' SABIHUDDIN AHMED, J.---Both the petitioners above-named appear to be aggrieved by the interim order of the Governor of the respondent No,1 dated 3-8-2001 and the consequential order of respondent No,2 dated 5-8-2001 purporting to remove the petitioners from positions of Senior Executive Vice-President/Director and Executive Vice-President of the Bank passed by the respondent No,2 dated 19-3-2Q02. When C.P. No,525 of 2002 came up for Katcha peshi alongwith an application for interim relief, we considered it appropriate to issue notices to the respondents before passing any order. M/s. Khalid Anwar and Shahid Anwar Bajwa entered appearance on behalf of the respondents and the matter was partly argued on 12-4-2002 and 17-4-2002, when it was adjourned to 30-4-2002 in the meantime C.P. No,669 of 2002 also came up before this Bench on 25-4-2002 and since we felt that the same order had been called in question in this petition we directed both the matters to be heard on 30-4-2002. It may be mentioned at this stage that both M/s. Malik Muhammad Qayyom and Anwar Mansoor Khan stressed on the need to pass an interim order in the same terms as had been done by the Honourable Supreme Court in C.P. No,150-L of 2002 arising from a judgment of the Lahore High Court whereby a petition calling in question the termination of services of another employee of the respondent No,2 had been dismissed. Mr. Khalid Anwar on the other hand asserted that an ex parte interim order passed by the Honourable Supreme Court did not amount to a declaration of law and passing of such an order could be contrary to public interest. In the circumstances, considering that it might be more appropriate to allow any of the parties arrayed before us to approach the Honourable Supreme Court in the event of being aggrieved by an order passed by us and be heard before the final resolution of the controversy, we decided with the consent of all the parties to admit and finally decide these petitions.
2. The admitted factual matrix appears to be that the Banking Supervision Department of the respondent No,1 in the course of routine inspection of the Station Road Branch, Hyderabad of the respondent No,2 reported that the respondent No,2 had been extending liberal financing facilities between Fateh Textile Mills Limited (F.T.M.L.) which was a major defaulter and such facilities were used for purchase of the shares of the respondent No,2 bank held by staff officers of the bank. It was further alleged that F.T.M.L. Had availed export refinance from the State Bank through the Station Road Branch of the respondent No,2 against fake shipments. The Governor of the respondent No,1 constituted a Standing Committee in terms of section 41-C of the Banking Companies Ordinance, 1962 for the purpose of making recommendations against the Directors/Senior Executives of the respondent No,2 in respect of different irregularities. The aforesaid committee after examining a number of reports/ documents but without hearing the petitioners vide its report dated 8-6-2001 recorded the following conclusions.
3. The Banking Supervision Department of the State Bank carrying out as. Special inspection headed by Deputy Director and comprising two Assistant Directors noted the following serious irregularities in the functioning of the Branch:
(a) That F.T.M.L. Availed Export Refinance from the State Bank through A.B.L. Station Road Branch Hyderabad against fake shipments.
(b) The ABL through its Foreign Exchange Branch, Karachi and Station Road Branch, Hyderabad was extending financial facilities to the F.T.M.L. For purchase of bank's shares held by staff officers of the bank.
4. With regard to the first irregularity, it was found by the Committee upon random picking of six cases that export refinance wa's availed against certain shipments though it was established that the so-called shipments had never moved from the Port of Karachi and no Master Bill of Ladings were issued. The committee also found that huge amounts of money were deposited in the current account of F.T.M.L. Which were used not for normal business purpose but were utilized for purchase of shares of the Bank. It was also found that large amounts of money were transferred by F.T.M.L. To the account of one Abdul Ghaffar Noorani through whom shares of the value of Rs,21.5 Millions owned by Mr. M. Rasheed Chodhri (ex-President) and 2.5 Million each owned by Mr. I.A. Usmani S.E.V.P./Director and Johar Hussain (ex-E.V.P) were purchased. The Standing Committee recorded the following conclusions and recommendations:
(i) That the Bank and F.T.M.L. Were hands in gloves and the former had abetted F.T.M.L. In the latter's fraudulent availment of subsidized Export Refinance from the State Bank and misappropriation or activities other than exports/genuineness business needs.
(ii) That F.T.M.L. Was liable, to penalty under Export Finance Scheme in respect of cases where shipments had not been made.
(iii) All such cases needed to be dug out by the Bank's internal audit under the direct supervision of the Divisional Head Audit to determine the volume of misuse Export Finance Facilities and B.P.R.D.
May consider blacklisting of F.T.M.L. From availing further Refinance Facilities under the Export Finance Scheme.
(iv) That Bank's internal audit may also fix responsibilities on the official concerned both at the concerned Branches and the Central/Provincial/ Zonal Offices for misappropriation of Export Finance and Extending Facilities for purchase of the Bank's own shares.
(v) That internal audit ought to pin down and disciplinary action taken may be intimated to the State Bank.
5. Apparently the report of the Standing Committee was communicated to the Bank which carried out an exhaustive audit and affixed responsibility for the illegalities. While a large number of officers at the junior level were found responsible. The petitioner in C.P. 669 of 2002 who was then the Provincial Chief was also held responsible in certain situations and in the conclusions recorded by the Senior Vice-President Audit and Inspection Division, it was observed as follows: ' We understand though the officers at Branch Zonal and Circle levels have made certain grave commissions and omissions but had the Provincial Chief played his role prudently and did not exhibit undue inclination towards party the mishap could have been contained at the initial stage."
6. In a separate concurring note Mr. Mukhtar Ali Malik, a Government appointed Director who was associated with the audit referred to certain statements recorded on oath and observed that initially a meeting was held in March, 1999, wherein Mr. Rasheed Chowdhri, Mr. Johar Hussain, Mr. I.A.
Usmani, the petitioner in C.P. 525 of 2002 and representatives of the Workers Federation and Officers Federation participated. It was noticed that the Government intended to disinvest its 49% shares but the employees were unable to buy them, hence it was suggested that shares of all Bank employees be sold at Rs,45 to F.T.M.L. And in doing so there would be no change in the management. The meeting was then postponed but subsequently it came to be noticed that M/s. Rasheed Chowdhri, Johar Hussain and I.A. Usmani sold their shares at the rate of Rs,100 per share.
The petitioner in C.P. 669 of 2002 and his brother at Rs,94.78 and 84.78 respectively while other employees had to sell their respective shares between Rs,20 and 30 each.
7. On the basis of the aforesaid reports and some other documentary material Standing Committee of the State Bank constituted under section 41-C of the Banking Companies Ordinance, 1962 examined the matter in detail and submitted the following conclusions for consideration of the Governor of the State Bank vide its report dated 8-6-2001:
(i) F.T.M.L. Availed export refinance from S.B.P. Through A.B.L. Station Road, Hyderabad against fake shipping documents.
(ii) A.B.L. Through its Foreign Exchange Branch, Karachi and Station Road Branch, Hyderabad extended financing facilities to F.T.M.L. Which were used for purchase of shares held by the employees of A.B.L.
(iii) Moreover on the basis of Memorandum of Understanding (M.O.U. Dated 9-11-1998) between a U.S. Based company called Inter Link Equity Capital and the employee Directors of the respondent No,2, the committee, recorded that the said Directors used their position for personal enrichment by negotiating sale of their own shares at more than three times the price paid to other employees shareholdeRs, Accordingly it recommended that four directors and two employees of the respondent No,2 were undesirable persons and their continued association with the respondent No,2 was against public interest.
8. On the basis of the aforesaid report the President of the respondent No,1 the Governor of the respondent No,1 passed an order dated 3-8-2001 in respect of six persons including the petitioners in the following terms: "In the light of facts and circumstances available before me, I am satisfied that: (a) the said Directors are unfit and undesirable persons to be associated with any banking institution; and (b) continued association of the Said Directors with A.B.L. Is against the interest of A.B.L. And its depositors as well as against public interest.
' The report and its annexures, inter alia, establish that:
(a) The said Directors participated and/or colluded in extending financial accommodation and full logistic support to a major defaulter of their bank to enable it to clandestinely purchase the A.B.L shares with a view to ultimately take control of the bank.
(b) That the said Directors used their position for personal encashment by negotiating sale of their own shares at more than 3 times the price paid to other employees shareholder.
' Terms of the Memorandum of Understanding dated November 9, 1998 entered into by the said Directors with the Interlink Company ("ILC"), a California based corporation establish that the said Directors were/are acting against public interest, against the interest of A.B.L. With a view to promoting their own interest.
' For reasons briefly stated above and in the report, it is necessary to remove the said Directors from their office and as executives of A.B.L. Forthwith."
9. The order further goes on to record that the said Directors will be given a reasonable opportunity of making a representation to State Bank for which they would be given separate show-cause notices and that delay in the removal of such Directors would be detrimental to public interest as well as the interest of A.B.L. And its depositoRs, Accordingly it was ordered that pending consideration of their representations, if any, petitioner Saleem Shaikh shall not, with immediate effect act as S.E.V.P. Or Director of A.B.L nor would Mr. Ashfaque Qureshi, E.V.P and shall not take any part of the management of the A. B. L.
10. Thereafter show-cause notices were served upon the petitioners and other Directors/Executives of the respondent No,2 to which they submitted their detailed replies. Eventually by an order dated 14-3-2002 the Governor of the respondent No,1 held that he was satisfied that there was no reason to alter his earlier order directing removal of Directors and officers under section 41-A of the Ordinance. This order is called in question through both these petitions.
11. We have had the benefit of some very able arguments presented by Mr. Malik Muhammad Qayoom and Mr. Anwar Khan on behalf of the two petitioners and M/s. KhaMansoorlid Anwar and Shahid Anwar Bajwa on behalf of the respondents touching upon several legal aspects of the controversy and analyzing the rather voluminous material on record. Nevertheless, in view of the order that we propose to pass, we do not feel persuaded to comment upon the same.
12. Both Mr. Khalid Anwar and Mr. Bajwa contended by way of a preliminary objection to the maintainability of this petition that the petitions were premature as the petitioners had not availed of the alternate remedy of appeal provided under section 41-C of the Banking Companies Ordinance. Mr. Khalid Anwar argued that under section 41-C of the Ordinance no order under section 41-A could be made except by the Governor State Bank and such order was appealable before the Central Board of Directors of the State Bank whose decision was to be final. Learned counsel contended that the Central Board of Directors was an autonomous institution under section 9 of the State Bank of Pakistan Act consisting of the Governor of the State Bank, the Secretary, Ministry of Finance Government of Pakistan and non-official Directors representing different provinces and different sectors of economic activity.
13. Mr. Anwar Mansoor Khan learned counsel for the petitioner in C.P. No,525 of 2002, however, contended that an appeal was merely an exercise in futility inasmuch as it could not be treated as an efficacious remedy when appellate powers had been conferred upon a Board which was headed by the person against whose orders the appeal could be preferred and who also had a casting vote in the event of a divided opinion in terms of section 9 of the State Bank of Pakistan Act.
Learned counsel further argued that the petitioner could not be called upon to avail of the remedy, as a - Constitutional petition was a mere appropriate remedy when the impugned order ex facie suffered from lack of, jurisdiction. Learned counsel referred to a large number of cases decided by the superior Courts including the Honourable Supreme Court to the effect that a Constitutional petition was a more appropriate remedy when the impugned order was ultra vires the powers of the authority passing the same. Indeed the principle of law is well established and it is not necessary to cite precedents in support thereof. To demonstrate that the order dated 15-3-2002 was ultra vires powers of the Governor State Bank, Mr. Anwar Mansoor Khan referred to the opening words of section 41-A of the Banking Companies Ordinance which purported to confer the powers upon the State Bank and not Governor thereof. Learned counsel argued that under section 9 of the State Bank of Pakistan Act, 1956, the general superintendence and directions of the affairs and business of the Bank has been entrusted to the Central Board of Directors which may exercise all the powers and do all acts and things that may be exercised or done by the Bank and are not expressly directed or required to be done in general meeting or annual general meeting. From the above, learned counsel deduced that the powers to remove a Director or other officer under section 41-A could only be exercised by the Central Board of Directors and not by the Governor acting as persona designata.
14. With profound respect, we do not find merit in this contention. Section 41-C (1) expressly provides that no order under section 41-A shall be made except by the Governor of State Bank on a report by Standing Committee and subsection (2) stipulates that any person or bank aggrieved by an order of Governor under section 41-A may appeal to the Central Board of Directors whose decision shall be final. Learned counsel was unable to explain that if his interpretation of section 41-A is accepted, section 41-C would become meaningless and such meaninglessness can never be attributed to the Legislature.
15. Having considered the above mentioned statutory provision and applying the rule of harmonius construction, we agree with Mr. Anwar Mansoor Khan to the effect that the regulatory power to ,safeguard the interests of a Banking Company or its depositors to secure proper management of Banks in the public interest vests in the State Bank in terms of section 41-A. Section 41-C however, deals with the manner of exercise of such power and postulates three things. In the first place a Standing Committee set up by the State Bank is required to examine the affairs of a Bank and no order of removal can be passed in the absence of a report of such committee. Thereafter an order of removal can be made by the Governor of the State Bank after giving the person concerned an opportunity of being heard. Finally an order of removal is subject to the incidents of an appeal to the Central Board of Directors,
16. Responding to the preliminary objection Malik Muhammad Qayyom learned counsel for the petitioner in C.P. 669 of 2002 argued that the Courts in Pakistan have not .Treated a mere theoretical existence of an alternate remedy as an invariable bar to the exercise of jurisdiction under Article 199 of the Constitution. It is well-settled that the alternate remedy must be equally efficacious and even otherwise a petition was always entertainable if the necessary factual material upon which an administrative Tribunal could assume jurisdiction did not exist. Whenever an administrative Tribunal unlawfully assumes jurisdiction an aggrieved party could not be required to litigate his grievances in the hierarchy of such Tribunals. It may not be necessary to cite the large number of precedents covering the above proposition of law. It may however, be stated in the context of the present case that if it could be shown that the factual or legal basis upon which jurisdiction was assumed by the respondent did not exist or if such jurisdiction was assumed not for the purposes laid down in the Statute, but for some other collateral purpose, a petition under Article 199 of the Constitution could be entertained at this stage. On the other hand if necessary material or pre-conditions for assumption of jurisdiction did exist but the order passed suffered from a wrong finding of fact or application of law, the aggrieved party would normally be required to avail the alternate remedy provided in the Statute before approaching this Court.
17. In this view of the matter it becomes necessary for us to examine the impugned orders from the above stand point. The operative part whereof reads as under:-- "In view of the above I am satisfied that there is no reason to alter my earlier decision that said Directors and said official be removed under section 41-A of the B.C.O. My findings, inter alia, are as under:-
(a) Said Directors participated and/or colluded in extending financial accommodation and full logistic support to a major defaulter of their bank to enable it to clandestinely purchase A131, shares with a view to ultimately take control of the bank.
(b) Said Directors used their position for personal encashment by negotiating sale of their own shares at more than three times the price paid to other employees shareholder.
(c) Terms of the Memorandum of Understanding dated 9th November, 1998 entered into by said Directors with the Interlink Company a California-based corporation, establish that said Directors, were/are acting against public interest, against the interest of A.B.L, with a. View to promoting their own interests.
(d) Said Directors as well as said official are unfit and undesirable persons to be associated with any banking institution. I am further satisfied that removal of said Directors and said officials by the interim order was in the interest of A.B.L. And its depositors and in public interest.
18. Taking up the finding recorded at (c) above, it is not disputed that the petitioner in C.P. No,525 of 2002 alongwith three other Directors entered into a Memorandum of Understanding with a California-based company whereby the aforesaid Directors were to facilitate the company inter alia in purchasing the 49% shares of the Federal Government proposed to be disinvested and in consideration thereof, the company was to purchase the personal shares of these Directors at a premium i,e, 2 Dollars per share and at the same time, upon acquiring majority shares, benefit them through handsome pay packages and also retained them on the Board of DirectoRs, Mr. Anwar Mansoor Khan indeed argued that M.O.U. Could not be treated as a concluded contract, and in fact it had not been acted upon and therefore could not be given any weight. We are not impressed by this contention inasmuch D as while agreeing that it had not become an enforceable contract, its weight as regards the intention of the Directors for the purposes of proceedings like the present one could not be overlooked. Section 41-A enables the State Bank to take both punitive and preventive action in the interest of the Banking Company, its depositors or the public. Therefore it is not necessary to wait till a person actually causes loss and once it is shown that he had all the intentions of doing so. The power to remove could be exercised in a proper case.
19. Nevertheless, assuming that the M.O.U. Had acquired the form of a proper contract and had been acted upon, we requested Mr. Khalid Anwar, to show whether such a contract could be deemed to be barred by any law or otherwise invalid. Learned counsel conceded that a shareholder is always entitled to disinvest his shares at such price as may be offered to him and practically those holding controlling shares in a company are mostly found at a certain premium over and above the price offered to ordinary shareholders, Indeed the employees purchasing the shares of the Bank were restrained from disposing them off for a period of five years from the date of Privatization in 1991, the M.O.U. Was admittedly signed after the aforesaid period and nothing was placed on record to show any prohibition or illegality in such a transaction. Indeed the fact that some shareholders might be able to secure a much higher price for their shares on account of their privileged position in a company might offend once ethical suscepbilities but such is the rule in market economy and in the absence of any legal prohibition no objection to such transaction can be sustained. In any event there is nothing on record to indicate that the intended action of the petitioner and other Directors could have possibly led to a situation detrimental to the interests of the Banking Company or its depositoRs,
20. It was indeed argued that the power of removal under section 41-A was available even if the association or a Director or officer was "otherwise undesirable" or if such removal was in the public interest, apart from the specific grounds of being detrimental to the interests of the Banking Company or its depositoRs, We are afraid we cannot countenance such a broad interpretation of the expression "undesirable" and "public interest". It needs to be kept in view that section 41-A(1) and (3) confers a power upon State Bank not merely to remove a person from its existing employment but to prohibit him from taking part in the management of any other Banking Company. It intends to deprive a person of his means of livelihood and therefore, must be construed very strictly. Moreover Article 4 of the Constitution guarantees that no person shall be prevented from or be hindered in doing that which is not prohibited by law and Article 23 guarantees a fundamental right to acquire, hold and dispose of property subject to the Constitution and any reasonable restriction imposed by law in the public interest. Therefore, in our view a removal in the public interest under section 41-A of the Banking Companies Ordinance on the above ground could only be effected if a restriction on the transfer of shares had been imposed by law. Likewise the expression "otherwise undesirable" in section 41-A(1)(a) has to be read ejusdem generis with the earlier words "detrimental to the interest of the Banking Company or its depositors" and not public power of such drastic nature could be exercised on the ground that the Governor State Bank considers a person's association with the Bank to be undesirable for any subjective reasons.. We would therefore, hold that the impugned action could not be taken on the basis of ground (c) reproduced in para.17 above.
21. As regards grounds (a) and (b) however, the position appears to be substantially different.
Indeed there is material on record to indicate that extremely liberal financing was granted to F.T.M.L. Which had even earlier defaulted in payment of dues of the respondent No,2 Bank. There is also material to suggest that the F.T.M.L. Purchased or agreed to purchase the shares held by some Directors and Senior Executives at a price much higher than the normal price of such shares. Mr. Khalid Anwar rightly pointed out that section 95 of the Companies Ordinance prohibits a company from advancing loans or financial assistance or purchase of its own shares. Moreover, a distinguishing feature of these allegations as compared to the one at number (c) seems to be that the interest of depositors were being compromised by advancing loans to a defaulter for which some Directors and persons in the senior management obtained an advantage by exercising their management powers, Therefore, it could not be held that relevant pre-conditions for exercise of power under section 41-A did not exist in respect of the aforesaid allegations.
22. The question whether the facts necessary for taking penal action under section 41-A was established or otherwise is basically a question of fact and this Court does not normally enter into such controversies whenever alternate remedies are available. Indeed both Mr. Malik Muhammad Qayyom and Mr. Anwar Mansoor Khan argued that the alternate remedy in terms of section 41-C is only illusory as the appellate authority i,e, the Central Board of Directors of the State Bank is headed by the Governor himself who has passed the impugned order and the very concept of an appeal to a' higher forum would be destroyed in case he is called upon to preside over a forum where his own decision is questioned. Mr. Khalid Anwar urged that the Central Board of Directors is a fairly autonomous body after the enactment of the State Bank of Pakistan (Amendment) Act, 1994. He also fairly conceded that it would be appropriate to order that an appeal against the impugned order be heard by the Central Board where the Governor should exclude himself from participating.
23. We have also noticed that the impugned order suffers from one more lacuna inasmuch as the period during which the petitioners have been debarred from being associated with the management of the respondent No,2 Bank and Consequently with any other Bank has not been specified. It is important to keep in view that as a consequence of an order of removal passed under section 41-A(1) the person removed also stands debarred under subsection (3) from taking part in the management of any other Banking Company for the period not exceeding three years, When a professional banker is so removed he stands deprived of all opportunities of gainful employment in the profession in which he is trained. The Legislature has therefore ordained that such period should be specified in the order and should not in any case exceed three yeaRs,
24. In view of the foregoing we would partly allow these petitions and hold that no action on the basis of execution of Memorandum of Understanding dated 9-11-1998 could be taken. The impugned order dated 15-3-2002 passed by the Governor of the respondent No,1 is accordingly set aside, but he is at liberty to pass any appropriate order on the basis of grounds (a) and (b) stated in the impugned order. In doing so the Governor will take into consideration the extent of responsibility of each of the ,petitioners and thereafter determine whether any action is warranted under section 41-A. He will also specify the period during which such order will operate for the purposes of section 41-A(3). In case the petitioners are aggrieved by any order that may be so passed they would be free to invoke the appellate jurisdiction of the Central Board of Directors of the respondent No, 1 and the Governor will not participate in the hearings and decision-making process of such appeals. Till the disposal of these appeals interim order passed earlier will remain operative subject to any decision or modification or vacation of the interim order passed by the Honourable Supreme Court in C.P.L. 150 of 2002. The parties will bear their own costs. We may record our appreciation of the invaluable assistance rendered by Malik Muhammad Qayyom and Mr. Anwar Mansoor Khan for the petitioners and M/s. Khalid Anwar and Shahid Anwar Bajwa for respondents.