ISLAMABAD - The Supreme Court on Friday annulled the appointment of Muhammad Ali Ghulam Muhammad as commissioner and chairman of Securities and Exchange Commission of Pakistan (SECP).
The judgment authored by Justice Jawwad S Khawaja declared that the selection and appointment of Ali on these posts do not meet the requirements of the SECP Act 1997. The court set aside the appointment notification, No. SRO 21 (KE)/2011, dated December 24, 2010.
The federal government was directed to make appointments without delay to these statutory positions as per sections 5, 6 and 7 of the SECP Act in a “credible, rigorous, transparent and open manner” ensuring that the appointees meet all the requirements.
The court noted that the insertion of section 5(5) in the SECP Act through the Finance Act 2003 was violative of the constitution and in particular Article 73 thereof; Clause 3(1) of Chapter 11 of the SECP Service Rules (HR Handbook), which allow for termination without cause of employees of SECP, is ultra vires the constitution and inter alia, the SECP Act.
The court directed that this clause must be replaced appropriately by provisions, which ensure due process and adherence to articles 9, 10A, 14, 18 and 25 of the constitution and are consistent with the SECP Act so as to ensure independent and objective decision making without fear or favour that is required of an independent regulator.
A two-member bench comprising Justice Jawwad S Khawaja and Justice Khilji Arif Hussain heard the case for several days and on April 10 had reserved the judgment. Muhammad Ashraf Tiwana through Afnan Karim Kundi filed the petition under Article 184 (3) of the 1973 Constitution, raising important questions of public importance relating to the enforcement of fundamental rights guaranteed in Chapter I of Part II of the constitution.
The petitioner had contended that SECP chairman was appointed in sheer violation of law, equity, justice, fairness, public policy, constitution and principles of natural justice. He pleaded that appointment of those individuals as commissioner or as SECP chairman who were or have been members of stock and commodity exchanges, brokers, directors and/or shareholders of brokerage companies is against the law.
The petitioner also requested to strike down some clauses of the SECP Act including sub-section (5) of Section 5 of this Act, claiming that it was in violation of articles 73 and 75 of the constitution. Tiwana maintained that the federal government should be directed to introduce necessary amendments in the existing SECP Act as well as the new SECP Bill pending in the parliament to prohibit the appointment of individuals with conflict of interest as commissioners and chairman of SECP in future, besides ensuring the avoidance of Regulatory Capture of SECP in line with best international practices.
The petitioner further requested to strike down those sub clauses from SECP Services Rules which he claimed were against articles 4, 9, 10A, 14,18 and 25 of the constitution as well as in contravention of Section 23 of the Contract Act 1872 and Section 24-A of the General Clauses Act.
Earlier, in the day SECP Spokesperson Imran Gardezi denied reports regarding the involvement of Chairman Muhammad Ali in ‘undisclosed business ventures’. He said that a few brokerage houses are using the media to pressure the SECP by throwing up concocted stories regarding Ali’s alleged ownership of shares in a construction firm called RI Enterprises.