' SARDAR MUHAMMAD ASLAM, J.---This judgment shall dispose of Writ Petition No,457 of 2000 and Writ Petition No, 2697 of 2000, as common question of facts and law are involved.
2. Through this Constitutional petition, the petitioner-Banking Company prayed that the impugned order, dated 10-11-1999 passed by the Secretary (Inspection), Central Board of Revenue, Government of Pakistan, Islamabad be declared to be illegal, without lawful authority and consequently of no legal effect, and the respondent be directed to approve the special reserve created by the petitioner in terms of section 23(1) (ix) of the Income Tax Ordinance, 1979.
3. Briefly the facts relevant for the disposal of this Constitutional petition are that the petitioner is a banking company incorporated under the Companies Ordinance, 1984, and functioning under the Banking Companies Ordinance, 1962. By its letter, dated 4-7-1993, the petitioner informed the respondent that it has created a special reserve of Rs,5,000 million out of its profits for the financial year ended on 31-12-1992 for the following purposes:--
(i) To provide for possible doubtful debts.
(ii) To provide for diminution in the value of securities.
(iii) To provide for unforeseen contingencies.
(iv) To strengthen and consolidate the Banks equity base and requested for approval of the special reserve in terms of section 23(1)(ix) of the Ordinance but the request of the petitioner was turned down by the respondent vide its letter, dated 12-9-1993. The petitioner by its letter, dated 2-12-1993 and 2111-1994 again requested the respondent to let them know requirements of law to qualify your approval but the same was rejected by the respondent vide letter, dated 5-12-1994. After protracted correspondence, the respondent informed the petitioner vide its letter, dated 7-4-1997 that:- ' The case of every financial institution is to be considered on merits and no blanket concession to create reserve is to be given to the financial institutions or lo the Banking Companies.
(ii) Each case has to be examined on merits and in accordance with the financial strength of the institution to be examined on the touch-stone of the equity/profit ratio and other such criteria.
'The petitioner through its letter, dated 21-7-1999 by Tax Consultants made a detailed application/representation to the respondent for the approval of Special Reserve in terms of section 23 (1)(ix) of the Ordinance. It was also brought to the notice of Central Board of Revenue that the Federal Ombudsman had granted relief to the Bank of Punjab in similar circumstances and petitioner cannot be meted out with discrimination. The respondent has refused to accede his request, through letter, dated 10-11-1999, which is being assailed herein.
4. In response to the notice to the writ petition, respondent submitted para. Wise comments wherein it is stated that the purpose of the introduction of clause (iv) of subsection (1) of section 23 was to impose the financial strength and lending capacity of the financial institutions engaged in the development work which provision was inserted through Finance Ordinance, 1960. The petitioner is a Scheduled Bank and its activities are not for the development of any particular sector and prayed for the dismissal of the constitutional petition.
5. The learned counsel for the petitioner contends that non-approval of Special Reserve is discriminatory and opposed to the provisions of Article 25 of the Constitution of Islamic Republic of Pakistan, 1973; he cited the cases, whereby the relief was granted to Pakistan Industrial Credit and Investment Corporation Limited, Pakistan Industrial Finance Corporation, House Building Finance Corporation, Investment Corporation of Pakistan and the Bank of Punjab. He further adds that the policy of pick and chose adopted by the respondent speaks of mala fide. He argued that the discretionary power has to be exercised justly, fairly and reasonably, without discrimination. He relied on Amanullah Khan and others v. The Federal Government of Pakistan through Secretary, Ministry of Finance, Islamabad and others (PLD 1990 SC 1092): Chairman, Regional Transport Authority, Rawalpindi v. Pakistan Mutual Insurance Company Limited, Rawalpindi (PLD 1991 SC 14); Messrs Gudoon Textile Mills and 814 others v. WAPDA and others (1997 SCM R 641); Government of N.W.F.P. Through Secretary and 3 others v. Mejee Flour and General Mills (Pvt.) Ltd., Mardan and others (1997 SCM R 1804); Messrs Airport Support Services v. The Airport Manager, Qauid-e-Azam International Airport, Karachi and others (1998 SCM R 2268) and Nizam-ud-Din and another v. Civil Aviation Authority and 2 others (1999 SCM R 467).
6. Conversely, the learned counsel for the respondent controverting the arguments raised by the petitioner's learned counsel urged that the provisions of section 23 (1)(ix) of Income Tax Ordinance has since been repealed; assessm ent have been completed for the financial year, 1993 till the repeal of Ordinance; the matter once finally decided cannot be reopened at this stage. As to the discriminatory treatment, the learned counsel vehemently argued that the respondent-Board has not granted concession to any of the bank of its own. The case of the financial institutions to whom relief has been granted, cannot be quoted as precedent. As to the relief granted to the Bank of Punjab, the learned counsel stated that order of remand of Federal Ombudsman was implemented, on rejection of their representation by the President of Pakistan. He also contended that the Constitutional petitions are barred by laches, and, are thus, liable to dismissal on this count alone.
7. I have carefully considered the respective contentions of the learned counsel for the parties, perused the record and precedent case law.
8. The respondent is a public functionary. The petitioner had been approaching the respondent through protected correspondence to let them know the requirement of law to qualify them for the grant of approval of Special Reserve in terms of section 23(1)(ix) of the Ordinance. Attention of the Board was drawn to the cases of the financial institutions to whom relief was granted by it. In mere particular, the respondent was requested to treat (sic) and deal him equally as was done in the case of Bank of Punjab. The respondent took different stands on different stages and finally refused, that blanket approval cannot be granted on the precedent of Bank of Punjab. The Constitutional petitions were filed, thereafter, immediately. There is no codified law governing laches. Each case has to be examined on its own peculiar facts to non-suit or otherwise, on the doctrine of laches.
Protracted correspondence between the parties, suggestive of consideration, will not attract the rigour of laches.
9. The petitioner has approached the respondent for the grant of relief in terms of section 23(1) (ix) of the ordinance. He cited the cases of financial institutions to whom relief was granted in similar circumstances. The respondent refused to grant relief mainly on the ground that the petitioner is banking Company, cannot equate itself with the financial institutions, who have been provided the relief being engaged in development and building. Sector and some of the institutions were facing hardships. (sic) the learned counsel, obviously render no help to him. The Bank of Punjab performing similar functions and duties like the petitioner, had approached the Federal Ombudsman who directed the respondent to grant benefit of Special Reserve in view of the provisions of section 23 (1)(ix) of the Ordinance. The respondent unsuccessfully challenged the decision of Federal Ombudsman before the Honourable President of Pakistan. Income Tax Appellate Tribunal in an appeal by the Bank of Punjab against respondent allowed relief in regard to Special Reserve in accord with decision of Federal Ombudsman and decided the appeal in terms thereof. The Central Board of Revenue, Islamabad, thereafter, in obedience of the judgment of the Federal Ombudsman and Appellate Tribunal, revised the original assessment by giving benefit of Special Reserve.
10. The petitioner's case is at par with the case of the Bank of Punjab, being similarly placed and similarly circumstanced. He cannot he meted out with discrimination.
11. In Messrs Gadoon Textile Mills and 814 others v. WAPDA and others (1997 SCM R 641), it was held that he treated alike. Reasonable classification is permissible but if it is arbitrary or is not founded on any rational basis it will not be deemed to be classification warranting its exclusion from the mischief of Article-25 of the "Constitution. In Nizamuddin and another v. Civil Aviation Authority and 2 others (1999 SCM R 467), similar view was expressed by the Honourable Supreme Court of Pakistan. Reiterating its view in Aman Ullah Khan and others v. The Federal Government of Pakistan through Secretary, Ministry of Finance, Islamabad and others (PLD 1990 SC 1092) and Chairman Regional Transport Authority, Rawalpindi v. Pakistan Mutual Insurance Company Limited, Rawalpindi (PLD 1991 SC 14) holding that the Government is not supposed to discriminate between citizens and its functionaries and cannot be allowed to exercise discretion on their whim, sweet will or as they please but are bound to act fairly, evenly and justly. Similarly observations were also made in the case of Messrs Airport Support Services v. The Airport Manager, Quaid-e-Azam International Airport, Karachi and others 1998 SCM R 2268. In Government of N.-W.F.P. Through Secretary and 3 others v. Mejee Flour and General Mills (Private) Limited, Mardan and others (1997 SCM R 1804) and in Rai Mazhar Iqbal and another v. The University of the Punjab, Lahore through Vice Chancellor and two others (1992 CLC 1158).
12. Examination of the aforementioned precedents leads me to conclude that public functionary like the respondent cannot treat with discrimination to persons equally placed. The Public functionaries are required to act justly, fairly, evenly, honestly and cannot seek refuge on the plea of classification which is arbitrary or not found on rational basis.
13. The argument of the learned counsel for the respondent that the assessment stood completed under the law, then inforce, the same cannot be re-opened now, being past and closed transaction, has been responded by the petitioner that the proceedings are still pending in the hierarchy established under the Income Tax Ordinance. The petitioner can seek benefit in the proceedings pending adjudication before the Income Tax Forums and the repeal will not affect its right, if the same was available and could be granted legitimately by the respondent.
14. In view of the above discussion, this Constitutional petition is allowed, the impugned order, dated 10-11-1999 passed by the respondent is declared to be illegal and without lawful authority.
Resultantly, the respondents are directed to approve the Special Reserve created by the petitioner in terms of section 23(1)(ix) of the Income Tax Ordinance.