FARZANA ASAR Versus NATIONAL INVESTMENT TRUST

1. SYED ABDUR REHMAN, J.‑‑‑ This is a petition under Article 199 of the Constitution of Islamic Republic of Pakistan.

2. The petitioner is holder of 6,720 N.I.T. Units. She is a Hanafi Muslim. On 27th June, 1989, she filed a declaration duly sworn in the prescribed manner as required by First Proviso to subsection (3) of section 1 of Zakat and Ushr Ordinance, 1980 for exemption from compulsory deduction of Zakat on the abovesaid holdings of N.I.T. Units. Respondent No.l informed the petitioner vide letter dated 3rd July, 1989 that as the Affidavit was not "executed before 30 days of the valuation date, therefore, they were not in a position to mark her holdings as NDZ Account for the year 1989, but would do so for 1990. Later on Respondent No.l changed its mind and by letter dated 5th September, 1989 refused to allow her request for marking her Account as NDZ on the ground that the petitioner was a follower of Fiqh Hanafiya. This gave an impression to the petitioner that perhaps, inter alia, Fiqh‑e‑Hanafiya was not one of the recognized Fiqhs of Islam. This refusal, according to the petitioner, is mala fide, illegal, mischievous and contrary to the provisions of Zakat and Ushr Ordinance. Hence this petition with the following prayers:‑‑

(1) Declare that Fiqh‑e‑Hanafiya is one of the only four recognized Fiqh‑e Islam and its followers are not debarred from the exemption allowed under First Proviso to subsection (3) of section 1 of Zakat and Ushr Ordinance;1980.

(2) Declare that in the Zakat and Ushr Ordinance, 1980 there has not been granted any specific exemption to the followers of the alleged Fiqh‑e -Jafariyah and the statement of Respondent No.l contained in the said circular is unauthorised and misguiding.

(3) Issue. Writ of command directing the Respondents, jointly and severally, to accept the declaration of the petitioner and mark her holdings of N.I.T. Units as Non‑Deduction of Zakat Account.

(4) Issue Writ of command directing the Respondent to withdraw the said statement by intimation of all the Registered purchasers of N.I.T. Units.

(5) Grant any other or further relief or reliefs which this Honourable Court may deem fit or proper in the circumstances of the case."

3. Counter‑Affidavit of Kabeer A. Qureshi, Secretary of Respondent No.l (N.I.T.) was filed wherein he admitted the averments made in the petition. He asserted that since the declaration made by the petitioner indicated that she was professing Hanafi faith, as such the proviso to subsection (3) of section 1 of Zakat and Ushr Ordinance, 1980 was not attracted in her case. According to the deponent all Muslims were bound to pay Zakat, but according to Fiqh‑e Jafariyah, there is no Zakat on cash which includes investments/savings etc. This facility is therefore, available only to Fiqh‑e=Jafariyah. The petitioner being a follower of Fiqh‑e‑Hanafiyah was not entitled to be placed under category falling under NDZ. Copies of Circulars dated 21st February, 1983 and 26th March, 1983 issued by Administrator, General Zakat, Government of Pakistan, Islamabad, were filed alongwith the Affidavit. It was, however, admitted that Fiqh‑e Hanafiyah was recognized alongwith the other three schools of thought of Sunnis. Hence the petitioner's impression that her declaration was rejected due to non recognition of her faith was ruled out.

4. On behalf of Respondent No.2, Mrs. Nigar Fatima, an Officer and General Attorney of National Bank of Pakistan filed counter=affidavit to the same effect.

5. We have heard Mr. Muhammad Asar Hussain, Advocate for the petitioner, Mr. Ahhtar Mehmood Advocate for Respondent No.1 (N.I.T.), Mr. Sultan Ahmad Shaikh Advocate for Respondent No.2 (Nationa'. Bank of Pakistan) and Mr. Naeem‑ur‑Rahman, Standing Counsel.

6. Subsection (3) of section 1 of Zakat. and Ushr Ordinance, 1980 `reads as under:

(3) In respect of the person who may believe that the whole or any part of the recoveries effected from him in the manner laid down in this Ordinance are not according to his. belief, such recoveries shall nevertheless be made, but shall be deemed to be contribution to Zakat Fund on the part of that person:

2. Provided that Rio Zakat or Ushr shall be charged or collected on compulsory basis in respect of assets or the produce of a person, who within the period of three months preceding the Valuation Date (or; in the case of first Zakat year, three months preceding Deduction Date) files with the Deducting Agency or with the Local Committee in the case of Ushr, a declaration in the prescribed form sworn by him before the Magistrate, an Oath Commissioner, a Notary Public or any other person authorised to administer oath, in the presence of two witnesses, who identify him, to the effect that he is a Muslim ante a follower of one of the recognized fiqhs, which he shall specify in the declaration, and that his faith and the said fiqh do not oblige him to pay the whole or any part of Zakat or Ushr in the manner laid down in this Ordinance:

3. Provided further that, where for any reason Zakat or Ushr is collected on compulsory basis from such a person and he does not wish to leave it in the Zakat Fund as Sadaqah or Khairat in the name of Allah as a manifestation of the unity of the Ummah and claims refund, on the basis of a declaration as aforesaid filed by him within the period specified in . . the first proviso or within such further period as may be prescribed, the amount so collected shall be refunded to him in the prescribed manner."

4. The plain reading of subsection (3) of section 1 makes it quite clear that no Zakat shall be charged or collected on compulsory basis in respect of the A assets of a Muslim, who follows a recognized Fiqh, if he files the requisite declaration within prescribed period. Subsection (3‑A) of section 1 of the Ordinance reads aS under:‑‑

5. "(3‑A) The Federal Shariat Court may, on the application of any person, decide the question whether ‑a declaration such as is referred to in the first or second proviso to subsection (3) made by any person is valid according to the fiqh he professes to follow; and, if the Federal Shariat Court decides that the declaration is not valid, such person shall, without prejudice to any other action that may be taken against him under any other law, be liable to pay Zakat or Ushr, as the case may be, in the manner laid down in this Ordinance."

6. Bare reading of subsection (3‑A) makes it quite clear that the validity or invalidity of the declaration. filed under the proviso to subsection (3) of section 1 B of the Ordinance can be decided only by the Federal Shariat Court..

7. A perusal, of above provisions of Zakat and Ushr Ordinance makes it quite clear that any person, who files a declaration in the prescribed manner that he is a‑Muslim and follows a recognized Fiqh and claims that his faith and the said Fiqh do not oblige him to pay the whole or any part of Zakat, shall be exempted from compulsory deduction or collection of Zakat. No provision of C Zakat and Ushr Ordinance or Zakat (Deduction and Refund),Rules, 1981, which provides to the contrary was brought to our notice by the learned Advocates appearing for the Respondents. The only authority, therefore, which can adjudge such.a declaration as, invalid, is Federal Shariat Court. It is not the case of the respondents that any such decision was given by the Federal Shariat Court in respect of the declaration filed by the petitioner ,or generally in respect of persons belonging to Fiqh‑e‑Hanafiyah. On going through the Zakat and Ushr Ordinance we came across. section 24 which empowers‑ the Federal Government to exempt by Notification in the Official Gazette any specified class or cases of persons from payment of compulsory levy rtof Zakat ,and Ushr with consultation of Council of Islamic Ideology. This section does not authorise the Federal Government to declare that persons belonging to Fiqh‑e‑Hanafiyah or for that matter any other recognized Fiqh were not exempt from paymeht of compulsory levy of Zakat and Ushr. In this connection it may also be stated that it is not contended on behalf of the respondent that any such notification in exercise of the powers conferred in this section has been issued. We were taken through the Zakat (Deduction and Refund) Rules, 1981. Sub‑rule (1) of Rule 20 thereof reads as under:‑‑

7. "20. Zakat not to be deducted in respect of the assets of a person claiming exemption on grounds of faith and fish. ‑‑(1) Zakat shal not be deducted in respect of a person claiming exemption from deduction on grounds of faith and fiqh under the first proviso to subsection (3) of section 1 of the Ordinance, provided he files with the ZDO a declaration on CZ‑50 or an attested true copy thereof within a period not less than thirty days preceding the Valuation Date."

8. Hence it is clear that even this rule does not provide that a Muslim belonging to Fiqh‑e‑Hanafiyah could not claim exemption from compulsory deduction of Zakat.

9. $; The mainstay of the respondents' case, as disclosed in the counter affidavits and arguments were the two letters, photostat copies of which have been filed alongwith the counter‑affidavits of the respondents. ‑The first letter is Annexure `A/1'. It is marked as Confidential. It reads as under:‑‑

"GOVERNMENT OF PAKISTAN

MINISTRY OF FINANCE

10. 'CENTRAL ZAKAT ADMINISTRATION.

11. Confidential.

12. No. 879 CE 28(6)

13. 92, Nazimuddin Road, F.8/4, Islamabad.

14. 21st Febntary/7th March, 1983)

15. The President,

16. National Bank of Pakistan,

17. Trustee of the National Investment Trust

18. (National Bank of Pakistan Trustee Wing, Head Office),

19. I.I. Chudrigar Road,

20. Post Box No. 4936,

21. KARACHI.

22. SUBJECT: CLAIMS FOR EXEMPTION ON GROUNDS OF FAITH AND FIQH FROM. DEDUCTION OF ZAKAT‑AT‑SOURCE

23. Under the first proviso to subsection (3) of section 1 of the Zakat and Ushr Ordinance, 1980, a person can claim exemption from the deduction of Zakat at source, in respect of his Zakatable assets, if he files a declaration in the prescribed form (CZ‑50) in the manner prescribed in the proviso to the effect that he is a follower of one of the recognised fiqhs namely:‑

(1) Fiqh Hanafi;

(2) Fiqh Shafai;

(3) Fiqh Maliki;

(4) Fiqh Hambali; and ,

(5) Fiqh‑e‑Jafariyah, ‑ and that his faith and fiqh do not oblige him to pay Zakat wholly or partially in the manner laid down in the said Ordinance.

2. In this connection, the, following guidelines are laid down:

(a) Declaration filed by any one professing to follow a Fiqh other than the five specified above, may be ignored;

(b) Declaration filed by a person professing to follow Fiqh‑e‑ Jafariyah, may be accepted, subject to the fulfilment of the usual condition and observance of the prescribed procedure; ,

(c) Declaration filed by a person professing to follow any of the aforementioned four recognized Fiqhs, other than Fiqh‑e‑ Jafariyah, may be referred to this Administration.

24. (Sd/‑)

25. (S . Athar Mahmud)

26. Deputy Administrator‑General Zakat

27. Phone: 51196."

28. The second letter is. Annexure `A‑2'. It reads as under

29. "GOVERNMENT "GOVERNMENT OF PAKISTAN

30. MINISTRY OF FINANCE,

CENTRAL ZAKAT ADMINISTRATION

31. No. 1017 CE 28(6). i 92 Nazimuddin Road,

32. F‑8/4, Islamabad.

33. (26th March, 1983)

34. To

35. The President National Bank of Pakistan,

36. Trustee of the National Investment Trust

37. (National Bank of Pakistan Trustee Wing, Head Office),

38. I.I. Chudrigar Road, Post Box No. 4936, ‑

39. KARACHI.

40. 1991 Farzana Asar v. National Investment Trust Karachi 34

41. (Syed Abdur Rehman, J)

42. SUBJECT: CLAIMS FOR EXEMPTION ON GROUNDS OF FAITI AND FIOH FROM DEDUCTION OF ZAKAT‑AT‑SOURCE .

43. Please refer to this Administration's letter No. CE 28(6) of 21: February/7th March, 1983 on the above subject.

2. The spelling of word `Jafaria' at serial No. 5 of para.2 ma please be amended to read as `Jafariyah'.

3. It is clarified that Fiqh Jafariyah referred to at Serial No. 5 c para. 1 of the above circular also includes the following:

(a) Shia Ismailia,

(b) Shia Bohra,

(c) Shia Dawoodi Bohra.

4. If the ZDCA's find some difficulty in deciding a case under sub para. (b) of para. 2 of Circular No. CE 28(6), dated 7th March, 198: referred to .above, they may seek advice from this Administration in the specific case by sending the original declaration or its copy.

44. (Sd.)

45. (S. Athar Mahmud)

46. Deputy Administrator‑General Zaka

47. (Headquarters) Phone: 51196."

9. These letters are not purported, to have been issued in exercise of the powers given by any Statute: nor have they been gazetted. Hence it is clear than these letters are mere administrative orders and carry no legal sanctity or authority, if these are not in conformity with the law. So far as the letter Annexure `A‑1' is concerned, it is clearly discriminatory to the four schools of Sunnis including Hanafi School of thought as it gave the direction to accept the declarations filed by the persons belonging to Fiqh‑e‑Jafariyah and to refer the declaration filed by Hanafi Muslims to Central Zakat Administration. What is worse is that this direction appears to have been given to frustrate the declarations of Sunnis by putting them in cold storage which is clear from the fact that without challenging these declarations before Federal Shariat Court, the respondent No.l on the authority of letter Annexure `A‑1' has rejected the declarations filed by the petitioner, on the ground that she is a Hanafi Muslim, vide letter dated 5th September, 1989 Annexure `C'. Letter Annexure `A‑2' only purports to include Shia Ismailia, Shia Bohra and Shia Dawoodi Bohra in Fiqh‑e‑Jafariyah and we do not propose to say any thing in this regard. As such there did not appear to be any justification with the respondents to issue such a discriminatory direction, which is also violative of the inalienable: fundamental rights of being treated in accordance with law, and of equality before law guaranteed under Articles 4 and 25 of the Constitution. Letter which is filed by the petitioner as Annexure `C' reads as under:

"NATIONAL INVESTMENT TRUST LIMITED

48. Reeistered.

49. No. ISD/ZKT/13(4)/89 ;5th September, 19891

50. Miss Farzana Asar 3‑P, Block 2, P.E.C.H.S., Karachi‑29.

51. NON‑DEDUCTION OF ZAKAT REG. NO. N/13 1157

52. Dear Madam

53. Please refer to our letter No. ISD/ZKT/13(4)/89, dated 3rd April, 1989 on the subject noted above. It has been observed that in your declaration dated 12th June, 1989 submitted in respect of non‑deduction of Zakat on N.I.T. Units, you have declared that,you are Muslim and follow the Fiqh‑e Hanfia.

54. In this regard we have to advise you that under the provision of Zakat and Ushr Ordinance, 1980, Muslims following Fiqah‑e‑Hanifa are not exempt from compulsory deduction of Zakat at source.

55. As such your holding of N.I.T. Units cannot be exempted from deduction of Zakat on the basis of declaration submitted by you.

56. Yours faithfully

57. (Sd.)

58. (Sanaullah Beg)

59. ISO ‑‑ I.S.D:"

10. It may be pointed out that Zakat and Ushr Ordinance, 1980 was promulgated on 20‑6‑1980. On its promulgation objections were raised by certain quarters in respect of the provisions thereof. Consequently in order to meet the demands of the representatives of Shias sect, it was proposed in a high level meeting that in subsection (3) of section 1 of the Ordinance a proviso should be inserted to the effect that no Zakat and Ushr shall be charged from a person, who files a declaration in the prescribed manner that he is a Shia Muslim and a follower of Fiqah‑e‑Jafariyah and the said Fiqh does not oblige him to pay Zakat and Ushr in the manner laid down in this Ordinance. When the proposed amendment was brought to the notice of the then Chairman, Islamic Idenlugical Council, he objected to the same on the ground that this concession is discriminatory to.Hanar Muslims. The then Chairman, Islamic Ideological Council summed up his point of view as follow:‑‑

60. ~I l1`~ ~I~ G. 11~j :~ ~ ^~ ~ S )t~wl ~J I V~!>G Vla l

11. Consequently the proviso referred to above was inserted in the present 1 form by Zakat and Ushr (Amendment) Ordinance, 1980 (LII of 1980) on 29th' H October, 1980. Reference in this connection may be made to the Report of the Working Committee of Islamic Ideological Council for the period beginning from Ist January, 1980 and ending with 27th May, 1981 at pages 85 to 87 and onwards. It is painful to note that on one hand Statutory provision was made in Zakat anti Ushr Ordinance at the suggestion of an august body like Islamic Ideologicai Council which made similar provision for followers of all the recognized schools of Muslims for claiming exemption from charging or collecting the Zakat on i compulsory basis, yet on the other hand confidential administrative instructions were issued and it was so manoeuvred surreptitiously that the declarations filed by Shia Muslims were accepted without any hesitation, while similar declarations filed by Hanafi Muslims were rejected, which caused unrest and bitterness amongst Sunnis, who form more than 90% of the population of the country. Such dissatisfaction was voiced by a number of leading papers of the country in their editorials including Daily Jang on the manner in which Zakat was being deducted under the Ordinance. We are, therefore, of the clear view that this is not only against the provisions of Zakat and Ushr Ordinance, 1980 and the Rules framed thereunder, but is also in violation of the fundamental rights guaranteed under the Constitution.

61. We do not feel any hesitation, in view of the settled law and the admission of the respondents, to hold that, inter alia, Fiqh‑e‑Hanafiyah is a recognized Fiqh of Islam and its followers are not debarred by any provision of K the Zakat and Ushr Ordinance and any rules framed thereunder from claiming exemption from compulsory deduction of Zakat under the provisions of subsection (3) of section 1 of the Zakat and Ushr Ordinance.

12. Although no provision in the Zakat and Ushr Ordinance, 1980 or the rules framed or notification issued thereunder was brought to our notice by the respondents which specifically granted exemption to the followers of Fiqh‑e Jafariyah, but in view of the fact that the wordings of proviso to subsection (3) are general and would include every Fiqh which was recognized, therefore, it cannot be said that the exemption cannot be granted to them. Moreover it is a point of academic interest only and has no relation to the relief claimed by the petitioner. The relief that she has claimed is that her declaration may be accepted and her holdings of N.I.T. Units may be marked as NDZ. Reference in this connection may be made to P L D 1964 Lahore 138 (Pakistan Steel Re‑Rolling Mills Association v. Province of West Pakistan) where it was held that in writ jurisdiction relief‑, claimed have to be construed and granted in terms of the prayers made in the petition and the Courts are not called upon merely to decide nuection of law without reference to the relief which is sought in the petition.

13. We are, therefore, of the clear view that the respondents had no power or authority to declare as invalid or reject the declaration filed by any Hanafi Muslim, if it was in the prescribed form and filed within time. This jurisdiction being exclusively assigned by the Statute to Federal Shariat Court, the respondents' action of treating the petitioner's declaration as invalid and consequently refusing to mark her holdings of N.I.T. as Non‑Deduction of Zakat Account is illegal, ultra vires, of no effect and a clear violation of law. These are the reasons for our short order dated 26th March, 1991 which is reproduced for the sake of convenience as under:‑‑

62. "For reasons to be recorded, we allow this petition to the extent that we declare that no Zakat shall be charged or collected on compulsory basis in respect of assets of a person, who within the prescribed period files with the deducting agency a declaration in the prescribed form and sworn in the prescribed manner to the effect that he is a Muslim and follower of one of the recognized Fiqhs which he shall specify in the declaration and that his faith and the said Fiqh do not oblige him to pay the whole or any part of Zakat in the manner laid down in Zakat and Ushr Ordinance, 1980 (Ordinance XVIII of 1980). Consequently we also b'I declare that confidential directive dated 21st November/7th March, 1981 from the Central Zakat and Ushr Administrator, Ministry of Finance. Government of Pakistan to the President, National Bank of Pakistan/Trustee of N.I.T. as well as letter of N.I.T. dated 5th September, 1989 indicating that Muslims following Fiqh‑e‑Hanfi are not exempt from compulsory deduction of Zakat at source are illegal without lawful authority and of no effect. We, therefore, direct the respondents to accept the declaration of the petitioner and treat her holdings of N.I.T. Units as non‑deduction of Zakat Account."

63. M.B.A./M‑1408/x. Order accordingly