MUHAMMAD ASHRAF TIWANA and others vs PAKISTAN and others
This matter involves a constitutional petition raising important questions of public importance concerning the enforcement of fundamental rights and the governance structure and functioning of the Securities and Exchange Commission of Pakistan (SECP). The core legal questions addressed the validity of the appointment of the Chairman and Commissioner of SECP, the constitutionality of inserting section 5(5) into the SECP Act via the Finance Act 2003, and the vires of termination simpliciter clauses in the SECP Service Rules. The Supreme Court held that the appointment of the respondent as Commissioner and Chairman failed to meet statutory requirements and set aside the notification. The Court further declared the insertion of section 5(5) through the Finance Act 2003 violative of Article 73 of the Constitution, and ruled that rules allowing termination without cause are ultra vires the Constitution and the SECP Act. The key principles laid down emphasize strict adherence to statutory selection criteria for independent regulators, transparency in public appointments, and the protection of due process and fundamental rights in service matters.
- Does the selection and appointment of the Chairman and Commissioner of the Securities and Exchange Commission of Pakistan meet the requirements of the Securities and Exchange Commission of Pakistan Act 1997?
- Was the insertion of section 5(5) in the Securities and Exchange Commission of Pakistan Act 1997 through the Finance Act 2003 violative of Article 73 of the Constitution of Pakistan?
- Are clauses in service rules allowing for termination simpliciter of SECP employees ultra vires the Constitution and the Securities and Exchange Commission of Pakistan Act 1997?
- Section 5, Securities and Exchange Commission of Pakistan Act 1997
- Section 6, Securities and Exchange Commission of Pakistan Act 1997
- Section 7, Securities and Exchange Commission of Pakistan Act 1997
- Section 21, Securities and Exchange Commission of Pakistan Act 1997
- Article 73, Constitution of Pakistan 1973
- Article 189, Constitution of Pakistan 1973
- Article 9, Constitution of Pakistan 1973
- Article 10A, Constitution of Pakistan 1973
- Article 14, Constitution of Pakistan 1973
- Article 18, Constitution of Pakistan 1973
- Article 25, Constitution of Pakistan 1973
ORDER
' JAWWAD S. KHAWAJ A , .---This petition has raised important questions of public importance relating to the enforcement of fundamental rights guaranteed in Chapter 1 of Part II of the Constitution. The salient aspect of this petition relates to the functioning and governance structure of the Securities and Exchange Commission of Pakistan (SEC?) which is the apex regulator inter alia of the corporate sector and the capital markets of the country.
2. Over the course of several days, we have heard and noted in detail, the submissions of learned counsel representing the parties. For reasons to be recorded we hold, declare and direct as under:- -
3. That:--
(a) the selection and appointment of respondent No, 4 namely. Muhammad Ali Ghulam Muhammad as Commissioner and Chairman SECP does not meet the requirements of the Securities and Exchange Commission of Pakistan Act 1997 (the SECP Act);
(b) as a consequence, the notification No, S.R.O. 21 (KE)/2011 dated 24th December 2010 appointing Mr. Muhammad Ali Ghulam Muhammad as Commissioner and Chairman SECP is set aside;
(c) the Federal Government shall, without delay, make appointments to statutory positions in SECP which meet the requirements of A the SECP Act including Sections 5, 6 and 7 thereof, in a credible, rigorous, transparent and open manner, through a selection and appointment process undertaken with due diligence and deliberation which manifestly and demonstrably ensures that the appointees meet the requirements of law as enunciated by precedent, including mutatis mutandis, the principles of law determined in the case of Muhammad Yasin v. Federation of Pakistan (PLD 2012 SC 132);
(d) the insertion of section 5(5) in the SECP Act through the Finance Act 2003 was violative of the Constitution and in particular Article 73 thereof;
(e) Clause 3(1) of Chapter 11 of the SECP Service Rules (HR Handbook), which allow for termination simpliciter (without cause) of employees of SECP is ultra vires the Constitution and inter alia, the SECP Act;
(f) the above Clause must be replaced appropriately by provisions ensuring due process and adherence, inter alia to Articles 9, 10A, 14, 18 and 25 of the Constitution and which are consistent with the provisions of the SECP Act ensuring independent and objective decision making without fear or favour, required of an independent regulator;
(g) the prayer in the petition for striking down the order dated 13-6-2011 terminating the employment of the petitioner is disallowed as not pressed, but without prejudice to his rights/remedies, if any, before a competent forum in accordance with law;
(h) respondent No,1 (Federation) and respondent No,2 (SECP) shall bear the costs of the petitioner.
4. A copy of this Order shall be sent to each member of the Securities and Exchange Policy Board for action deemed appropriate by said Board in relation to the governance structure and decision making policies of SECP as per requirements of the SECP Act and for consideration on issues of policy-making highlighted by the present petition and for the effective performance of the Board's functions under the SECP Act, particularly section 21 thereof. The Board having, inter alia, the duty to "oversee the performance of [SECP) to the extent that the purposes of the [SECP) Act are achieved", shall look into this petition and documents placed on file and after making such further inquiries as may be deemed appropriate by it, submit within 45 days, a report as to the performance of the SECP.
5. A copy of this Order shall be sent to the Secretary, Ministry of Finance to enable the Federal Government to remain compliant with the law and legal principles enunciated by this Court, in terms of Article 189 of the Constitution. The Secretary (Finance) shall also look into this petition and documents placed on file (including those filed by the Ministry itself) to examine wrongdoings/shortcomings, if any, within the Ministry and the decision-making processes of the Federal Government under the SECP Act. A report in this respect shall be submitted in Court within 45 days.