Respondent No. 1 purchased 10 Foreign Exchange Bearer Certificates of value Dollars 10,000/- each.
Photostat copies of the same are available on record of writ petition. These Certificate were purchased for a period of five years and profit of 11% per annum was payable on the same, twice a year, respondent No. 1 received profit in the sum of Dollars 5500 on 16-7-1995 and 16-1-1996. The grievance voiced in the Constitutional petition was that the respondent wrapped the Certificate in 'Khaki' envelop and placed it in his bedroom wardrobe (wooden almirah) on the right hand side under a piece of red carpet and covered it with unwashed off-season clothes for the purpose of security. As the instalment of profit was due on 16-7-1996 and for claiming the same, production of certificate was necessary. Only at that time it was revealed that Certificates were eaten up by termite, which was spreading all over. Respondent No. 1 lodged F.I.R, on 2-7-1996 and thereafter submitted an application alongwith copy of F.I.R, to the appellant for issue of Duplicate Certificate and also for payment of profit, which was due on 22-8-1996. The appellant declined the claim on the ground "the certificates in question are bearer in character and that the Rules governing the scheme of Foreign Currency Bearer Certificates do not permit entertainment of claim of any nature in case any Certificate is lost, destroyed, mutilated or burnt." The letter was challenged in the writ petition No. 16208/96 with a prayer "that refusal of appellant to issue duplicate FCBCs and to pay profit accrued as contained in the letter dated 22-8-1996 may kindly be declared to be illegal, without lawful authority and of no legal effect, lt was further prayed that a direction for issue of Duplicate Certificate was also made with a further prayer that Rule 11 of Public Debt Act and other Rules in this behalf of Five Years Foreign Currency Bearer Certificates Rules, 1992 be declared as illegal, without lawful authority and of no legal effect."
2. The appellant/Bank was directed to submit para wise comments, wherein it was stated that as the Certificates are Bearer in character, therefore, their duplicate cannot be issued like other Government Bearer Certificates and Prize Bonds. On placing reliance on Rule 11 of Five Years Foreign Currency Bearer Certificates Act, 1992, it was. Further stated that the physical presentation of the Certificates as well as its coupon is essential for receiving the profit as well as value of the Certificate and on that basis the stand was taken that the respondent/petitioner had no claim against the appellant/Bank and it was not within the authority of appellant to accept the claim of respondent/petitioner. However, in para wise comments it was admitted that respondent No. 1/petitioner did purchase Certificates through the appellant/respondent. The learned Single Judge after hearing learned counsel for the parties allowed the writ petition by declaring Rule 11 of Rules 1992 as ultra vires of section 11 (1-A) of the Act and consequently the denial of appellant/bank to entertain and adjudicate the claim of writ petition on the strength of Rule 11 of Rules 1992 was declared as without lawful authority. Concluding para of the judgment read as under:- "For the above-noted reasons, this petition is allowed. The refusal of the respondent-Bank as contained in its letter dated 22-8-1996 (Annexure-N), to consider the case for issue of duplicate/value of the Certificates is hereby declared as without lawful authority and of no legal effect. The respondent-Bank is directed to process the claim in accordance with the provisions of the Act and relevant Rules."
This is vide judgment dated 4-2-1998. Hence present ICA.
3. the learned counsel appearing on behalf of appellant/Bank has contended that the Foreign Currency Bearer Certificates are covered by Section 2(2)(a)(iv) of Act and Rule 11 of the Rules, 1946 does not apply to Bearer Certificates, lt is further argued that FCBC Certificates are entirely different from Bearer Bonds. To better appreciate the controversy it is essential to reproduce the statutory provisions contained in Section 2 of the Act, 1944 which reads as follow:- "Definition-In this Act, unless there is anything repugnant in the subject or extent:-
(1) "the Bank" means the State Bank of Pakistan.
(1A) "Government", in relation to Government security means the Federal or Provincial Government by whom the security is created and issued; added vide Extra-Ordinary Gazette dated 3-5-1961 Ordinance No. VII of 1961.
(2) "Government security" means-
(a) a security, created and issued, whether before or after the commencement of this Act by the Government for the purpose of, raising a public loan, and having one of the following forms, namely:
(i) stock transferable by registration in the books of the Bank; or
(ii) a promissory note payable to order; or
(iii) a bearer bond payable to bearer; or
(iv) a form prescribed in this behalf; or notified by the Government from time to time.
(b) Any other security created and issued by the Government in such form and for such of the purposes of this Act as may be prescribed: Section 11 of the Act reads: "Issue of duplicate securities and of new securities on conversion, consolidation, sub-division or renewal-
(1) If the person entitled to a Government security applies/* not being security in a form notified in pursuance of paragraph (iv) of sub-clause (a) Of clause (2) of Section 2 to the Bank alleging that the security has been lost, stolen or destroyed, or has been defaced or mutilated, the Bank may, on proof to its satisfaction of the loss, theft, destruction, defacement or mutilation of the security, subject to such conditions and on payment of such fees as may be prescribed, order the issue of a duplicate security payable to the applicant.
(1-A) If a Government security in any of the forms notified in pursuance of paragraph (iv) of sub- clause (a) of clause (2) of section 2 has been defaced or mutilated, the holder thereof may, in such manner and subject to such conditions and on payment of such fees, if any, as may be notified by Government apply for the issue of a duplicate security or for the refund of its value:- (Provided that, where such Government security is in the form of Prize Bond, the holder thereof may apply only for the refund of its value.")
Rule 11 of the Rules, 1946 reads as below:- "Procedure when a Government security is lost, etc.-
(1) When a Government security is lost, stolen, destroyed, mutilated or defaced, the person entitled thereto shall apply for the issue of a duplicate security in the manner laid down in Rules 12, 13, 14, 15, 16 or 17, as the case may be, to the Public Debt Office at which the security is domiciled or registered with a statement showing particulars, such as number, amount and loan of the security.
(2) The bank may by its, payment of interest on or the maturity value of the security or postpone the making of any order under Section 11 of the Act or the registration of any transfer of the security until the vesting order has been made.
Rule 11 of the Rules, 1992 reads as follow: No claim of any nature will be entertained in case of any certificate is lost, stolen, destroyed, mutilated or burnt.
4, The learned counsel has vehemently argued that ^he Certificate is different in nature from a Bond and the same, as already mentioned, is covered under Section 2(2)(a)(iv) of the Act and not by section 11 of the Act and respondent No. 1 has got no right to obtain duplicate security as he has lost all rights by mutilation of the said Certificate.
5. The learned counsel has also referred to section 28 of the Public Debt Act 1946, to contend that the Federal Government is vested with powers to make Rules and the finding of the learned Judge declaring Rule 11 of the Rules, 1992 ultra vires of section 11(1-A) is also not warranted by law.
6. We have given our anxious consideration to the arguments advanced by the learned counsel for appellant and have also minutely gone through the record available. We do not agree with the arguments advanced by the learned counsel for the appellant that the Bond and Certificate is not one and the same thing rather supported the reasoning recorded in para 14 of the impugned judgment, which is reproduced as under:- "The above in-depth analysis shows that in essence and spirit a bond and a Certificate is one and the same thing. Both evidence a debt and a promise made by the Government or issuing Company to pay a fixed sum on a fixed date as also the interest on the said fixed sum. The word bearer, as noted would mean that no endorsement is needed to transfer the bond and certificate and ownership of the value of bond and certificate can be transferred by simple delivery of possession. I, therefore, hold that the lost certificate in this case would also be covered by Section 2(2)(a)(iii) of the Act. The objection, therefore, on behalf of the respondent that the petitioner is not entitled to duplicate of the certificate under Section 11 as the certificate is not proved for therein is repelled. I may, however, add that this distinction is not material for the purposes of disposal of this petition as sub-section (1- A) of section 11 added through Act XIII of 1963 would cover the case of the certificates, even if the contention of the learned counsel for the respondent that bond is different from certificate is held to be correct, lt has not been denied in fact it is admitted that the lost certificates would fall within Section 2(2)(a)(iv) of the Act."
7. The contention of the learned counsel that the issuance of duplicate Certificate is not permitted to avoid false claim, has no force because if the contention of learned counsel is accepted, then nobody would invest his saving with the Bank.
The contention of the learned counsel is in contradiction of Rule 14 of the Rules, 1946, which deals with the Procedure of processing the claim for issue of duplicate in case of lost etc. of the Bearer Bonds. The appellant/Bank has also admitted that respondent No. 1 purchased Certificates through them and when respondent No. 1 is providing photostat copies in proof of his claim, which is also admitted by the appellant/Bank, then it is not understandable that how question of false claim would arise. lt is merely an evasive tactic on the part of appellant and nothing else. The conduct of respondent No. 1 also shows that he after lodging F.I.R, also informed the Bank Authorities about the mutilation of the Certificates and this being the act of God, the respondent No. 1 cannot be penalized for the same. The appellant/Bank was not legally justified in refusing to entertain the claim of respondent. The indifferent attitude of the Bank Authorities will not only prove harmful to the Banking business, but also would be disastrous for the country. What to talk of big Investors if small Investors are discouraged in this manner and no safeguard is provided to their life long savings, they would definitely prefer to invest the same outside the country. This is neither a service to the Nation nor any individual would appreciate the same because if one the faith of individuals in the Financial Institutions is lost, then the result is obvious. The present practice if allowed to continue, the economic condition, which is otherwise not encouraging would further deteriorate as it would spread a general impression that inspire of giving incentives to the Investors, the same has been introduced to snatch away their Savings, In order to restore the confidence of investors, these Rules should be framed in such a manner, through which the investors should feel protection and security about their rights so that their deposit be fully safeguarded. If the Bank succeeds in creating such a situation and atmosphere then it would be a pleasant change. Even the Constitution of Pakistan guarantees such rights and any Rule which is apparently against the interest of Investors actually it goes against the Bank because the Investors would hesitate to make deposit, then in that situation who would be at loss, certainly the Bank and ultimately the country, In this age of competition if better incentives with full protection and safeguard are not provided to the Investors then it would definitely prove most harmful to the very economic system with no hope about positive results-. Uplifting of economic position of Investors is rather in the interest of Bank itself, In order to save its own good-will the Bank should show generosity in advancing every facility to its credit holders and Investors and also to protect their savings so that they would feel themselves safe and sound about their investments. The hardship faced by respondent No. 1 in the present case is not at all appreciational.
8. Even if it is conceded that Rule 14 of Rules, 1946 does not cover FEBC, then the Government has to make similar Provisions in FEBC Rules, 1992 to cater for such situation.
9. We have held that the learned Single Judge in Chamber rightly treated the case of FEBC covered by Section 2(2)(a)(iii) of the Act 1944 and that under Section 11 (1-A) the Rules should provide procedure for issuance of Duplicate Certificate if the original is defaced or mutilated. On the other hand, Rule 11 of 1992 Rules provides that Duplicate Certificate is not to be issued, the same was therefore, rightly declared by the learned Single Judge as ultra vires. The word 'mutilated' has not been defined in Rules 1946 and 1992. Therefore, the learned Single Judge correctly referred to the dictionary meaning. The word 'mutilated' as defined in Black's Law Dictionary are as under:- Mutilated " As applied to written documents, such as wills, Court records, and the like, this term means rendering the document imperfect by the subtraction from it of some essential part, as, by cutting, tearing, burning, or erasure, but without totally destroying it. See Wood ful v. Patton, 76 Ind.
583, 40 Am. Rep. 269. Also, the alteration in the writing, as in a negotiable instrument, so as to make it another and different instrument and no longer evidence of the contract which the parties made.
Clem v. Chapman (Tex. Civ. App.) 262 S.W. 168, 171."
10. We have repeatedly asked the learned counsel whether the Bank has received any application for payment of dividend for the period which was due on 22-8-1996 and subsequent dividend and whether anybody has claimed encashment of the Certificates. He candidly admitted that no claim either for payment of dividend or encashment has been lodged by any one anywhere in the World.
This by itself was more than sufficient to prove the claim of respondent. Moreover the respondent is asking for issuance of Duplicate Certificates to receive dividend, which could have been paid after obtaining indemnity bond from him for refund of the amount in case some body else proved his ownership of the disputed Certificates. The issuance of Duplicate Certificates may have been kept pending and the claim of the respondent has been decided after proper scrutiny in this way we observe that Rule 14 of Rules 1946 provide detailed Procedure and fully secure the interest of both parties particularly the Bank.
11. In the light of above discussion we find that the assailed observation and findings are clearly in line with the law and do not suffer from any legal or factual infirmity. The present ICA is accordingly found to be wholly meritless and is dismissed in limine.