P L d 2000 s c 225 (Riba prohibition stayed)

 

 

 

Before proceeding to examine the aforenoted submission on crucial issues of definition of Riba, the concepts, connotation and scope thereof, it is appropriate to deal with the question of scope of jurisdiction of the Federal Shariat Court and the Shariat Appellate Bench.

 

 

 

The question of scope of jurisdiction of the Federal Shariat Court and the Shariat Appellate Bench of this Court, was raised by some jurisconsults and the scholars who appeared before us. This question was raised mainly in view of the representation of the Government made in the application for withdrawal of the appeal from this Court and to seek parameters and guidelines from the Federal Shariat Court as to the modalities of enforcing and implementing its judgment on Riba. The Government needed such guidelines within which the Government wanted to move the necessary legislation for the compliance of ifs constitutional duty and obligation to enforce a truly Islamic economic system. The Federal Government in. the said application had also contended that some serious issues of utmost importance have come up which have a close and intimate bearing on Pakistan’s obligations both to foreign lenders as well as in relation to the functioning of the banking system within the country including lending for the payment of foreign debts, inflation, indexation etc. are involved and that the Government seeks guidelines of the Court (Federal Shariat Court) in the shape of laying down guidelines on the basis of which the Government can comply with its solemn commitments within the framework of Islamic Injunctions. These specific parameters and guidelines,, it was urged, were to be sought so as to enable banking and other related laws to be recast in such a manner that they conform strictly to the stipulations of Islam.

 

 

 

Prof. Khurshid Ahmad, Maulana Abdul Sattar Niazi and Maulana Gauhar Rehman, the religious scholars as well as Mr. Muhammad Ismail Qureshi, Advocate, argued that neither the Federal Shariat Court nor the Shariat Appellate Bench of the Supreme Court has jurisdiction or power to provide guidelines or the parameters in compliance of which the Government is to provide the legal framework of Islamic Injunctions by enacting appropriate laws, nor economic financial or banking policies or the system is to be charted out by the Court. According to them the Federal Shariat Court and the Shariat Appellate Bench of the Supreme Court, in view of the provisions contained in Chapter 3-A of the Constitution and more particularly under Article 203-D of the Constitution are empowered only to examine and decide one question i.e. whether or not any law or provision of law is repugnant to the Injunctions of Islam as laid down in the Holy Qur’an and Sunnah of the Holy Prophet (peace be upon him). According to them it is only vires of any law or the provisions of law on the touchstone of Injunctions of Islam as to their repugnancy or otherwise which is to be examined and decided by the Court i.e. the Federal Shariat Court and the Shariat Appellate Bench of the Supreme Court. Neither the framing of any law nor the economic or financial policies or the banking system itself can be examined by the Federal Shariat Court as these are concerns of the other organs of the State under the relevant provisions of the Constitution and the law. It is unfortunate that these contentions so emphatically urged by the religious scholars were not at all adverted to by the learned counsel for the Federation. Learned Attorney-General also, despite being conscious of the questions raised in the application moved by the Federation and the view-point of the religious scholars on this question, did not enter appearance to render assistance to the Bench on the important Constitutional and legal questions in his capacity of highest law, officer of the country, what to say of presenting and elaborating the point of view of the Federal Government. We have, therefore, surveyed the provisions of the Constitution and the relevant legal provisions on our own. Article 203D of the Constitution which provides for the powers, jurisdiction and functions of the Federal Shariat Court constituted in pursuance of Article 203-C of the Constitution reads as under:-----

 

 

 

“203D. Powers, jurisdiction and functions of the Court-- (1) The Court may, [either of its own motion or] on the petition of a citizen of Pakistan or the Federal Government or a Provincial Government, examine and decide the question whether or not any law or provision of law is repugnant to the Injunctions of Islam, as laid down in the Holy Qur’an and the Sunnah of the Holy Prophet, hereinafter referred to as the Injunctions of Islam.

 

 

 

(IA) Where the Court takes up the examination of any law or provision of law under clause (1) and such law or provision of law appears to it to he repugnant to the Injunctions of Islam, the Court shall cause to be given to the Federal Government in the case of a law, with respect to a matter in the Federal Legislative List or the Concurrent Legislative List, or to the Provincial Government in the case of a law with respect to a matter not enumerated in the either of those Lists, a notice specifying the particular provisions that appear to it to be so repugnant, and afford to such Government adequate opportunity to have it point of view placed before the Court.

 

 

 

(2) If the Court decides that any law or provision of law is repugnant to the Injunctions of Islam, it shall set out in its decision--

 

 

 

(a) the reasons for its holding that opinion; and

 

 

 

(b) the extent to which such law or provision .is so repugnant: and specify the day on which the decision shall take effect:

 

 

 

Provided that no such decision shall be deemed to take effect before the expiration of the period within which an appeal therefrom may be preferred to the Supreme Court or, where an appeal has been so preferred, before the disposal of such appeal.

 

 

 

(3) If any law or provision of law is held by the Court to be repugnant to the Injunctions of Islam,--

 

 

 

(a) the President in the case of a law with respect to a matter in the Federal Legislative List or the Concurrent Legislative List, or the’ Governor in the case of a law with respect to a matter not enumerated in either of those Lists, shall take steps to amend the law so as to bring such law or provision into conformity with the Injunctions of Islam; and ‘

 

                       

 

(b) such law or provision shall, to the extent to which it is held to he so repugnant, cease to have effect on the day on which the decision of the Court takes effect.”

 

 

 

The revisional and other jurisdiction of the Federal Shariat Court is contained in Article 203-DD while Article 203-E details the powers and the procedure of the Court. The next Article i.e. Article 203-F provides for appeal to the Shariat Appellate Bench of the Supreme Court against the final decision of the Court rendered in the proceedings under Article 203-D of the Constitution. At this juncture it will be appropriate to reproduce the definition of the term “law” given in clause (c) of Article 203-B in Chapter 3 of the Constitution which reads:--

 

 

 

“law” includes any custom or usage having the force of law but does not include the Constitution, Muslim Personal Law, any law relating to the procedure of any Court or Tribunal or, until the expiration of ten years from the commencement of this Chapter, any fiscal law or any law relating to the levy and collection of taxes and fees or banking or insurance practice and procedure.

 

 

 

It is pertinent to note that the period of ten years of moratorium has expired and as such the vires of any fiscal law or any law relating to the levy and collection of taxes or fees and banking or insurance practice and procedure can now be tested on the touchstone of Islamic Injunctions. It is also pertinent to note that the provisions of the Constitution, Muslim Personal Law and any law relating to the procedure of any Court or Tribunal are still outside the purview or jurisdiction of the Court i.e. the Federal Shariat Court and the Shariat Appellate Bench of the Supreme Court. The jurisdiction is thus limited to the examination of the question whether any law or provision of law is or is not repugnant to the Injunctions of Islam as laid down in the Holy Qur’an and Sunnah of the Holy Prophet and the term “law” also includes any custom or usage having the force of law or any law relating to banking or insurance practice and procedure. The authors of Chapter 3-A consciously included within the definition of term  “law” for the purposes of Chapter 3-A, “any custom or usage having the force of law” as the Supreme Court in its judgment in Federation of Pakistan through the Secretary, Ministry of Finance, Government of Pakistan. Islamabad etc. v. United Sugar Mills Limited, Karachi (PLD 1977 SC 397) had held that “the term “law” as used in Article 4 has also been used in Article 8 of the Constitution, in contradistinction with any “custom or usage having the force of law” and must therefore, be given the same limited connotation in Article 4 as well.” The Shariat Appellate Bench of the Supreme Court in the case of Wasi Ahmed Rizvi v. Federation of Pakistan (PLD 1982 SC 20) commenting on the term “law” appearing in Article 203-B observed:--

 

 

 

“13. Coming back to Article 203-B which confers jurisdiction, which defines the limits thereof and which prescribed exclusions thereto, we find that it provides an inclusive definition of law. On the force of that definition itself any usage having the force of law shall qualify as law. Such a usage may relate to the nation or group as a whole or may relate to practise and procedure of the Court. The former has been included in the definition of law but the latter has been expressly excluded by providing that law includes any custom or usage having the force of law but does not include ‘any law relating to the procedure of any Court or tribunal’. Law here does not mean only the enacted law but includes usage having the force of law. Such usage or law may relate to procedure of Court or to matters not expressly excluded from the jurisdiction of the Court. If usage or law does not relate to matters excluded from jurisdiction, a petition attacking it would be competent. On the other hand, if it concerns any of the matters excluded then it would be incompetent.”

 

 

 

But the question is whether the Federal Shariat Court or the Shariat Appellate Bench of the Supreme Court can be called upon to lay down parameters and guidelines of financial policies or the banking system-and the legal framework needed for complying with the requirements of Shariah. The mandate of the Constitution as is apparent from the Objectives Resolution under Article 2-A it that the Muslims shall be enabled to order their lives in the individual and collective spheres in accordance with the teachings and requirements of Islam as set out in the Holy Qur’an and Sunnah; and that adequate provision shall be made for the minorities to profess and practise their religions and develop their cultures; and also that fundamental rights including equality of status of opportunity and before law, social economic and political justice, and freedom of thought, expression, belief, faith, worship and association, subject to law and public ‘ morality, shall be guaranteed.

 

 

 

The framing of laws is the prerogative of the Parliament or the Provincial Assemblies according to their respective spheres allotted to them under the Constitution. A reference to Article 227 of the Constitution is relevant as it prop-ides that all existing laws shall be brought in conformity with the injunctions of Islam as laid down in the Holy Qur’an and Sunnah, and that no law shall be enacted which is repugnant to such Injunctions. Clause (2) of this very Article provides that effect shall be given to the provisions of clause (1) only in the manner provided in Part IX of the Constitution. This has a reference to the next Article 228 which provides for composition of Council of Islamic Ideology to which a reference may be made by the Parliament, the President or the Governor of a Province on a question whether a proposed law is or is not repugnant to the injunctions of Islam. On receipt of such a question so referred under Article 229 the Council has to inform within 15 days of the receipt of reference, the period within which the Council expects to be able to furnish the reply/advice. Article 230 further provides that if the Council advises that the law is repugnant to the Injunctions of Islam, the Parliament, the Provincial Assembly, the President or the Governor, as the case may be, shall reconsider the law so made. This is how the law which is to be framed or enacted can he made to conform to the In junctions of Islam and the mandate of Article 227 that no law shall be enacted which is repugnant to such injunctions is to be complied with. If any enacted law is considered by anyone to be repugnant to the Injunctions of Islam, the course to be adopted, as provided by the Constitution, is to challenge the said law before the Federal Shariat Court under Article 203-D of the Constitution. This power can also be exercised suo moat by the Federal Shariat Court.

 

 

 

The manner of framing of laws by the Parliament or the Provincial Assembly as to who is to introduce a law in the shape of the bill in the Parliament or the Provincial Assembly is contained in the Constitution and need not be dilated upon here. The framing of the economic and financial policies including banking is prerogative of the Government which is composed of the majority party in the Parliament or in the Provincial Assemblies. The parameters, the limits and the scope of these policies have been provided in the Constitution itself and the laws framed under the Constitution. Some of the Constitutional provisions having important bearing on the fiscal policies may now be noticed.

 

 

 

Article 73 of the Constitution provides that a Bill or amendment shall be deemed to he a Money Bill if it contains provisions dealing with all or any of the following matters:-----

 

 

 

(a) the imposition, abolition, remission; alteration or regulation of any tax;

 

 

 

(b) the borrowing of money, or the giving of any guarantee, by the federal Government, or the amendment of the law relating to the financial obligations of that Government;

 

 

 

(c) the custody of the Federal Consolidated Fund, the payment of moneys into, or the issue of moneys from, that Fund;

 

 

 

(d) the imposition of a charge upon the Federal Consolidated Fund, or the abolition or alteration of any such charge;

 

 

 

(e) the receipt of moneys on account of the Public Account of the Federation, the custody or issue of such moneys;

 

 

 

(f) the audit of the accounts of the Federal Government for a Provincial Government; and

 

 

 

(g) any matter incidental to any of the matters specified in the preceding paragraphs.

 

 

 

A Money Bill is to originate in the National Assembly and if passed is to be presented, without being transmitted to the Senate, to the President for assent. Article 74 then provides as under:-----

 

 

 

“A Money Bill, or a Bill or amendment which if enacted and brought into operation would involve expenditure from the Federal Consolidated Fund or withdrawal from the Public Account of the Federation or affect the coinage or currency of Pakistan or the constitution or functions of the State Bank of Pakistan shall not be introduced or moved in Majlis-e-Shobra (Parliament) except by or with the consent of the Federal Government. --

 

 

 

The other provisions which provide for financial procedure and also borrowing powers of the Government may now he noticed. These are reproduced hereunder:---

 

 

 

“78. Federal Consolidated Fund and Public Account.---(1) All revenues received by- the Federal Government. all loans raised by that Government, and all moneys received by it in repayment of any loan, shall form part of a consolidated fund. to be known as the Federal Consolidated Fund.

 

 

 

(2) All other moneys--

 

 

 

(a) received by or on behalf of the Federal Government; or

 

 

 

(b) received by or deposited with the Supreme Court or any other Court established under the authority of the Federation, shall be credited to the Public Account of the Federation.

 

 

 

79. Custody etc. of Federal Consolidated Fund and Public Account.---The custody of the Federal Consolidated Fund, the payment of moneys into that Fund, the withdrawal of moneys therefrom, the custody of other moneys received by or on behalf of the Federal Government their payment into, and withdrawal from, the Public Account of the Federation, and all matters connected with or ancillary to the matters aforesaid shall be regulated by Act of Majlis-e-Shoora (Parliament) or, until provision in that behalf is so made, by rules made by the President.

 

 

 

80. Annual Budget----(1) The Federal Government shall, in respect of every, financial year, cause to be laid before the National Assembly a statement of the estimated receipts and expenditure of the Federal Government for that year, in this Part referred to as the Annual Budget Statement.

 

 

 

(2) The Annual Budget Statement shall show separately --

 

 

 

(a) the sums required to meet expenditure described by the Constitution as expenditure charged upon the Federal Consolidated Fund; and

 

 

 

(b) the sums required to meet other expenditure proposed to be made from the Federal Consolidated Fund; and shall distinguish expenditure on revenue account from other expenditures.

 

 

 

81. Expenditure charged upon Federal Consolidated Fund ---The following expenditure shall be expenditure charged upon the Federal Consolidated Fund---

 

 

 

(a) the remuneration payable to the President and other expenditure relating to his office and the remuneration payable to--

 

 

 

(i) the Judges of the Supreme Court;

 

 

 

(ii) the Chief Election Commissioner;

 

 

 

(iii) the Chairman and the Deputy Chairman;

 

 

 

(iv) the Speaker and the Deputy Speaker of the National Assembly;

 

 

 

(v) the Auditor-General;

 

 

 

(b) the administrative expenses, including the remuneration payable to officers and servants, of the Supreme Court, the department of the Auditor-General and the Office of the Chief Election Commissioner and the Secretariats of the Senate and the National Assembly;

 

 

 

(c) all debt charges for which the Federal Government is liable, including interest, sinking fund charges, the repayment or amortisation of capital, and other expenditure in connection with the raising of loans, and the service and- redemption of debt on the security of the Federal Consolidated Fund;

 

 

 

(d) any sums required to satisfy any judgment, decree or award against Pakistan by any Court or Tribunal; and

 

 

 

(e) any other sums declared by the Constitution or by Act of Majlis-e-Shoora (Parliament) to be so charged.

 

 

 

82. Procedure relating to Annual Budget Statement,--- (1) So much of the Annual Budget Statement as relates to expenditure charged upon the Federal Consolidated Fund may be discussed in, but shall not be submitted to the vote of, the National Assembly.

 

 

 

(2) So much of the Annual Budget Statement as relates to other expenditure shall be submitted to the National Assembly in the form of demand for grants, and the Assembly shall have power to assent to, or to refuse to assent to, any demand, or to assent to any demand subject to a reduction of the amount specified therein:

 

 

 

Provided that, for a period of ten years from the commencing day or the holding of the second general election to the National Assembly, whichever occurs later, a demand shall be deemed to have been assented to without any reduction of the amount specified therein, unless, by the votes of a majority of the total membership of the Assembly, it is refused or assented to subject to a reduction of the amount specified therein.

 

 

 

(3) No demand for a grant shall be made except on the recommendation of the Federal Government.”

 

 

 

A study of these Articles shows that the Federal Government has the power to frame the financial, economic and fiscal policies of the State and also to provide necessary legal framework to execute such policies. It is the Federal Government which has the authority under the Constitution to operate and issue guarantees on the security of the Federal Consolidated Fund under such limits as may be fixed by an Act of the Parliament. However, no such law framed by the Parliament was referred to us. In the absence of such a law, the Government exercises unrestricted powers to borrow against the security of the Federal Consolidated Fund as no law has yet been framed to regulate the custody of Federal Consolidated Fund or the Public Account of the Federation. Though variety of rules such as Treasury Rules exist but in the absence of specific laws and rules pertaining to borrowing, it is practically and ultimately the Rules of Business which are resorted to regulate the business of the Federal Government. Rules of Business [Schedule II, specified in Rule 3(3)] indicate at Entry No.13 `Finance Division’ and the functions assigned to the said Division. In subentries 6 and 7 thereof, following items have been mentioned:-----

 

 

 

Public debt of the Federation both internal and external; borrowing money on the security of the Federal Consolidated Fund;

 

 

 

Loans and advances by the Federal Government.

 

 

 

It follows from these provisions of the Rules of Business that the lending and borrowing operations of the Federation are performed by the Ministry of Finance within the framework provided in the Rules of Business.

 

No specific guidelines appear to have been provided to regulate and streamline such functions. It may, therefore, be inferred that the Secretary Finance or at best the Minister for Finance are free to make decisions on these subjects though they may consult the Prime Minister if the matter is considered, in the discretion of the Secretary Finance or the Minister for Finance, to be an important policy matter. Rule 16 which specifies the cases required to be brought before the Cabinet does not contain borrowing proposals and as such even the Cabinet is not required to be taken into confidence. It will, therefore, be seen that neither the borrowings are restricted for specific uses nor the expediency of the situation necessitating borrowings has been spelled out. This situation of wide flexibility confers on the Finance Division unique and unlimited powers to borrow without at all being bothered about the productivity of the uses to which borrowed resources are applied or even without there being any limitation to the extent to which the nation is to be burdened with borrowings.