IN THE SUPREME COURT OF PAKISTAN

(Appellate Jurisdiction)

PRESENT:
Mr. Justice Amin-ud-Din Khan
Mr. Justice Syed Hasan Azhar Rizvi

Civil Petition No.2537 of 2020

[Against the judgment dated 20.07.2020 of the Peshawar High Court,
Peshawar passed in Civil Revision No.399-P of 2020]

Allied Bank Limited

…Petitioner(s)
Versus

Habib-ur-Rehman and others

…Respondent(s)
*****
For the Petitioner(s) : Mr. Makhdoom Ali Khan, ASC
Syed Rifaqat Hussain Shah, AOR

For Respondent No.1 : In person

Date of Hearing : 03.05.2023

JUDGMENT

Syed Hasan Azhar Rizvi, J. Allied Bank Limited (ABL),

through this petition filed under Article 185(3) of the Constitution of

the Islamic Republic of Pakistan, 1973 (the Constitution), has

impugned the legality of the order dated 20.07.2020 of the Peshawar

High Court, Peshawar whereby the Civil Revision filed by the present

petitioner against the order of learned first Appellate Court was

dismissed. By its judgment, the first appellate court had reversed the

judgment/decree of the trial court and had decreed the suit of the

respondent No.1 (Dr. Habib-ur-Rehman) for declaration, permanent

injunction, and recovery of benevolent funds, etc.

Civil Petition No.2537 of 2020.doc -2-

2. The brief facts necessary to appreciate the controversy in

the present petition are that the respondent No.1/plaintiff (the

respondent No.1) has filed a suit for declaration, permanent

injunction, and recovery of the benevolent fund, etc. with the

assertions as per averments of the plaint: that he joined the Bank as a

probationary officer; later on, he was elevated and promoted gradually

to the position of the Vice-President and served with the

petitioner/Bank as such w.e.f. 01.01.1995 till his retirement on

13.07.2007. After his retirement, he received a letter dated 20.08.2007

to inform him that his pensionary dues had been calculated and

approved as his retirement benefits based on his basic pay which he

was drawing as on 30.06.2002 and not from his last pay drawn on the

date of his retirement.

3. On an inquiry, the respondent No.1 found that his

retirement benefits had been calculated arbitrarily on the basis of

circular No.P/Ins/2002/121 dated 04.09.2002 and against the

existing rules of the ABL with the intention to deprive him of the

benefits those occurred to him on account of rise in his salary during

the period from 30.06.2002 till his retirement on 13.07.2007. The

respondent No.1 further asserted that the pension to an employee of

the Bank is to be granted on the basis of the "last drawn pay" and not

on the basis of some previous presumptive date, in view of Article

4.6(3) of Pension Fund Rules 1990 duly approved by the Board of

Trustees and further updated and developed vide letter dated

14.12.1993; the said rules have not been amended or modified so far.
Civil Petition No.2537 of 2020.doc -3-

Besides, the respondent No.1 also agitated disparity against the grant

of the following other benefits admissible on retirement:

1. that the petitioner bank has been paying benevolent fund @

Rs.4500 PM., but the same has been allowed to the
respondent No.1 @ Rs.2021;

2. that the petitioner bank has been releasing the car which is
in the custody of a retiring executive/Officer at the time of
his retirement @ 10% of its purchase price but the same
facility has been given to the respondent at a higher rate of
33%; thereby subjecting him to the discrimination and loss
of Rs.1,75,030/-;

3. that under the Policy/Office Note dated 16.08.1989,

approved by the Executive committee, the retiring
Executives were allowed house rent and utility bills and
petrol facility for six months after their retirement. The
respondent has also not been provided the same, which
amounts to Rs.1,89,282/-; and

4. that the petitioner bank has not attended to the legitimate

claims of the respondent No.1 regarding his promotion as
S.V.P along with the allied financial benefits,for which he is
eligible since 01.01.2003.

4. The suit of the respondent No.1 was dismissed by the

learned trial court/civil Court, vide judgment/decree dated

29.11.2013. Being aggrieved, the respondent No.1 filed an appeal

which was allowed by the learned Additional District Judge/first

appellate court, vide its order dated 16.03.2020 and the suit of the

respondent No.1 was decreed in his favour “as prayed for”. Though the

ABL, the petitioner, challenged the legality of the order of the first
Civil Petition No.2537 of 2020.doc -4-

appellate court by filing a Civil Revision before the Peshawar High

Court, Peshawar yet remained unsuccessful; hence, this petition.

5. Mr. Makhdoom Ali Khan, Sr. ASC learned counsel

appearing for the petitioner has contended that as per the circular, the

new policy applied to all employees of ABL. Each employee, however,

had the option to remain on the old pension scheme if he

communicated it, in writing, to the ABL before 30.09.2002. An

employee who chose to remain on the old pension scheme could

receive a pension on the “Frozen Basic Pay as on June 30, 2002" along

with General Provident Fund (GPF). Such an employee was not entitled

to receive Contributory Provident Fund (CPF) and gratuity.

6. That any employee who did not opt, in writing, to continue

with the old pension scheme stood automatically transferred to the

new scheme. The old pension scheme was superseded by the new

scheme. Further asserted that under the new scheme, the pension up

to 30.06.2002 was protected. And, the other retirement benefits in the

shape of CPF and gratuity were introduced from 01.07.2002. Pension

and GPF under the old scheme were substituted by CPF and gratuity

under the new scheme. The old pension scheme ceased to exist.

7. Further asserted that three factors were and continue to

be taken into account for the calculation of pension: salary, service,

and age. Under the new scheme, all eligible employees are entitled to

receive a pension on the basis of salary, service, and age as on

30.06.2002. With effect from 01.07.2002, they were entitled to receive

benefits instead of pension such as CPF and gratuity. On the other

hand, persons who opted, in writing, to remain on the old pension

Civil Petition No.2537 of 2020.doc -5-

scheme were entitled to receive pension on the basis of pay as on June

30, 2002. Other factors such as service and age continued to run till

the date of retirement along with GPF.

8. Learned Sr. ASC further asserted that the revised salary

structure and new scheme were more beneficial for the employees of

ABL than the old system. It, therefore, made no financial sense for any

employee to opt to remain on the old pension scheme. This option was

available for employees of ABL who were about to retire, soon after the

introduction of the circular, and would gain no benefit from the new

scheme. However, employees of ABL with more than one year of

service after the introduction of the new scheme could not avail benefit

from opting to remain on the old pension scheme. As per the circular,

an employee of ABL who chose to remain on the old pension scheme

would receive a pension on basic pay as on 30.06.2002, at the time of

retirement. Choosing to remain on the old pension scheme did not

mean that the employee would receive a pension on the basis of the

last drawn salary at the time of retirement. The basic pay was as on

June 30, 2002. This is evident from a bare reading of the circular.

9. On the other hand, Dr. Habib-ur-Rehman (respondent

No.1) has submitted that the learned Courts below on detailed

discussion and consideration of the material evidence on record

concurrently found that he is entitled to the pensionary benefits on the

basis of the old scheme of the ABL. Further submitted that the learned

Civil Judge, Peshawar had also dismissed another suit titled

Muhammad Zafar & 21 others v. Chairman Board of Directors Allied

Bank Private Limited (earlier suit) on the same cause of action and on
Civil Petition No.2537 of 2020.doc -6-

the same date, vide judgment/decree dated 29.11.2013. A Civil Appeal

No.02/2013 filed against the said judgment/decree was also dismissed

by the learned first appellate court/Additional District Judge, vide

order dated 07.07.2015. However, a Civil Revision No.634-P of 2015

against the order of learned first appellate court/Additional District

Judge was allowed by the Peshawar High Court, vide order dated

22.01.2018 and the suit of the twenty-two (22) plaintiffs was decreed,

accordingly. ABL, being aggrieved of the order of the Peshawar High

Court, filed a Civil Petition No.920 of 2018 before the august Supreme

Court of Pakistan wherein leave was granted vide order 16.05.2018,

and the petition was converted into a Civil Appeal (C.A. No. 793 of

2018) but the same was dismissed vide order 17.01.2020 while

upholding the order of the Peshawar High Court. Finally submitted

that as a case of similar nature based on the same cause of action has

already been decreed by the Peshawar High Court and upheld by a

bench of similar strength of the august Supreme Court of Pakistan,

the instant petition is, therefore, liable to be dismissed.

10. We have heard the arguments of the learned counsel for

the petitioner as well as the respondent No.1 appearing in person and

perused the relevant record.

11. Allied Bank of Pakistan Limited was originally a company

registered under the Companies Act, 1913 (VII of 1913) transacting the

business of banking. By virtue of the Banks Nationalization Act, 1974

(XIX of 1974) the said bank was nationalised, and its ownership,

management and control thenceforth vested in the Federal

Government. At the time of enactment of Act, 1974, four (4) banks

Civil Petition No.2537 of 2020.doc -7-

namely Australasia Bank, Sarhad Bank, Pak Bank, and Lahore

Commercial Bank were merged into one entity. It was renamed initially

as the Allied Bank of Pakistan Ltd. ("ABL"). ABL came to be wholly

owned by the Government of Pakistan. It was subsequently privatized

on 09.09.1991. See Suo Motu Action regarding non-payment of

retirement benefits by the relevant departments (2018 SCMR 736). It

would not be out of context to state that the memorandum of

association is the document that sets up the company and the articles

of association set out how the company is run, governed, and owned.

The articles include the responsibilities and powers of the directors

and the means by which the members exert control over the board of

directors. So, clause 132 of the Article of Association of Allied Bank of

Pakistan Limited enumerates certain powers of directors of the ABL,

and clause 132(q) thereof, empowers the directors to give away and

allow any bonus, pension, gratuity, or compensation to any employee

of the Company or his widow, children, or dependents that may

appear to the Directors just or proper, whether such employee, his

children or dependents have or have not a legal claim upon the

Company. In the exercise of this power, the ABL has introduced a new

scheme on the subject: “Restructuring of Salaries of Executives and

Officers” vide the circular No.P-INST/2002/121 dated 04.09.2002 (the

circular). However, the respondent No.1, through his suit, did not

challenge the competence of the ABL to issue the circular, rather the

case of the respondent No.1 was that the said circular has not

correctly been applied by the ABL while calculating his pension as well

as other benefits, etc. and thereby caused him heavy financial loss and
Civil Petition No.2537 of 2020.doc -8-

damage. Therefore, the present controversy revolves around the true

import and interpretation of the circular supra as well as application

thereof to the case of the respondent No.1. The relevant portion of the

circular relating to the present controversy is reproduced hereunder

for ready reference:

“4. REVISED RETIREMENT BENEFITS SCHEME

Effective from 01.07.2002, existing Pension Scheme is revised

and Gratuity and Contributory Provident Fund benefits are being
introduced as per the following details:-

A) For the service upto 30th June 2002, Pension and

Commutation to be allowed, subject to eligibility, on the
basis of current formula, on basic salary, service and age
as on 30.6.2002 payable on retirement.

B) General Provident Fund balance as on 30.6.2002 including

accrued profit and future profit thereon.

B) Contributory Provident Fund at 8.33% of the Monetized

Basic Pay with effect from 1.7.2002. The employees
contribution shall be equally matched by the Bank and the
employee is to be entitled to profit on both the contributions
as well.

C) Gratuity at one month's Monetized Basic Pay last drawn for

each completed year of service after 01.07.2002. Gratuity to
be paid in the event of resignation from employment, death,
retirement, retrenchment or termination of service for any
reason other than dismissal for misconduct.

Employees who want to continue with the Pension Scheme will

have to opt for the same and in such a case they will be entitled to
pension on the frozen Basic Pay as on 30.06.2002payable at the
Civil Petition No.2537 of 2020.doc -9-

time of retirement along with the General Provident Fund. They

will not be entitled to CPF or Gratuity.

The following points, however, are to be noted in connection with

the above:

I) Revised Retirement Benefits Scheme will be applicable to all

employees unless an employee submits written option for
the pension on frozen basic pay, upto 30th September 2002.

II) Contribution to General Provident Fund will be at the

revised rate of 6% of the Revised Basic pay but it shall not
be less than the actual contribution as on 30.06.2002.

III) Provision pertaining to the above shall be implemented

subject to eh permission of the Commissioner of Income Tax
under the Income Tax Ordinance, 2001”
(Emphasis supplied)

12. The afore-quoted portion of the circular has been read and

examined carefully, and it has been found that an employee, under the

new scheme, is entitled to the benefits vis-à-vis pension and

commutation for service up to 30.06.2002 on basic salary, service and

age as on 30.06.2002, payable at the time of retirement; ii) GPF

balance as on 30.06.2002 including accrued and future profit thereon,

iii) CPF with effect from 01.07.2002 and iv) gratuity for each completed

year of service after 01.07.2002. It is vivid from the plain reading of the

circular that the new revised scheme was made effective from

01.07.2002 and it, generally, was applicable to all the employees of the

ABL unless an employee submits a “written option” for the pension on

frozen basic pay by 30.09.2002. And, in case of non-submission of

such a written option by the cut-off date, the employee would be

governed by the new revised scheme.

13. By introducing the new revised scheme, the pension up to

30.06.2002 was protected and new retirement benefits in the shape of

Civil Petition No.2537 of 2020.doc - 10 -

CPF and gratuity were introduced from 01.07.2002. In other words,

the Pension and GPF under the old scheme were substituted by CPF

and gratuity through the new revised scheme. In our understanding,

the revised scheme appears to be more beneficial for all the employees

as compared to the old one and it, definitely, would make no sense to

opt for the old scheme. The option to opt for the old scheme may be

utilized by or more beneficial for those employees who were going to be

retired within a day or soon after the introduction of the new revised

scheme, as the case may be. But, merely opting for the old scheme

does not, in any manner, mean that the retiring employee would get a

pension to be computed on the basis of his last drawn pay. As the new

revised scheme clearly provides: “[E]mployees who want to continue

with the Pension Scheme will have to opt for the same and in such a

case they will be entitled to pension on the frozen Basic Pay as on

30.06.2002 payable at the time of retirement along with the General

Provident Fund.” (Emphasis supplied). Meaning thereby that the new

revised scheme, unequivocally, froze the basic pay as on 30.06.2002

for the purpose of the calculation of pension for an employee of ABL

who opts for the old scheme.

14. Even otherwise, the respondent No.1, being an officer in

high a position as Vice-President of the ABL, was fully conversant with

the command as well as the operation of the new revised scheme and

it is a matter of record that he had already received the retirement

benefits in accordance with the new revised scheme and did not raise

any objection thereto at the relevant time. Having received the benefits
Civil Petition No.2537 of 2020.doc - 11 -

under the newly revised policy, he is now estopped to question the

legality of the said new scheme.

15. Moreover, the impugned circular has already been upheld

by this Court in a somewhat similar case in a Civil Petition No.142-L of

2009 vide order dated 28.05.2009, and a subsequent Civil Review

Petition No.88-L of 2009 filed there against was also dismissed by this

Court vide order dated 23.12.2009.

16. In this case, the respondent No.1, admittedly, did not

submit a “written option” to opt for the old scheme, and as such his

case is to be dealt with in accordance with the new revised pension

scheme. Along similar lines, the learned trial court has rightly

dismissed the suit of the respondent No.1 while observing that his

claim for calculation of his pension on the basis of his last pay drawn

is unfounded and ground-less. We find the judgment of the learned

trial court to be a well-reasoned and judiciously crafted decision. The

learned trial court, in its meticulous analysis of the evidence as well as

the relevant legal principles, has arrived at a sound and reasoned

conclusion that is both legally sound and just.

17. Whereas the learned first appellate court/Additional

District Judge did reverse the judgment of the learned trial court not

on merits but on the basis of the order of learned Peshawar High

Court passed in Civil Revision No.634-P of 2015 dated 22.01.2018

subsequently upheld by this Court in Civil Appeal No. 793 of 2018

vide order dated 17.01.2020 passed in another suit titled Muhammad

Zafar & 21 others v. Chairman Board of Directors Allied Bank Private

Limited filed by other twenty-two employees of the ABL with respect to

Civil Petition No.2537 of 2020.doc - 12 -

the same revised scheme. The decision of the learned first appellate

court/Additional District Judge was also upheld by the Peshawar High

Court vide the impugned order. However, the Peshawar High Court too

did not consider the circular in its true perspective and wrongly

interpreted the same while holding that: “the respondent-employee has

never given option to continue with the introduced Revised Retirement

Benefits Scheme and, therefore, respondent cannot be deprived of his

pensionary benefits from the date of his superannuation.” (see para 7 of

the impugned order). The Peshawar High Court, as such, has failed to

accurately grasp the true intent and meaning of the circular leading to

a flawed decision that could have far-reaching implications.

17. Now coming to the important aspect of the matter that

this two-member bench is bound by the view already taken by an

earlier equal bench of this Court in Civil Appeal No. 793 of 2018, in

view of the principle of stare decisis. No doubt, a somewhat similar

question qua interpretation of the same circular was involved in the

suit titled Muhammad Zafar & 21 others v. Chairman Board of Directors

Allied Bank Private Limited and in that case, the plaintiffs too did not

submit written option to opt the old scheme. In that case, the learned

High Court vide its order dated 22.01.2018 passed in a Civil Revision

No.634-P of 2015 has set-aside the concurrent findings (dismissing the

suit) of the lower courts i.e. trial court as well as the first appellate

court and decreed the suit of the plaintiffs while holding as under:

"14. In the case of the petitioners, it is evident from

the record that they have not opted for the retiring
benefits on the basis of impugned notification which
fact is also proved on the record by the mouth of their
Civil Petition No.2537 of 2020.doc - 13 -

own witness i.e. DW-1 Syed Muzaffar Jamil, who in

respondent to a question has categorically stated that:

‫ ﻣﻮﺟﻮد ﻧہ ﮨﮯ۔‬option
‫ ﮐﮯ ﻣﺘﻠﻖ ﮐﻮﺋﺊ‬4-9-2000‫ﻣﺤﻤﺪ ظﻔﺮﮐﯽ طﺮف ﺳﮯ ﺳﺮﮐﻠﺮ‬

15. In such clear cut admission of the witness of the

respondents, nothing else is required to prove the
stance of the petitioners, so the learned Courts below
while deciding the lis in hand have totally ignored the
evidence available on the file and have rather
adjudged the matter on extraneous ground. Secondly,
the judgments referred to by the learned counsel for
the petitioners are supportive to the stance of the
petitioners as the dicta laid down in the said
judgments is that only those persons who have opted
for impugned circular dated 04.09.2000 are disentitled
to the pensionary benefits solicited by the present
petitioners
16. As discussed above, the only point of issue for
determination is the impugned notification to which
the present petitioners have never opted and the
respondents could not prove their stance specifically
taken and pleaded by them. So, in the circumstances,
the petition in hand is allowed, judgments and decrees
of both the courts below are set aside and the suit of
the petitioners is decreed as prayed for."
(Emphasis supplied)

18. The learned Peshawar High Court in that case

misconstrue the circular despite its clear and unambiguous language;

its observation that the plaintiffs/petitioners, in that case, did not opt

for the circular; hence, their cases were to be governed under the old

scheme is contrary to the spirit of the circular. This misinterpretation

has resulted in a distorted understanding of the circular's purpose and

Civil Petition No.2537 of 2020.doc - 14 -

the intended scope of its application. Consequently, the Peshawar

High Court's order not only undermines the original intention behind

the notification but also creates confusion and ambiguity in its

implementation. But, that order was affirmed by a two-member bench

of this Court in Civil Appeal No. 793 of 2018 vide order dated

17.01.2020.

19. This Court is fully aware of the legal position that a Bench

of co-equal strength cannot deviate from the view held by an earlier

Bench, and if a contrary view has to be taken, then the proper course

is to request the Hon'ble Chief Justice for constitution of a larger

Bench to reconsider the earlier view. At the same time, the law

declared by this Court should be clear, certain, and consistent, as it is

binding on all other courts of the country, under Article 189 of the

Constitution of Pakistan, 1973. The doctrine of binding precedent

promotes certainty and consistency in judicial decisions, and ensures

an organic and systematic development of the law as has been held in

the cases ofthe Province of East Pakistan v. Dr. Azizul Islam (PLD 1963

Supreme Court 296); the Province of East Pakistan v. Abdul Basher

Cohwdhury (PLD 1966 Supreme Court 854); Multiline Associates v.

Ardeshir Cowasjee (PLD 1995 Supreme Court 423); Ardeshir Cowasjee

v. Karachi Building Control Authority (1999 SCMR 2883); Gulshan Ara

v. the State (2010 SCMR 1162); Zahid Rehman v. the State (PLD 2015

Supreme Court 77); WAK limited Multan Road v. Collector Central

Excise and Sales Tax (2018 SCMR 1474); Shafqat @ Shafaat v. the

State (PLD 2019 Supreme Court 43); and Mst. Samrana Nawaz v.

M.C.B. Bank Ltd. (PLD 2021 SC 581).

Civil Petition No.2537 of 2020.doc - 15 -

20. It would not be out of place to observe here that not every

statement or observation in a judgment of this Court creates a

precedent to become binding on courts. In this regard reference may

be made to Article 189 of the Constitution of the Islamic Republic of

Pakistan, 1973 (the Constitution), reproduced hereunder: Any decision

of the Supreme Court shall, to the extent that it decides a question of

law or is based upon or enunciates a principle of law, be binding on all

other courts in Pakistan. Moreover, where this Court deliberately and

with the intention of settling the law, pronounces upon a question, the

such pronouncement is the law declared by the Supreme Court within

the meaning of Art.189 of the Constitution and is binding on all

Courts in Pakistan. Reference here may be made to the judgments in

the cases of Justice Khurshid Anwar Bhinder v. Federation of Pakistan

(PLD 2010 Supreme Court 483) & Muhammad Shifa v. Meherban Ali

(2022 SCMR 647). This Court in Civil Appeal No. 793 of 2018 did not

decide the question of whether the employee who did not submit a

“written option” was to be governed by the old scheme or the new

revised scheme. Even, the decision in that case, with due respect, fell

short of articulating the underlying principle of law on which the

decision was based.

21. A decision not expressed, not accompanied by reasons,

and not proceeding on conscious consideration of an issue cannot be

deemed to be a law declared to have a binding effect as is

contemplated by Article 189 of the Constitution. In this regard,

reference may be made to the observation made by the Supreme Court

Civil Petition No.2537 of 2020.doc - 16 -

of India in the case of Arnit Das v. the State of Bihar (AIR 2000 SC

2264).

22. In this view of the matter, we convert this petition into an

appeal and allow the same. The impugned order dated 20.07.2020 of

the Peshawar High Court not being sustainable in the eyes of law is

set-aside. Resultantly, the Civil Revision filed by the petitioner is

accepted while setting-aside the order dated 16.03.2020 of the learned

first appellate court/Additional District Judge and the

judgment/decree dated 29.11.2013 of the trial court is restored. No

order as to costs.

JUDGE

JUDGE

Announced in open Court

on 25.05.2023 at Islamabad
Approved for reporting
Ghulam Raza/*