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The Mustafa Impex Case: Defining the Federal Government in the light of the 18th Amendment to the Constitution of Pakistan, 1973

The Mustafa Impex Case

Recollecting his earlier article titled ‘The End of History’ that culminated into his famous book ‘The End of History and the Last Man’, Professor Francis Fukuyama of the Stanford University noted that he had argued ‘end point of mankind’s ideological evolution’ in the article, and that ‘the final form of human government’ had constituted the ‘end of history’, which generated a lot of commentary, and controversy as well. It seems that his claim meets challenges on daily basis; the latest constitutional case of Pakistan styled as “M/s Mustafa Impex and others versus The Government of Pakistan” has once again evinced this point. In this context, it is appropriate for the students of law and the governance in Pakistan to have a look at the case. Facts and brief discussion on the case are being presented herewith.

Brief facts and proceedings

The skeleton facts, as reflected in the judgement, are that some companies (M/S Mustafa Impex and others) had been granted exemptions from the sales tax by the Federal Government. In 2013, through a notification signed by an Additional Secretary of the Finance Division, some of the granted exemptions were either withdrawn or modified. The companies challenged the 2013 notification in the High Court on the ground that the notification could only be issued by the Federal Government and that the Additional Secretary was not competent to issue such a notification. The challenge failed in the High Court, and therefore, the case was instituted at the Supreme Court of Pakistan (hereinafter SC). Three-member bench of the apex court, comprising Justices Mian Saqib Nisar (now the Chief Justice), Iqbal Hameedur Rahman and Maqbool Baqar, heard the case. Syed Ali Zafar, Advocate Supreme Court of Pakistan, was appointed the amicus curiae.

Judgement

The judgement of the case was rendered on 18th August 2016. It redefined the conduct of business and decision-making of the government. The federal and the provincial governments (especially the Government of the Punjab) have started reconsidering the way they process the legislative and executive decision-making. To appreciate it fully, it may be appropriate to present the findings, in verbatim, and then to set out the reasoning employed by the SC to adjudicate the case.

I. Findings

The summary of the findings (as contained in Paragraph 84 of the judgement) is reproduced hereunder:

“(i) The Rules of Business, 1973 are binding on the Government and a failure to follow them would lead to an order lacking any legal validity.

(ii) The Federal Government is the collective entity described as the Cabinet constituting the Prime Minister and Federal Ministers.

(iii) Neither a Secretary, nor a Minister and nor the Prime Minister are the Federal Government and the exercise, or purported exercise, of a statutory power exercisable by the Federal Government by any of them, especially, in relation to fiscal matters, is constitutionally invalid and a nullity in the eyes of the law. Similarly budgetary expenditure, or discretionary governmental expenditure can only be authorized by the Federal Government i.e. the Cabinet, and not the Prime Minister on his own.

(iv) Any Act, or statutory instrument (e.g. the Telecommunication (Re- Organisation) Act, 1996) purporting to describe any entity or organization other than the Cabinet as the Federal Government is ultra vires and a nullity.

(v) The ordinance making power can only be exercised after a prior consideration by the Cabinet. An ordinance issued without the prior approval of the Cabinet is not valid. Similarly, no bill can be moved in Parliament on behalf of the Federal Government without having been approved in advance by the Cabinet. The Cabinet has to be given a reasonable opportunity to consider, deliberate on and take decisions in relation to all proposed legislation, including the Finance Bill or Ordinance or Act. Actions by the Prime Minister on his own, in this regard, are not valid and are declared ultra vires.

(vi) Rule 16(2) which apparently enables the Prime Minister to bypass the Cabinet is ultra vires and is so declared.

(vii) Fiscal notifications enhancing the levy of tax issued by the Secretary, Revenue Division, or the Minister, are ultra vires. (it is clarified, in passing, that this court has in the past consistently held that a greater latitude is allowed in relation to beneficial notifications and that principle still applies).

(viii) In consequence of the above findings the impugned notifications are declared ultra vires and are struck down.”

II. Reasoning

The judgement was authored by Justice Mian Saqib Nisar. His reasoning can be thematically explained as comprising:

a. The Constitutional History

He traced the constitutional history of the Pakistan’s constitution starting from the Government of India Act, 1833, which effected ‘the arrangement with the East India Company’ vis-à-vis the Crown. He elaborated on how the law was re-enacted in 1854, which continued till 1861 when the Indian Councils Act came into force. The Indian Councils Act, 1861 was then amended by 1892 law having similar title. Later, in 1915, the Government of India Act was passed that laid the conceptual foundations of the present-day constitutional ideology and distinguished between the powers of the Crown (Section 1) and the powers of the Secretary of State to be exercised by the Council of India (Section 6). The same scheme was followed in the Government of India Act, 1935. Then, he traced the constitutional architecture of the Government of India Act, 1935 in the Pakistan’s 1956 Constitution, which maintained the scheme by providing for functions of the Governor General (Section 7) and the functions of the Council of Ministers (Section 9). He opted not to discuss in detail the 1962 Constitution due to its different form of government i.e. presidential. He, then, examined the provisions of the 1973 Constitution, which followed the ‘template’ of the Government of India Act, 1935.

b. The Eighteenth Amendment

The nub of the reasoning of the present case comes from the Eighteenth Amendment to the Constitution of Pakistan, 1973. The original 1973 Constitution was substantially amended by the Revival of the Constitution Order, 1985 (RCO), which amended the provisions related to the exercise of executive authority by the Federation. The Eighteenth Amendment, which came into effect in 2010, reversed the effects of the RCO, hence reviving the earlier scheme of the Constitution. The judgement heavily weighs in favour of the formulation of Articles 90 and 99 (which deal with the working and conduct of business by the federal government) of the 1973 Constitution and almost literal interpretation of the constitutional provisions has been made the basis of the judgement.

c. The Comparative Constitutional Law:

Different set of lawyers argued on different lines in front of the Court. The constitutional position of the US, the UK and India were discussed. The bench relied heavily on the reasoning of the UK constitutional law on the subject. The Halsbury’s Laws of England was used to inform the judgement on the working of the government; it specifically relied on:

“748. Ministers of the Crown and local authorities: Where functions entrusted to a minister are performed by an official employed in the minister’s department there is in law no delegation because constitutionally the act or decision of the official is that of the minister. Similarly where a local authority appoints a committee for the discharge of certain of its functions, the committee is merely machinery for the discharge by the authority of the business entrusted to the committee all of whose acts are subject to the authority’s approval.”

d. Distribution of Development Funds Case

In checking the power of the Prime Minister, the Court has followed its earlier judgement in case of former Prime Minister Raja Parvaiz Ashraf, wherein it had held:
“(1) The National Assembly, while giving assent to a grant which is to be utilized by the Executive at its discretion, has to follow the procedure provided in Articles 80 to 84 of the Constitution as well as the Rules of Procedure, 2007. However, such discretionary grant cannot be spent at the absolute discretion of the Executive and the discretion has to be exercised in a structured manner;

(2) The Constitution does not permit the use/allocation of funds to MNAs/MPAs/Notables at the sole discretion of the Prime Minister or the Chief Minister. If there is any practice of allocation of funds to the MNAs/MPAs/Notable sat the sole discretion of the Prime Minister/Chief Minister, the same is illegal and unconstitutional. The government is bound to establish procedure/criteria for governing allocation of such funds for this purpose;

(3) Though funds can be provided for development schemes by way of supplementary grant but for that purpose procedure provided in Articles 80 to 84 of the Constitution and the rules/instructions noted hereinabove has to be followed strictly;

(4) Funds can be allocated by way of reappropriation but the procedure provided in the Constitution and the rules has to be followed in its true perspective;

(5) No bulk grant can be made in the budget without giving detailed estimates under each grant divided into items and that every item has to be specified;

(6) The amounts as approved in the budget passed by the National Assembly have to be utilized for the purpose specified in the budget statement. Any re appropriation of funds or their utilization for some other purpose, though within the permissible limits of the budget, are not justified. In such circumstances, the supplementary budget statement has to be place before the Parliament following the procedure provided in Articles 80 to 84 of the Constitution and the rules/instructions noted hereinabove.”

Impact of the judgement and the way forward

As noted above, the judgement has affected the working of the government. The governance structures have been reshaped in their conduct and allocation of business in the light of this judgement. In the Punjab, the cabinet and the sub-committees of the cabinet have been formally notified and all the processes have been delicately subjected to the rigours of the judgement: whether this will usher into a more constitutional compliant governance of the state is yet to be seen in the coming years; with this hope, the judgement warrants a warm welcome.

The author is an independent researcher and has done his BCL from the University of Oxford. kamranadilpsp@gmail.com

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