AKBAR ALI and others vs STATE BANK OF PAKISTAN and otherss
This matter concerns an appeal by employees of financial institutions located in Khyber Pakhtunkhwa, FATA, and PATA, who sought to avail themselves of a loan write-off scheme introduced by the State Bank of Pakistan via SMEFD Circular No. 1/2011. The scheme was designed to rehabilitate business and industrial activities in areas severely impacted by terrorism. The core legal question was whether these employees, who had obtained loans from their own financial institutions, fell within the scope of the relief package. The Supreme Court held that the scheme was specifically intended to restore the confidence of the business and industrial community to prevent economic decline and unemployment in the affected regions. The Court observed that a clarificatory letter explicitly excluded loans extended to employees of financial institutions from the write-off benefits. The ratio of the decision is that where a relief scheme is designed for a specific purpose and target group, courts cannot extend its benefits to categories of persons expressly excluded by the policy, particularly when those persons do not share the same economic vulnerabilities as the intended beneficiaries.
- Are employees of financial institutions eligible for loan write-offs under the State Bank of Pakistan's SMEFD Circular No. 1/2011?
- Can a court extend the benefits of a government relief scheme to a category of persons expressly excluded by the scheme's clarificatory instruments?
- What is the primary objective of the loan write-off scheme introduced by the State Bank of Pakistan for terrorism-affected areas?
' FAISAL ARAB, J.---In order to rehabilitate business and industrial activities severely affected by the acts of terrorism in various parts of the province of Khyber Pakhtunkhwa and the areas of FATA and PATA, the Federal Government in consultation with the Chamber of Commerce and Industry announced a relief package for such areas. Pursuant to such announcement, the State Bank of Pakistan issued SMEFD Circular No, 1/2011 dated 02.02.2011. In terms of this Circular, loans that were extended by financial institutions for their utilization in Malakand, Swat, Buner and Chitral districts and had remained outstanding as of 31.12.2009 were to be written-off on certain conditions. The impact of such right-off on the financial institutions was to be borne by the Government of Pakistan in the shape of providing subsidy to the affected financial institutions. For the purpose of such write-off, a detailed procedure was prescribed in the circular.
2. The appellants are employees of the financial institutions located in the areas covered by State Bank's SMEFD Circular No, 1/2011 dated 02.02.2011. They claim that they be also extended the benefit of the write-off scheme launched under State Bank of Pakistan's Circular dated 02.02.2011 as they are also working in the areas to which benefit write-off of loans has been extended. We may point out here that this Circular of State Bank was followed by a clarificatory letter dated 17.02.2011 describing the scope of its application. Item Nos. 8 and 22 of State Bank's clarificatory letter dated 17.2.2011 provide that the loans extended by the financial institutions to their employees were not eligible for write-off under the State Bank's Circular dated 02.02.2011.
3. As noted above, the write-off package was intended to rehabilitate the business and industrial environment of certain specified areas that were badly affected by terrorism. Thus the whole purpose of the write-off scheme was to encourage business and industrial activities in such affected areas. As a prerequisite, the financial institutions were required to intimate the State Bank of Pakistan the list of beneficiaries covered under the write-off scheme. As the financial impact of such right-off scheme was to be borne by the Government of Pakistan, the financial institutions were entitled to reimbursement of written-off loans only if they have done so by remaining strictly within the ambit of the State Bank's scheme. Keeping in view the purpose and the scope of the benefit of the write-off scheme, which is to be read with State Bank's SMEFD Circular No,1/2011 dated 02.02.2011 and its clarificatory letter dated 17.02.2011, any category of persons who were excluded from the grant of benefit cannot seek a write-off of its financial liability even if it relates to the period or the areas covered under the scheme. It would have been an altogether different case where a person entitled for a write-off of loan has not been extended the benefit by a financial institution. In such a situation only he and no one else could have sought relief from a court of law.
4. The courts give effect to law or to any instrument having the enforceable instrument to a person who is not entitled thereunder. In the present case the whole background of granting concession of write-off was to restore the confidence of the business and industrial community of certain specified areas, possibly for the reason that they may not close their businesses and shift to other areas as such shifting might result in a decrease in commercial and industrial activities and an increase in unemployment ratio in the affected areas. An employee of a financial institution located in the affected areas, who has obtained loan from his financial institution on the bases on which other co-employees are also entitled then he been already gainfully employed cannot be said to have been adversely affected by the hostile business or industrial environment. The appellants' claim, as employees and borrowers of the financial institutions, by no stretch of imagination falls within the object and scope of the write-off scheme. They, therefore, cannot seek extension of the same benefit for themselves which was not extended to them but to others keeping in view an altogether different purpose and object in mind.
5. Vide short order 02.06.2016 these appeals were dismissed and these are the reasons for the same.