Constitutionality of Reappointment of NBP President

In the landmark case of Mir Muhammad Idris & another vs. Federation of Pakistan (PLD 2011 SC 213), the Supreme Court of Pakistan scrutinized the reappointment process of the President of the National Bank of Pakistan (NBP). This case raised critical constitutional questions regarding the amendment of laws through Finance Acts and the legal limits of such amendments, particularly concerning key appointments in state-owned entities.

Background:

The petitioners challenged the reappointment of Syed Ali Raza as President of the National Bank of Pakistan (NBP) for a fifth term. The central argument revolved around the legality of his reappointment, which was facilitated by amendments to the Banks (Nationalization) Act, 1974. These amendments were made through various Finance Acts, particularly the Finance Act of 2007, which allowed the reappointment for "such further term or terms as may be determined," effectively enabling his continued tenure.

Key Issues:

Validity of Amendments Through Finance Acts: The core issue was whether the amendment to Section 11(3)(d) of the Banks (Nationalization) Act, 1974, which allowed indefinite reappointments, could be legitimately enacted through a Finance Act - a Money Bill under the Constitution. The petitioners argued that such a substantive change in the law, especially concerning public appointments, could not be passed through a Finance Act, which is typically limited to fiscal matters.

Constitutionality and Legislative Process: The Supreme Court examined whether the passage of this amendment violated Articles 70 and 73 of the Constitution, which govern the legislative process for non-fiscal matters. The Court was tasked with determining if the inclusion of this amendment in the Finance Act was a misuse of legislative power.

Impact of Unconstitutional Legislation: The Court also considered whether the reappointment of the NBP President, made under this unconstitutional amendment, could be protected as a "past and closed transaction," or if it should be invalidated retroactively.

Case Law: The Supreme Court referenced Sindh High Court Bar Association vs. Federation of Pakistan (PLD 2009 SC 879), where it was held that legislative amendments carried out through improper channels (such as Finance Acts for non-fiscal matters) are unconstitutional. The case of Dr. Mobashir Hasan vs. Federation of Pakistan (PLD 2010 SC 265) was cited to reinforce the principle that any action or appointment made under unconstitutional laws must also be struck down.

Court’s Conclusion: The Supreme Court declared the amendment to Section 11(3)(d) of the Banks (Nationalization) Act, 1974, as unconstitutional. Consequently, the reappointment of Syed Ali Raza as President of NBP was invalidated, and he was directed to cease holding office immediately. The Court emphasized that the amendment was made in contravention of the constitutional provisions governing the legislative process, and as such, could not stand.

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