268: Subject as provided in para 254, a competent authority may sanction an advance to a Government servant not holding a post which would ordinarily be held, by a member of an All- Pakistan Service of Central Service Class 1, for the purchase of means of conveyance other than a motor car, a motor boat or a motor-cycle provided that the following conditions are fulfilled:--
(i) The total amount to be advanced to a Government servant should not exceed two, months pay or Rs.300 whichever is greater, and should be limited to the anticipated price of the conveyance to be purchased. If the actual price paid is less than the advance taken, the balance should forthwith be refunded to Government.
(ii) A Government servant who takes an advance under this rule should, within one month after drawing the advance, furnish the head of the office with a certificate giving full particulars of the conveyance purchased with the advance and the cash receipt obtained for the amount actually paid for it.
(iii) Recovery will be made unless the sanctioning authority otherwise specially directs, by deducting monthly instalments equal to one---twelfth part of the advance from the pay bill of the Government servant concerned. It will commence with the first issue of pay after the advance is drawn. The amount of interest calculated in accordance with para 51 will be recovered as laid down in clause (iv) of para 256.
The provisions of the Note below clause (iv) of para 56 apply mutatis mutandis to the recovery of advances granted under this rule.
(iv) The conveyance purchased with the advance will be considered to be the property of Government until the advance with interest accrued thereon has been fully repaid.
2. Notices were issued to the Federal Government and Provincial Governments. Mr. Iftikhar Hussain Chaudhry Standing Counsel for the Federation submitted his written statement on behalf of the Government which was taken on record. He also held brief for Advocate-General, Balochistan. Mr. Mohammad Aslam Uns, Advocate appeared for Advocate-General Punjab. Mr. Shahabuddin Burq, Law Of6ceer appeared for Advocate General N.-W.F.P. He submitted two circulars issued by the Government of N: W.F.P.. Mr. Hafiz S. A. Rahman appeared for Advocate-General Sindh.
3. Mr. Iftikhar Hussain Chaudhry submitted that the Federal Government did not support the provisions. In the written statement submitted by him he stated:-- "Apparently, the element of interest is repugnant to the Injunctions of Islam. However, Government is already seized with the question of elimination of the element of interest from the economy of the country. The moment a decision is taken in this respect at national level, all the rules and regulations concerning interest will be changed/amended accordingly."'
4. Mr. Shahabuddin Burq submitted a written note along with copies of the circular issued by the Government of N.-W.F.P. He submitted that Government of N: W.F.P. Provides loans to its employees for building houses and purchase of conveyances. These loans are granted free of mark-up to employees of Grades i-15 as per Finance Department Circular No. F.D (SR-11)1-/78 (p), dated 11-4- 1979. Similarly mark-up is also not charged on above loans from those Government employees of Grade-16 and above who do not claim mark-up on their G.P. Fund balances as per Finance Department Circular No. FD(SR-11)1-1/78(p), dated 23-8-1983.
5. The learned counsel who appeared on behalf of Sindh and Balochistan did not support the provisions of interest as contained in these rules. Mr. Mohammad Aslam Uns, Advocate who represented Advocate-General, Punjab submitted that the provisions containing interest are at war with the Injunctions of Islam as laid down in the Holy Qur'an and Sunnah.
6. There is no dispute that interest is prohibited in Islam. The subject has been elaborately discussed in our main judgment on interest in the light of Islamic Injunctions as contained in the Holy Qur'an anti Sunnah of the Holy Prophet (p.b.u.h.). It may be mentioned that interest is prohibited in all its forms. The Holy Prophet (p.b.u.h.) is reported to have said:-- "Abdullah (b.Mas'ud) (Allah be pleased with him) said that Allah's Messenger (may peace be upon him) cursed the accepter of interest and its payer, and one who records it, and the two witnesses."
(Tuhfatul Ahwadi, Volume IV, page 396)
7. Consequently in view of the admitted position, the aforementioned impugned rules of the General Financial Rules of the Central Government relating to the interest-bearing transactions read with relevant paras, mentioned above, of the Drawing and Disbursing Officer Book are declared repugnant to the Injunctions of Islam to the extent of the element of interest therein.
Unless the same are brought in conformity with the Injunctions of; Islam by 30th June, 1992, they shall cease to have any legal effect.