2013 PLP (C (PLC(CS))

SHAUKAT AZIZ SIDDIQUI, J.

Through this single judgment all the connected Writ Petitions bearing Nos.3022, 2703 of 2006, 1760, 1882, 2654, 2917, 4232, 4846 of 2010, 465, 468, 1686, 2993 to 2995, 3106, 3116, 3267 of 2011, 119, 575, 596, 854, 3594, 4182 of 2012 and 535 of 2013, are being disposed of, as common questions of law and facts are involved.

2. The brief facts presented through above mentioned writ petitions are that, the then ADBP was established under Agricultural Development Bank of Pakistan Ordinance, 1961, with a Board of Directors appointed by the Federal Government under section 9 of the Ordinance, vested with general directions and superintendence of the affairs and business of the Bank. Now, ADBP has been converted into a Company namely "Zarai Taraqiati Bank Limited" to be referred as respondent Bank under the Companies Ordinance, on promulgation of Ordinance No.LX. which was made effective through Notification from 14-12-2002 and the terms and conditions of services of the employees have been protected under section 6 of the aforesaid Ordinance.

3. The petitioners were the employee of the then ADBP subsequently transferred to ZTBL by operation of law through an Ordinance without their option in this respect. Petitioners rendered unblemished service to the institution, received promotion from different positions and finally retired from service on attaining the age of superannuation. That, the pensionary benefits of the petitioners were released vide pension payment order by the respondent-bank on the basis of illegal revised formula of pension without approval of Federal Government which they received under protest as they were unjustly paid less pensionary benefits in violation of the rules by rendering incorrect interpretation by the respondent-bank. That the petitioners vide their representation drew attention of respondent No.1 towards the payment of less pensionary benefits and particularly stressed that application of wrong formula for calculation of pension and other retirement benefits circulated vide impugned Circular No.PD/26/2002 dated 10-8-2002 with the approval of the Board of Directors which had been made applicable with retrospective effect i.e. 1-7-2000 without prior approval of the Federal Government which was mandatory for the respondent bank and also not giving the benefit of one increment, in terms of Finance Division Regulation Wing O.M. No.F-3(20)/Reg/98 dated 8-9-1999 which was applicable to the employees of the respondent bank and even the Federal Service Tribunal also delivered a judgment on this point allowing the benefit of one increment reckonable for purpose of pension and other benefits, in case of rendering more than six months service in the year of retirement. That in terms of Regulation 5-A of Staff Service Regulations, 1975 of the respondent-Bank, in all matters not provided in these regulations, the rules/orders applicable to the Federal Government Servants are applicable to the employees of the respondent-bank.

4. Learned counsel for petitioners argued that the provisions contained in section 11(10) of the Banks Nationalization Act, 1974 do not apply to the employees of the ADBP who are governed by the provisions of a specific statue i.e. ADB Ordinance, 1961, qua terms and conditions of service and alterations therein. The terms and conditions of service, including the pension benefits and provident fund of the employees of the ADB, cannot be altered without prior approval of Federal Government in view of the Provisions contained in subsection (2) of section 39 of the Agricultural Development Bank, Ordinance 1961. That reduction in commutation from 50% to 40% by the Federal Government while introducing new pay scales during 2001 had no impact on overall computation of pension benefits or simply reduced the commutation amount which did not reduce the overall computation.

5. On the other hand, respondents while filing their reply/parawise comments raised the preliminary objections that instant writ petition is wholly misconceived, misdirected and premature, as the petitioners did not avail the alterative remedy available to them by way of departmental appeal; the appeal is time-barred and writ petition is liable to be dismissed under Order VII, Rule 11, C.P.C. That writ is not maintainable as the respondent-Bank is a body corporate under the Companies Ordinance, 1984 having no statutory rules and the relationship between the petitioners and the respondent-bank is that of "master and servant" and there involve lot of serious factual controversies.

6. On facts it is inter alia contended that Ministry of Law and Justice through their letter dated 23rd August, 2004 has commented that ZTBL requires no approval of the Federal Government for changing its Service Regulations in view of section 6 of the ADBP (Re-organization and Conversion) Ordinance, 2002. Moreover, Board of Directors approved revision of pension factor in respect of employees of the Bank on 9-8-2002 and as opined by the honourable Federal Service Tribunal in various appeals that ADBP (now ZTBL) after falling within the ambit of Banks Nationalization Act, 1974, vide Finance Division's Notification No.F-1(3)Inv.II/81 dated 13-1-2001 Government's approval is not required any more. Moreover, as per contents of Finance Division Government of Pakistan letter No.F.5(8)IF-I/2003 dated 12-10-2005, ZTBL Board is competent to carry out the necessary amendments in their Staff Service Regulations. That the ADBP (Re-organization and Conversion) Ordinance, 2002 did not provide for an option to the employees for their transfer from ADBP to ZTBL. That the pensioner benefits of the petitioners were released by the Bank on the basis of lawful approval regarding pension formula approved by the Board of Directors, under BNA, 1974. That, after the approval of the Board of Directors, no approval of Federal Government was required and this has also been confirmed by the Deputy Attorney-General before Hon'ble Lahore High Court in Writ Petition No.950 of 2001 where he stated that Board of Directors of the ADBP (Now ZTBL) is fully competent to decide the matter i.e. revision of pay, allowances and fringe benefits etc. of employees) and the approval of Finance Division, Government of Pakistan was no more required after 13-1-2001 i.e. the date when ADBP was brought under the ambit of Banks Nationalization Act, 1974 therefore, the word "protest" used by the petitioners is out of context, record and an afterthought. It is further contended that the Wage Commission and Pay Commission is not enforced and the Federal Government authorized the Board of Directors ADBP/ZTBL, through section 11(10) of BNA, 1974 to determine the remunerations and financial benefits of the employees. Moreover, section 38(1) of IRO, 1969 has been deleted while enforcing IRO, 2002 by the Federal Government. The Federal Government reduced the percentage of commutation from 50% to 40%, similarly, the ADBP introduced the new pension factor in the light of revised pay scales in respect of its employees.

7. I have heard the learned counsel for the parties and also perused the record.

8. Before giving my observations/findings I find it appropriate to provide following admitted facts between the parties:

Agricultural Development Finance Corporation and Agricultural Development Bank of Pakistan were replaced through an Ordinance called Agricultural Development Bank Ordinance, 1961 (No.IV of 1961). Regulation governing recruitment of employees of the Bank and terms and conditions of their service are made under section 39(2) of the Ordinance ibid. Through Ordinance No.LX/2002 Re-Organization or Conversion of ADBP into public limited company took place. Under section 6 of the latter Ordinance employees of ADBP, who were in service, got transferred and became employees of the Company on the same terms and conditions as well as rules and regulations applicable to them before the effective date which later on notified as 14-12-2002. Agricultural Development Bank Employees Pension and Gratuity Regulations, 1981 were framed on the mandate of section 39(2)(e) of the Agricultural Development Bank Ordinance, 1961 which were approved by the Federal Government and were published under requirement of section 40 of the Ordinance, ibid. The Board of Directors in its meeting dated 9-8-2002, decided to reduce the pension factor from 2.33% to 1.15% on account of revision of pay scale without giving any option to the employees to opt for new pay scale with new pension factor or old pay scale with old pension factor. This decision of ADBP Board was notified by circular dated 10-8-2002. The bank through application dated 13-3-2010, sought ex post-facto approval of decision of Board of Directors, which was conveyed, through reply to above noted request, vide memo. dated 20-8-2011. The request of Bank for issuance of gazette notification regarding ex-post facto approval was declined by the Ministry of Finance in the light of the opinion of Law and Justice Division on the ground of pendency of writ petitions pending before this Court on the issue. This was conveyed to bank through memo. dated 8-8-2012. The ex-post facto approval was accorded by the competent authority of Finance Division and not by the Establishment Division in consultation with Law and Finance Division. Till the date the decision of Board of Directors of reducing the pension factor from 2.33% to 1.15% has not been approved by the Federal Government and even approval by competent authority in Finance Division has not been notified and published in the gazette notification.

9. For convenience relevant sections of Agricultural Development Bank Ordinance, 1961 (No.IV of 1961) and Agricultural Development Bank of Pakistan (Re-organization and Conversion) Ordinance, 2002, are being reproduced hereinbelow:

"Regulations: 39.(1) The Board may make regulations not inconsistent with this Ordinance or the rules to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of this Ordinance and the efficient conduct of the affairs of the Bank. (2) Without prejudice to the generality of the provisions of subsection (1), the regulations may provide for:

(a) the matter on which Regional Advisory Committee may advise the Regional Manager; (b) the conduct of business at the meetings of the Board the Executive Committee or of any other Committee or Sub-Committee; (c) the procedure for the recovery of loans and other dues of the Bank; (d) the disclosure of interest, direct or indirect, of a Director in any application for loan; (e) the recruitment of the employees of the Bank, the terms and conditions of their service, the constitution and management or Provident Funds for the employees of the Bank and all other matters connected with any of these things; (f) the duties and conduct of employees and agents; (g) The forms of returns and statements; (h) preparation of annual estimates of income and expenditure of the Bank and their submission to the Board and the Federal Government; "Provided that no regulation made with respect to the matters mentioned in clauses (e) and (f) shall take effect until it has been approved by the Federal Government." Publication of Rules, etc.

40. All rules and regulations made under this Ordinance shall be published in the Official Gezette. Agricultural Development Bank of Pakistan (Re-organization and Conversion) Ordinance, 2002.

6. Continuation in service of the company.

(1) The employees of ADBP who were in the service of ADBP before the effective date shall stand transferred to and become the employees of the Company as of the effective date on the same terms and conditions and shall be subject to the same rules and regulations as were applicable to them before the effective date. Agricultural Development Bank Employees Pension and Gratuity Regulations, 1981.

22. Rate and scale of pension.

(1) Pension shall be calculated at the rate of seventy per cent of average emoluments on completion of thirty years qualifying service. (2) .. (3) .. (4) .. Important/relevant correspondence between ZTBL and Finance Division regarding ex-post facto approval of the decision of Board of Governors is also reproduced hereunder:

"ZARAI TARAQIATI BANK LIMITED HEAD OFFICE, 1 FAISAL AVENUE, P.O.BOX NO.1400 ISLAMABAD OFFICE OF EVP (HUMAN RESOURCE DIVISION) Confidential /Urgent Letter No.PRD-4(53)/2010/963 Dated 13-3-2010 Mr. Mehboob Khan, Section Officer (IF-I), Finance Division, Pak Secretariat, Islamabad. Subject: Ex-post facto approval of decision of Board of Directors. Dear Sir, It is submitted that ADBP Employees Pension and Gratuity Regulations, 1981 were framed by Federal Government and notified vide S.R.O. 1352(I)/81 dated 25-12-1981 published in Extraordinary Gazette Part-II (Annexure-I). These regulations continued till 9-8-2002 when our BOD in its meeting dated 9-8-2002 (Annexure-II), after being placed under BNA-1974, decided to reduce the pension factor from 2.33 to 1.15 on account of revision of pay scales without giving any option to the employees to opt for new pay scales with new pension factor or old pay scales with old pension factor. The said decision of ADBP's Board was notified vide circular dated 10-8-2002 (Annexure-III), however, approval of Federal Government could not be obtained. It may be noted that the Bank was converted into a Public Limited Company (ZTBL) on 14-12-2002. Some of the employees challenged the matter in Federal Services Tribunal where it was decided in favour of the Bank on 18-10-2003 (Annexure-IV) but the employees filed an appeal before the honourable Apex Court where leave to appeal granted on 5-6-2009 and the case was fixed for hearing on 22-2-2010 before a bench headed by the honourable Chief Justice of Pakistan. The honourable Bench observed that ADBP Employees Pension and Gratuity Regulations, 1981 notified vide S.R.O. 1352(I)/81 dated 25-12-1981 are statutory in nature. Since, the revision of pension factor, the Bank has already paid more than Rs.6 billion on account of commutation of pension. During the course of arguments it was deemed proper to settle the matter of these persons who were before the court and one time concession was thus made to the extent of appellant 13 in number only. The Court orders are self explanatory and reflect this position (Annexure-V). In order to avoid any further litigation heading to huge financial impact beyond the sustainability of the Bank, it is requested that decision of Board of Directors regarding revision of pension factor may kindly be approved retrospectively on urgent/priority basis. Yours Sincerely, Sd/- (Muhammad Asghar) EVP(HR) Enclosed: As above. Technology for Agriculture". "No. F.1(2)[F-I/2010-1381 Government of Pakistan Finance Division (Internal Finance Wing) Islamabad. August 20,2011 The President, Zarai Taraqiati Bank Limited, Islamabad. Subject: EX-POST FACTO APPROVAL TO THE DECISION OF BOARD OF DIRECTORS OF ZTBL. Dear Sir, Please refer to Zarai Taraqiati Bank Ltd. (ZTBL)'s letter No.PRD-4(53)/2010/963 dated 13-3-2010 and the correspondence made there under on the above subject.

2. It is informed that Finance Division had already approved the Voluntary Golden Hand Shake Scheme (VGHSS) of the Bank which included revision of pension factor decided by the Board of Directors of the Bank and Staff Regulation, 2004 SR-2005.

3. The request of the Bank for grant of ex-post facto approval of the decision of Board of Directors of ADBP now ZTBL reducing the pension factor from 2.33% to 1.15% vide Circular No.PD/26/2002 dated 10-8-2002 was examined in this Division and the Competent Authority has been pleased to grant ex-post facto approval of the above mentioned decision of the Board. Yours Sincerely, Sd/- (Mahbood Khan) Section Officer (IF-I) Ph:9209556". "IMMEDIATE BY FAX No F.1(2)[F-1/2010-1381 Government of Pakistan Finance Division (Internal Finance Wing) Islamabad, August 8. 2012 The Acting President, Zarai Taraqiati Bank Limited, Islamabad. Subject: EX-POST FACTO APPROVAL TO THE DECISION OF BOARD OF DIRECTORS. Dear Sir, Please refer to ZTBL's letter No. PRD HRM.4(53)/2010/II-546 dated 3-5-2012 and, this Division's letter of even number dated 20-8-2011 on the above subject.

2. ZTBL's request to issue Gazette Notification regarding ex-post facto approval granted by GoP to the decision of Board of Directors of the Bank reducing pension factor from 2.33% to 1.15% under section 39(2)(h) of ADBP's Ordinance, 1961 (which already stands repealed) was referred to Law and Justice Division for advice.

3. Law and Justice Division has informed that as the said decision of the Board of Directors has been challenged in the Islamabad High Court, Islamabad and is pending adjudication, hence it would not be appropriate to tender any legal opinion regarding the subject issue. The final decision /verdict of the Court would resolve the whole issue/controversy. Yours Sincerely, (Sd/-) (Mahbood Khan) Section Officer (IF-I) Ph.9209556."

10. The above admitted facts narrow down the controversy to understand and dilate upon the issue. The Statutory Regulations Relating to Pension and Gratuity, 1981 still hold the field. The decision of Board of Directors carries no value in presence of statutory provisions and guarantees. I totally failed to understand that how the Board of Directors reduced the pension factor to the disadvantage of employees when section 5 of the Agricultural Development Bank of Pakistan (Re-organization and Conversion Ordinance, 2002 guaranteed the applicability of same terms and conditions and rules and regulations. The Board of Directors has no authority under the law to assume the legislative role of parliament. As in the instant matter without bringing amendments in the statute no decision detrimental to the interest of employees could have been taken. The inconsistent stance of the respondent bank clearly speaks to the effect that Board of Directors of the Bank through arbitrary, colourable and illegal exercise of authority surprised and shocked the employees by reducing pension factor from 2.33% to 1.15% and started applying the same even without approval from the Federal Government. In my, humble estimation the ex-post facto approval can be granted in petty matters and not in the matters like in hand. The decision of the Board of Directors for all practical intents and purposes resulted into structural changes in the accrued rights of pension of the employees, therefore, was not liable to be entertained, even by the Finance Division. To alter the terms and conditions of services even otherwise comes within the domain of Establishment Division and approval of Federal Government can only be conveyed by the Establishment Division. I am fully convinced that decision of the Board of Directors dated 9-8-2002 is unprecedented, polluted, offensive to the Constitutional Guarantees, besides dictum laid down by the Hon'ble Supreme Court of Pakistan, in violation of principles of natural justice and fanciful. Guidance in this regard sought from the dictums laid down by august Supreme Court and honourable High Court in the cases, Muhammad Tariq Badar v. National Bank of Pakistan (2013 SCMR 314), Muhammad Ilyas Khokhar and 24 others v. Federation of Pakistan (2006 SCMR 1240) and Manzoor Hussain, Naib Tehsildar v. Deputy Commissioner/District Collector, Layyah (1997 PLC (C.S.) 965).

11. For the foregoing reasons, all the connected writ petitioner are allowed. The Pension and Gratuity Regulations, 1981 still hold the field, therefore, pension factor remains as 2.33% and reduction made by the Decision of Board of Directors is hereby set aside. The respondent bank is directed to make payment to employees in accordance with the pension factor @ 2.33% within one month of the receipt of the instant judgment as most of the petitioners/employees are at the twilight of their life and deserve realization of their accrued rights. JJK/103/Isl. ????