IN THE SUPREME COURT OF PAKISTAN 
(ORIGINAL JURISDICTION) 
 
 
PRESENT: 
MR. JUSTICE TASSADUQ HUSSAIN JILLANI 
MR. JUSTICE MIAN SAQIB NISAR 
MR. JUSTICE EJAZ AFZAL KHAN 
 
 
Const. Petitions No. 5 & 15 of 2004, 
C.M.A. No. 4251/2011 & H.R.C. No. 14144-S of 2009 
 
 
Dr. Akhtar Hassan Khan 
 
 
 
Petitioner 
(in Const. P. 5/2004) 
Watan Party through its President  
 
Petitioner 
(in Const. P. 15/2004) 
Application by Amjad Ali 
 
 
 
Petitioner 
(in H.R.C. 14144-S/2009) 
 
Versus 
 
Federation of Pakistan and others  
 
Respondents 
(in Const. Petitions) 
 
 
For the petitioner: 
 
 
Mr. M. Ikram Ch., Sr. ASC 
[in Const. P. 5/04) 
 
 
 
 
For the Petitioner: 
 
 
Barrister Zafarullah Khan, Sr. ASC 
(in Const.P.15/04) 
 
For Respondent 2: 
 
 
Ch. Aitzaz Ahsan, Sr. ASC 
(in Const.P.5/04) & 
Assisted by Mr. Faisal Qausain  
For Respondent 3 
Naqvi, Adv. 
(in Const. P.15/2004) 
Barrister Gohar Ali Khan, Adv. 
 
Mr. Arshad Ali Chaudhry, AOR 
 
For respondent No.3 
Mr. Makhdoom Ali Khan, Sr. ASC 
(in Const.P.5/04) & 
Mr. M.S. Khattak, AOR 
For respondent No.5 
assisted by Saad Hashmi, Adv. 
(in Const.P. 15/04) 
 
For Respondent No.4 
 
 
Mr. S. M. Zafar, Sr. ASC 
(in Const.P.5/04) & 
 
 
Syed Ali Zafar, ASC 
For Respondent No.6 
 
 
Raja Abdul Ghafoor, AOR 
(in Const. P. 15/04) 
 
 
assisted by Talib Hussain, Adv. 
 
For respondents 7-23: 
Syed Iftikhar Hussain Gillani,  
(in Const.P.5/04)  
 
 
Sr. ASC 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
2 
 
For respondent No.1: 
 
Maulvi Anwar ul Haq, Attorney General  
(in Const. P. 5/04 & 
 
for Pakistan. 
Const. P.15/04) 
 
Date of hearing: 
27.10.2011, 21, 22, 23, 24, 28, 29 
November, 2011 
 
 
JUDGMENT 
 
 
Tassaduq Hussain Jillani, J.- Privatization of Habib 
Bank Limited [hereinafter referred to as the “HBL”] effected 
through open bidding held on 29.12.2003 has been challenged 
through these two petitions filed under Section 184(3) of the 
Constitution of Islamic Republic of Pakistan. Having heard 
learned counsel for the parties at length, the issues which crop 
up for consideration broadly are as follows: -  
i) 
Whether the privatization of HBL was carried out in utter 
haste and on the desire of the International Monitory 
Fund?  
ii) 
Whether the procedure adopted to privatize HBL was 
tainted with mala fides and violative of the provisions of 
Privatization Commission Ordinance and the Rules 
framed there under? 
iii) 
Whether the approval of the highest bidder AKFED by the 
Cabinet Committee on Privatization in its meeting held 
on 1.1.2004, was an improper exercise of discretion and 
amenable to interference in accord with the well 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
3 
recognized principles of judicial review of administrative 
action; 
iv) 
Whether injecting an amount of Rs. 17.7 billion in HBL 
and thereafter offering it for privatization was an act of 
financial 
mismanagement 
of 
a 
financial 
institution 
causing loss to the public ex-chequer and against the 
best practices? and 
v) 
Whether the petitioners have locus standi to challenge 
the privatization of HBL?  
 
2. 
Facts giving rise to these petitions briefly stated are 
that the decision to privatize HBL though taken in 1995, but a 
decisive step culminating in its sale was taken in the year 2000, 
when the Privatization Commission Ordinance was promulgated 
and the Privatization Commission [hereinafter to be called the 
‘P.C.’] appointed an accountancy firm of Pakistan AF Ferguson as 
the Financial Advisor for valuation of the HBL. It invited 
Expressions of Interest [hereinafter referred to as the “EOIs’] 
from prospective bidders in June 2002 but on account of sluggish 
response, the process was called off. In the following year (April 
2003), the PC again called for EOIs and this time 19 parties 
submitted EOIs followed by submission of Statements of 
Qualification [hereinafter referred to as the ‘SOQs’]. The SOQs of 
the bidders were examined by a Pre-qualification Committee and 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
4 
these bidders were also granted access to the Data Room 
prepared by the Bank and the PC. It was opened on September 
8, 2003 and closed on 21st of November, 2003. However, only 
three parties entered the Data Room to conduct due diligence. 
3. 
In November 2003, with a view to provide further 
incentive to the prospective bidders, the PC decided that while 
bidders would be required to bid for 51% of the issued and paid 
up capital of the Bank, they would also have the option of either 
purchasing the entire 51% stake at once or first to acquire a 
26% or more stake with management control and then pay for 
the remaining stake within a period of not exceeding two years. 
The reference price recommended by the Financial Advisor (AF 
Ferguson & Co.) was Rs. 20.609 billion for the value of 
government stake of 51% in the Bank which was being invested. 
However, this reference price was revised by the PC itself and 
fixed at Rs.22.143 billion in its meeting held on 26th of December 
2003. This price was later approved by the Cabinet Committee on 
Privatization [hereinafter to be referred to as the ‘CCOP’]. 
4. 
The Pre-qualification Committee formed by the PC in 
its meeting dated 20th of December, 2003 permitted three 
potential bidders to participate in the bidding process. Agha Khan 
Foundation for Economic Development [hereinafter referred to as 
the “AKFED”] was declared the highest bidder in the bidding for 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
5 
sale of 51% shares of HBL held on 29.12.2003 and it was higher 
than the reference price of Rs.22.143 billion.  
5. 
The State Bank of Pakistan also provided their 
clearance for declaring AKFED as successful bidder vide letter 
dated 
31st 
December 
2003. 
The 
CCOP 
accepted 
the 
recommendation of the PC in its meeting held on Ist of January 
2004. AKFED then paid the initial sale price and entered into an 
agreement on 26th of February 2004 with the PC and the State 
Bank of Pakistan for the purchase of 51% share of the 
government stake in Habib Bank Limited and for taking over the 
management of the HBL.  
6. 
Petitioner Dr. Akhter Hassan Khan (in Const. P. No. 5 
of 2004) is a former Federal Secretary Planning, Government of 
Pakistan. According to him, the process of bidding was not 
transparent; that prior to bidding (dated 29th of December 2003) 
on 23.12.2003, the Economic Coordination Committee of the 
Cabinet [hereinafter referred to as the “ECC”] decided to make 
Habib Bank attractive for privatization. The ECC approved 
issuance of bonds amounting to Rs.9.84 billion against income 
tax funds due to the HBL. The Ministry of Finance also advised 
transfer of Rs. 9.00 billion of HBL’s bad debts to the Corporate 
and Industrial Restructuring Corporation [hereinafter referred to 
as the “CIRC”] and in this way a benefit of Rs.18.84 billion were 
given to the Habib Bank after short listing of three bidders. 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
6 
According to him if these benefits had been announced before 
the Expression of Interest, the response would have been much 
greater and multinational banks would have expressed interest. 
His learned counsel Mr. Muhammad Ikram Chaudhry, ASC 
contended as follows:- 
(i) 
that the net assets of the HBL valued more than 
the highest bid at which it has been sold; 
(ii) 
that in the year 2003 it had 1425 branches in 
Pakistan and 48 branches in 26 countries of the 
world including USA, UK, France, Germany, 
Saudi Arabia and UAE and had a staff of 17000 
employees. The good will of the bank can be 
gauged from the fact that at the time of 
privatization, it had 20% of the overall business 
in the banking sector with subsidiary companies; 
(iii) that good will of the bank, the value of movable 
and immovable properties as also assets were 
not correctly valued by the Financial Advisor and 
the decision was taken in posthaste by the 
Privatization Commission and the CCOP in 
violation 
of 
the 
Privatization 
Commission 
Ordinance, the Rules and other relevant laws; 
(iv) that it is on record that respondent No. 5 
(Central Insurance Co. Ltd) could not manage 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
7 
the earnest money of U.S Dollars 20 Million and 
respondent No. 6 (State of Qatar) were not 
found up to the mark having proposed a bid of 
Rs.21.09 billion in comparison to the successful 
bidder’s bid of Rs.22.4 billion. If this was the 
state of affairs, the Privatization Commission 
should have restarted the process of inviting 
parties for fresh bidding process as contemplated 
in the Privatization Commission Ordinance 2000, 
Privatization Commission Valuation of Property 
Rules, 2001 and Privatization Modes Procedure 
Rules 2001; 
(v) 
that the appointment of AF Fergusan and others 
etc was flawed because the procedure adopted 
for appointment of Financial Advisor and other 
consultants was violative of the Privatization 
Commission 
Ordinance, 
2000 
and 
the 
Rules/Regulations framed thereunder; 
(vi) that the method of valuation adopted by AF 
Fergusan and Co. as DDM was not suitable as it 
caused huge financial loss to public at large and 
Pakistan. The decision taken to sell 5% shares 
by public offering in the case of National Bank of 
Pakistan, OGDC, SSGC having multiple response 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
8 
could have been replicated in HBL. The sale of its 
shares could have brought a huge money of 
Pakistanis residing abroad (which in the present 
case would not be) and it would have also given 
fresh impetus and a better and positive idea to 
correctly evaluate the assets of HBL including 
goodwill and a base for determining better 
Reference Price; 
(vii) that the decision of Privatization Commission and 
CCOP seems to be made in posthaste as most of 
the proceedings are relatable to specific dates 
i.e. in a short span of time bidders entering the 
data room, on or before 21.12.2003, final 
reference price approved by December 26, 2003 
bidding on 31.12.2003, approval of the final bid 
of AKFED on 1.1.2004. It is humanly impossible 
to go through all the details/documents, in 
merely 8 days or so to arrive at a decision of 
approval by CCOP on December 17, 2003 and 
the steps taken thereafter for appointment of 
advisors, consultants and valuation of the assets 
etc of HBL were also done in a hurried manner. 
The enhancement of sale of shares from 26% to 
51% was also not publicized in the manner 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
9 
required by law and till 23rd December, 2003, Rs. 
9.84 billion investment made by issuance of 
bonds and also transfer of bad debts of Rs.9 
billion of HBL to CIRC as referred in the 
preceding paras were also not earlier, or 
thereafter advertized to the public which could 
have brought more money. It is evident from the 
record as well that IMF and World Bank pressure 
was also cause of hasty and under valued sale of 
HBL of course violated the law as well; 
(viii) Dilating on the financial worth of the HBL, 
learned counsel placed on record the following 
table of the yearly profit of the bank (after 
privatization) indicating that respondent AFKED 
had recovered the entire sale price of Rs.22.4 
billion in a period of five years. The table is given 
below:- 
Year 
Profit 
before tax 
Profit after 
tax 
AKFED 
Share of  
2004 
7,163 
5,679 
2,896 
2005 
13,834 
9646 
4,919 
2006 
18840 
12700 
6477 
2007 
13127 
8041 
4100 
2008 
15855 
10000 
5100/23492 
2009 
21000 
13400 
6834 
 
(ix) that the real worth of HBL is evident from the 
fact that the Government in October 2007 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
10 
decided to sell 7.5% shares of the HBL in the 
market 
and they fetched Rs.12.61 billion. 
Calculated at this price, the value of 51% share, 
according to him, comes to Rs.82.7 billion 
instead of 22.4 billion for which it was sold. He 
referred to the World Bank Paper No. 403 by Mr. 
Dick Welch Oliver Fremond titled as “The Case-
by-Case Approach to Privatization Techniques 
and Examples” to contend that the Privatization 
Commission 
should 
have 
conducted 
the 
privatization 
process 
in 
accord 
with 
the 
recommendations of such competent academics 
who have expertise in the field and in the afore-
referred paper, he has proposed various steps 
for a credible process of privatization. 
 
7. 
Learned 
counsel 
for 
the 
petitioner, 
Barrister 
Zafarullah, ASC in Constitution Petition No. 15 of 2004 in addition 
to the contentions which in substance were similar to the ones 
canvassed by petitioner’s learned counsel in Constitution Petition 
No. 5 of 2010 argued as follows:- 
(i) 
that the process of privatization has not been 
transparent inasmuch as although Section 23 of 
the Privatization Ordinance, 2000 specifically 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
11 
mandates that advertisements for Privatization 
will 
be 
placed 
in 
newspapers 
with 
an 
“international circulation”, the respondent-PC 
placed the advertisements in Statesman of India, 
Express, Nawa-i-Waqt, Dawn, Frontier Post, the 
News, Jang in Pakistan; Arab News of Jeddah 
and Khaleej Times of UAE. The advertisements in 
Pakistani newspapers were large and in some 
detail 
whereas 
advertisements 
in 
foreign 
newspapers were short and cryptic; 
(ii) 
that AKFED had offered the highest bid of Rs. 
22.409 billion or Dollars 350 million for 51% 
shares and QSCEAI offered Rs. 21.99375 billion 
which indicates very marginal difference between 
the two bids and it could be termed as collusive 
i.e. based on previous arrangements between 
the parties since QSCEAI joined the sale 
proceedings later on. The bid was confirmed by 
CCOP within forty eight hours which was unholy 
haste; 
(iii) 
that the two bidders, neither had any experience 
of 
owning 
or 
managing 
an 
operation 
as 
expansive as the HBL, in such a situation, a 
prudent course would have been to postpone the 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
12 
sale so as to analyze and ascertain the reasons 
behind this lack of interest and to take corrective 
measures so as to make the Bank and Pakistan’s 
investment climate more attractive. Instead by 
processing this complex transaction within 48 
hours on the strength of only two bids, it has 
created the impression of not only distressed 
sale but also not completely above board; 
(iv) 
that with the control of HBL in selected 
geographical areas, the AKFED will be in 
possession of a combination of financial power 
and mind controlling influence like East India 
Company; that after privatization a new branch 
of HBL was immediately opened in Afghanistan 
i.e. the hub of terrorism which is unfortunate 
and the possibility cannot be ruled out that other 
interested actors in Afghanistan can infiltrate and 
misuse the organization for non-commercial 
objectives; 
(v) 
that this is not surprising that AKFED’s core 
competence is that for profit development 
urgency 
creating 
economic 
capacity 
and 
opportunity 
and 
is 
region 
specific 
in 
the 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
13 
developing world. Apart from this there is reason 
for concern on two other counts:- 
(i) 
The new Board (Privatization Commission 
Board) was unable to successfully resist 
political pressure or stay aloof of crony 
capitalism. Already there are ethical problems 
with AKFED nominees on board, one being 
closely connected with security brokerage i.e. 
a Financial Advisor to the PC and other being 
Legal Advisor to several corporate borrowers 
of HBL. 
 
(ii) 
In Pakistan the AKFED is known too deeply 
involved in executing the educational reforms 
with an agenda in the wake of post 9/11 
developments. 
 
 
(vi) 
that in any case the net result of restructuring by 
the Privatization Ministry’s Financial Advisor 
leaves the people of Pakistan out of pocket by 
Rs.14 billion when it is realized that Rs.17.7 
billion of public money was injected by the State 
Bank of Pakistan to “fill a hole” in HBL’s balance 
sheet and further in December 2003, just week 
before the bidding, the Finance Ministry first 
authorized transfer of Rs. 9.00 billion of HBL bad 
debts 
to 
the 
CIRC 
(Corporate 
Industrial 
Restructuring Corporation) and then issued 
another 9.00 billion rupees worth of bonds to 
cover a tax liability to CBR now FBR this all 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
14 
amounts to Rs.27 billion to get Rs.22.4 billion 
only for sale of HBL. 
 
8. 
Learned counsel for the applicant, Mr. Iftikhar Gillani 
in CMA No. 742 of 2011 who wanted to be impleaded as party as 
he represents ex-employees of HBL who were laid off during the 
process of downsizing by various modes including the golden 
handshake scheme also questioned the transparency of the 
entire exercise of privatization and in addition to the submissions 
which were similar to the one’s made by learned counsel for the 
petitioners in the connected petitions, contended as follows:- 
(i) 
that 
the 
privatization 
of 
the 
Bank 
was 
undertaken 
on 
the 
dictation 
of 
IMF. 
The 
Memorandum of Economic and Financial Policies 
for January-June 2003 states in Para 23 that 
potential investors in HBL have been pre-
qualified and have started due diligence and 
bidding will take place in December. The bidding 
did take place on 29th December, 2003 in 
compliance with the undertaking given to the 
IMF; 
(ii) 
that on 23rd December, 2003 a few days before 
the bidding the government decided to issue 
bonds worth 9.84 billion against the taxation 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
15 
liability of the Bank to get it ready for 
privatization and in the same month the Finance 
Minister authorized transfer of Rs.9.00 billion of 
the bank’s bad debts to the CIRC (Corporation 
Industrial Restructuring Corporation), besides 
Rs. 17.7 billion were injected by the State Bank 
of Pakistan to “fill a hole” in the Bank’s balance 
sheet. Thus Rs. 36.84 billion; and the AKFED has 
recovered the entire sale price of Rs.22.4 billion 
in five years. This is a very short period in the 
life of a bank or any other service industry 
because in such institutions there is very little 
depreciation and the normal pay out period is 
about 15 years or even more.  
9. 
Learned counsel for the PC, Mr. Aitzaz Ahsan, ASC 
defended the privatization of HBL and submitted as follows:- 
(i) 
that these petitions have been filed under Article 
184(3) of the Constitution which are not 
maintainable as neither any question of public 
importance with reference to enforcement of 
fundamental rights is involved nor the judicial 
review is tenable in policy making domain of the 
executive authority; 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
16 
(ii) 
that the policy decision to privatize the strategic 
assets taken by the competent authority in the 
Federal Government cannot be assailed as the 
courts in exercise of power of judicial review 
have refrained from interfering in this domain; 
(iii) 
that the petitions have raised multiple disputed 
questions of fact entailing factual enquiry which 
exercise cannot be undertaken in a Constitution 
petition; 
(iv) 
that the argument that HBL should not have 
been privatized once it had become a profit-
earning 
enterprise 
is 
inherently 
flawed. 
If 
accepted, the logic of the argument would mean 
that an institution can never be privatized 
because if it is making losses, very few will be 
interested in buying it. More seriously, the 
fundamental argument behind privatization is 
that the private sector can be more reliably 
depended upon as a source of profits than the 
public sector. Thus, the decision in relation to 
the privatization of an asset is really a decision 
as to which mode of operation or control is likely 
to provide results in the long run. And, from that 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
17 
perspective, it is submitted that the results are 
clear: 
1) 
It is not in dispute that the nationalization of 
the banks in Pakistan caused financial havoc 
and 
the 
destruction 
of 
a 
once-proud 
industry. 
2) 
HBL was indeed rescued from collapse 
through a massive effort by the Government 
of Pakistan but the effort and the cash 
injections required were not a sustainable 
commitment from the Federal Government’s 
perspective. 
3) 
By comparison, HBL, since privatization, has 
only gone from strength to strength as can 
be seen from its annual reports. The 
privatization of HBL has thus caused no loss 
to the nation but has instead greatly 
benefited it. 
4) 
More specifically: 
(a) 
The net assets of HBL in the year 2008 
were worth Rs.66.3 billion and the net 
profit (before taxation) was Rs.16.9 
billion (USD 200.9 million (in contrast 
to USD 52 million in June 2003). 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
18 
(b) 
Similarly, the net assets of HBL in the 
year 2009 were worth Rs.84.3 billion 
and the net profit (before taxation) was 
Rs.21.3 billion (USD 253.8 million). 
(v) 
The privatization of HBL has been a huge 
financial success from the perspective of the 
Federal Government: 
(1) 
As of 31.12.2003, the accumulated losses 
of HBL were Rs.13 billion. 
(2) 
From 
2004 
till 
date, 
the 
Federal 
Government has made a profit of Rs.60.5 
billion from HBL (inclusive of tax receipts, 
dividends and income from sale of shares). 
(vi) 
that the allegations leveled by the Watan Party 
against the Ismaili community are despicable, 
based on communal hatred and deserve to be 
censured. They are also entirely unsustainable. 
Other 
international 
banks 
operating 
in 
Afghanistan 
include 
the 
National 
Bank 
of 
Pakistan and Standard Chartered Bank, neither 
of which has ever been accused of patronizing 
terrorism by virtue of a branch in Kabul; 
(vii) 
that the process of privatization of HBL does not 
reflect an undue haste as it commenced in the 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
19 
year 1995 and decisive decision was taken in 
2003; 
(viii) 
that the privatization of the Bank was part of an 
overall policy decision taken by the Federal 
Government 
to 
dispose 
of 
State 
owned 
enterprises and the first step in this regard was 
the establishment of Privatization Commission in 
the year 1991 for supervision and oversee of the 
disposal of State owned enterprises; 
(ix) 
that nationalized banks were privatized because 
they were no longer profit bearing enterprises; 
that balance sheet reflected losses on account of 
overstaffing, over-branching, huge portfolios of 
non-performing loans, poor customer services, 
under-capitalization, 
poor 
management 
and 
undue interference in lending and recovery of 
loans; that the banks and financial institutions 
privatized during the period in question are as 
follows: 
(i) 
In April 1991, 26% of the shares of Muslim 
Commercial Bank Limited in April 1991 
were sold to the National Group. 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
20 
(ii) 
In September 1991, 26% of the shares of 
Allied Bank of Pakistan Limited were sold to 
the Allied management Group. 
(iii) Bankers Equity Limited was privatized in 
1996. 
(iv) Habib Credit & Exchange Bank Limited 
(presently 
Bank 
Alfalah 
Limited) 
was 
privatized in June 1997. 
(v) 
United Bank Limited was privatized in 
October 2002. 
(x) 
that the privatization of HBL was a careful 
bipartisan exercise which commenced in 1995 
and completed in 2004. During this period, 
where 
steps 
were 
taken 
by 
successive 
Governments (detailed breakup is given in 
concise statement) culminating ultimately in the 
approval by the CCOP of the highest bid on 15th 
of January 2004 reflect that the process was 
bipartisan 
and 
in 
accordance 
with 
the 
Privatization Ordinance and the Rules framed 
thereunder. 
(xi) 
In support of the submissions made, learned 
counsel relied on: 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
21 
(1) 
Suo Moto Case No. 10 of 2007 (PLD 2008 
SC 673 & 689) 
 
(2) 
Gatron (Industries) Limited v. Government 
of Pakistan (1999 SCMR 1072). 
 
(3) 
All 
Pakistan 
Newspapers 
Society 
v. 
Federation of Pakistan (PLD 2004 SC 600). 
 
(4) 
Syed 
Zulfiqar 
Mehdi 
v. 
Pakistan 
International Airlines Corporation (1998 
SCMR 793 at 801). 
 
 
10. 
Mr. Makhdoom Ali Khan, learned counsel for HBL also 
filed a detailed concise statement narrating the history of the 
institution; its corporate profile; how it was ranked as one of the 
largest 
Banks 
in 
Asia 
prior 
to 
privatization; 
how 
the 
nationalization of the institution in 1974 reduced its market share 
from 15 to 18%; why it was deemed appropriate by the Federal 
Government to privatize it; how the process initiated in 1995 got 
delayed; why various attempts to privatize it remained abortive; 
and the various steps taken from 2002 to approval of the final 
bid and signing of the share-purchase agreement in February 
2004 reflect due diligence, transparency and a continued object 
to ensure that the ownership of this important national strategic 
asset does not go in the hands of buyer who does not have 
credible credentials. Explaining the rationale of the establishment 
of 
Corporate 
and 
Industrial 
Restructuring 
Corporation 
[hereinafter referred to as the “CIRC”] he argued that this 
corporation was established to plug the holes in various 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
22 
banks/financial institutions. The portfolio of non-performing loans 
in HBL had become huge and unless the State had intervened, it 
would have collapsed and thereby would have led to the 
economic meltdown in the country. Under this scheme, the HBL 
in 2001 transferred 22 non-performing loans worth Rs.309.815 
million to CIRC followed by transfer of 69 loans worth 894.587 
million in 2003. These loans were transferred back and various 
other amounts were also adjusted by mutual consent and an 
amount of Rs.994.076 million was paid to HBL by CIRC on 
18.9.2006 
through 
letter 
bearing 
No. 
CIRC/MF-MA3665. 
Defending the issuance of bonds by the Federal Government 
against the latter’s admitted liability of refunding the tax which 
were collected in excess of what was due from HBL, learned 
counsel submitted that this liability was a matter of record and 
no exception could be taken to it. This was a sensible decision 
taken by the Federal Government to maximize the privatization 
value of HBL; all the bidders had been informed about the 
transfer of non-performing assets to CIRC and they had 
accordingly factored this development into their bid values. 
11. 
Repelling the argument of petitioners that the 
Government had sunk Rs.17.7 billion into HBL and then sold it 
for Rs. 22.409 billion at a loss of Rs.4.4. billion, learned counsel 
contended that if the Federal Government had not contributed 
Rs. 17.7 billion to recapitalize the HBL, it would have been close 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
23 
to bankruptcy. This financial bail out, he argued was not unique 
in Pakistan but the governments world over in the 1980s injected 
billions of dollars to save their financial and banking institutions 
and thereby stalled the process of further deterioration of 
economies. In this regard, he referred to the two recent books 
titled, ‘Beyond the Crash’ authored by former Prime Minister of 
UK Mr. Gordon Brown and the book titled, ‘On the Brink’ 
authored by Mr. Henry M. Paulson, Jr., former US Treasury 
Secretary, whereby the authors explain various steps taken by 
these countries to assist the banks and economy. A special law 
was enacted to save these financial institutions called the 
Troubled Assets Relief Program and a sum of US Dollars 150 
billion were given to five banks alone to keep them afloat. 
Defending the mode of valuation of the bank by the Financial 
Advisor, learned counsel submitted that Discounted Dividend 
Model (DDM) takes into account, inter alia, the potential 
development of the entity/financial institution and its capacity to 
generate income in the future. The DDM took into account the 
revised business plan till the year 2009 developed by the FA for 
HBL. Even in valuating UBL prior to its privatization, DDM method 
was adopted. While conducting valuation, the FA took into 
account the decision of the Federal Government to issue bonds to 
HBL aggregating (i) Rs. 9.804 billion in respect of tax refunds; 
(ii) Rs. 2.247 billion in respect of public sector debts; (iii) transfer 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
24 
of non-performing loans having a book value of Rs.1.283 billion 
to CIRC; and (iv) the impact of additional provisioning in the sum 
of Rs.6.2 billion. If these factors had duly been taken into 
consideration in valuating HBL then it cannot be dubbed as 
flawed or tainted. The determination of reserved price as 
recommended by the FA, by the PC and its Board and its 
approval by the CCOP, therefore, cannot be regarded as arbitrary 
or collusive. 
12. 
Mr. S.M. Zafar, learned counsel for the AKFED 
submitted that a careful study of the various steps taken by the 
Federal Government and the PC to privatize HBL would indicate 
that the entire process was carried out strictly within the 
parameters of law i.e. the Privatization Commission Ordinance, 
2000 
and 
the 
Rules/Regulations 
framed 
thereunder. 
He 
submitted that respondent AKFED was the highest bidder in open 
bidding; that it had the most credible corporate profile and a 
history of service in the developing countries including Pakistan 
in the realm of social and economic sectors. It is an international 
development agency dedicated to promoting private initiative and 
building economically sound enterprises, primarily in the 
developing countries. He recounted services of Sir Sultan 
Mohamed Shah, Agha Khan III towards the establishment of 
Pakistan and how the family after the creation of this country 
worked for the wellbeing of the nation, his services in the area of 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
25 
health and education and how His Highness Agha Khan has 
upheld the laudable traditions of his grandfather. He in particular 
made reference to the creation of the pioneering institutions such 
as Agha Khan University in Karachi and the Agha Khan Rural 
Support Program (AKRSP). The latter program, he contended, 
has transformed rural lives in the poor and remote areas of 
Northern Pakistan. Under the aegis of Agha Khan Development 
Network, about 185 schools and centers of learning impart 
education to almost 40,000 students in the country and around 
200 health units and hospitals operate across Pakistan, serving 
its population in the rural as well as urban areas. He added that 
after the nuclear explosion in 1998 and the tragedy of 9/11, 
Pakistan was confronted with serious political economic, and law 
and order crisis which had a damaging effect on foreign 
investment. The global investors were reluctant to invest in 
Pakistan. In the wake of such a crisis, it was a conscious decision 
on the part of AKFED to participate in the privatization process so 
as to send a positive signal to the rest of the world that such a 
premier institution was ready to invest and was willing to take 
the 
challenge 
of 
contributing 
its 
bit 
towards 
country’s 
development. It was on account of purchase of the HBL by 
AKFED that former’s financial ranking has registered a steep rise 
and now it has become a thriving profit making venture and is 
among the best run banking institutions world wide. No wonder 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
26 
the HBL received the Best Bank Award by Global Finance (2008), 
Best Bank Emerging Markets by Global Finance (2008), Best 
Bank of the Year by the Banker (2009), Best Bank-Pakistan by 
Global Finance (2009), Global Finance Award for the World’s Best 
Emerging Market Bank in Asia (2010), Global Finance Award for 
Best Bank in Pakistan (2010), Global Finance Award for World’s 
Best Trade Finance Bank 2011, among other such awards.  
13. 
He also alluded to the Financial Statements of the 
year ending 2010 of HBL which indicate that it is being run in a 
professional 
manner; 
that 
its 
profits 
have 
tripled 
since 
privatization; that it has paid Rs.46.760 billion in taxes since 
privatization (this being higher than the total for 20 years of tax 
payments before privatization) and has paid Rs.6.332 billion in 
dividends to the government since privatization. Oblivious of the 
afore-referred facts and the remarkable performance of HBL, the 
petitioners, he lastly contended, have attempted to invoke Article 
184(3) of the Constitution to destroy a valid legal transaction 
which has not only resurrected a crumbling banking institution 
but also has added strength to country’s economy. 
14. 
We 
have 
given 
anxious 
consideration 
to 
the 
submissions made by learned counsel for the parties, have gone 
through the precedent case law cited at the bar as also the 
concise statements submitted by the parties and proceed to 
dilate on the broad questions framed in terms as follows: 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
27 
 
Question No. 1: 
Whether the privatization of HBL was 
carried out in utter haste and on the desire 
of the International Monitory Fund? 
 
15. 
This issue of necessity would entail a reference, 
though briefly to the history of HBL, its nationalization and the 
genesis of its privatization. The HBL was established in 1941 in 
Bombay and after the creation of Pakistan, it shifted its head 
office to Karachi and in a short span of time became one of the 
largest and successful banking institutions in the country. 
However, in 1974, it along with several other Banks was 
nationalized through promulgation of the Banks (Nationalization) 
Act, 1974. After nationalization, there was a financial crunch in 
the banking sector on account of various factors which is 
manifest from the fact that the portfolio of non-performing loans 
in this sector grew from 25 billion to 198 billion in the period 
from 1989 to 1998. After the military takeover in 1977, the 
Nationalization Policy was reviewed which is reflected in the 
Transfer of Managed Establishments Order, 1978. In 1991, the 
Federal Government brought certain amendments in the Banks 
(Nationalization) Act, 1974 with a view to sell its share in the 
capital of nationalized banks. In 1995, for the first time the 
Federal Government seriously examined the issue of privatization 
of the Bank, a summary was initiated, report was requisitioned 
from the Bank which among other things included taking ways 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
28 
and means to improve the performance of the Bank so as to 
make it a profit earning enterprise rather than a loss making 
entity for sale. The process was however delayed and it was in 
December 1998 that the Privatization Commission  invited the 
Expressions of Interest in relation to sale of 26% shares of the 
Bank and eight parties submitted the EOIs. The PC called for 
Statement of Qualification [hereinafter referred to as the “SOQ”] 
from potential bidders. However, this process had to be 
abandoned in view of the military takeover in October 1999. In 
the year 2000, the Privatization Commission Ordinance was 
promulgated to provide a legal regime to the privatization 
process and the PC appointed an accountancy firm of Pakistan AF 
Ferguson as the Financial Advisor for this exercise. The PC once 
again invited EOIs from prospective bidders in June 2002 and 
received 10 EOIs which was followed by soliciting SOQs from the 
bidders by 15th of August, 2002 but only four parties submitted 
their SOQs. Not satisfied with the response, the PC once again 
called for EOIs in April 2003 and this time 19 parties submitted 
EOIs followed by submission of SOQs. The SOQs of the bidders 
were examined by a Pre-qualification Committee and these 
bidders were also granted access to the Data Room prepared by 
the Bank and the PC. The Data Room was a physical space, had a 
sizeable location as well in which all the relevant information 
regarding the Bank and its assets were made available so that 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
29 
the bidders could carry out due diligence at their end. It was 
open on September 8, 2003 and closed on 21st of November, 
2003. However, only three parties entered the Data Room to 
conduct due diligence. 
16. 
In November 2003, the PC decided that while bidders 
would be required to bid for 51% of the issued and paid up 
capital of the Bank, they would also have the option of either 
purchasing the entire 51% stake at once or first to acquire a 
26% or more stake with management control and then pay for 
the remaining stake within a period of not exceeding two years. 
The Pre-qualification Committee formed by the PC in its meeting 
dated 20th of December, 2003 permitted three potential bidders 
to participate in the bidding process and those are:- 
(i) 
Agha 
Khan 
Foundation 
for 
Economic 
Development [hereinafter referred to as the 
“AKFED”]; 
(ii) 
Consortium 
of 
Central 
Insurance 
Company 
Limited [hereinafter referred to as the “CCIC”]; 
and  
(iii) 
Government of Qatar through the Supreme 
Council for Economic Affairs and Investment 
[hereinafter referred to as the “QSCEAI”]. 
 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
30 
17. 
The reference price recommended by the Financial 
Advisor (AF Ferguson & Co.) was Rs. 20.609 billion for the value 
of government stake of 51% in the Bank which was being 
invested. However, this reference price was revised by the PC 
itself and fixed at Rs.22.143 billion in its meeting held on 26th of 
December 2003. This price was later approved by the CCOP. 
18. 
Bidding for the sale of 51% shares was held on 
29.12.2003 but only two parties i.e. AKFED and QSCEAI 
submitted the bidding documents and the earnest money. The 
highest bid was received from AKFED and was accepted by the 
PC in its meeting on 30th of December, 2003 as it found it to be 
higher than the reference price of Rs. 22.143 billion. The State 
Bank of Pakistan also provided their clearance for declaring 
AKFED as successful bidder vide letter dated 31st December 
2003. The CCOP accepted the recommendation of the PC in its 
meeting held on Ist of January 2004. AKFED then paid the initial 
sale price and entered into an agreement on 26th of February 
2004 with the PC and the State Bank of Pakistan for the purchase 
of 51% share of the government stake in Habib Bank Limited and 
for taking over the management of the HBL.  
19. 
It is not disputed that the privatization of HBL was 
part of the overall policy of privatization whereby several 
financial institutions were disinvested to shore up their financial 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
31 
viability. Some of these institutions whose privatization preceded 
that of HBL are as under: -  
i) 
In April 1991, 26% of the shares of Muslim 
Commercial Bank Limited were sold to the National 
Group. 
ii) 
In September 1991, 26% of the shares of Allied Bank 
of 
Pakistan 
Limited 
were 
sold 
to 
the 
Allied 
Management Group.  
iii) 
Bankers Equity Limited was privatized in 1996. 
iv) 
Habib Credit & Exchange Bank Limited (presently 
Bank Alfalah Limited) was privatized in June 1997. 
v) 
United Bank Limited was privatized in October 2002. 
20. 
The afore-referred narration of the process of 
privatization in general and of HBL in particular would show that 
the impugned privatization was neither done in utter haste nor it 
was institution specific. 
21. 
The decline in financial worth of the bank can be 
gathered from a comparison of its 50% share of the local 
commercial banking market prior to its nationalization with the 
volume of its non-performing loans after nationalization which 
grew from Rs. 25.00 billion to Rs. 198.00 billion in the period 
between 1989 to 1998. It appears that the PC and CCOP were 
conscious of the checkered history of HBL privatization, the dire 
state of its finances and how the earlier attempts made since 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
32 
1995 could not fructify. This baggage must have made them 
wiser to take every step with care and without unnecessary delay 
as also to search for a credible buyer.  
22. 
The painful contrast between HBL’s glorious past, its 
corporate profile and financial strength prior to nationalization 
with its steep fall in the post nationalization period must have 
been one of the compelling factors which obliged successive 
governments in the country to review Nationalization Policy and 
to privatize public sector institutions particularly the banks. 
According to learned counsel for PC, Mr. Aitzaz Ahsan and which 
has not been contradicted by anyone, the accumulative loses of 
HBL as on 31.12.2003 were Rs. 13.00 billion. It is a matter of 
common observation that the nationalized banks were privatized 
because they were no longer profit bearing enterprises. Their 
poor performance and dismal balance sheets was attributable to 
a host of factors. Some of those factors were overstaffing, over-
branching, political interference for grant and recovery of loans 
leading to huge portfolios of non-performing loans, under 
capitalization, poor customer services and lack of professional 
management. These growing losses and their obvious adverse 
effect on national economy were some of the compelling reasons 
which weighed with all the governments preceding the one which 
finally privatized it to remain committed to this objective. The 
allegation that the impugned exercise was undertaken merely at 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
33 
the behest of the International Monetary Fund (IMF) or done in 
undue haste underpins a total lack of appreciation of the banking 
crisis which led to privatization. Such wild allegations shorn of 
any concrete proof and entailing factual inquiry cannot be valid 
basis for interference in constitutional jurisdiction of this Court. A 
mere advice or suggestion may not amount to a pressure of the 
kind to have deprived the competent authority under the law to 
have taken independent decision. Even otherwise, we are living 
in a globalized world of interdependence; a world where 
countries and international financial institutions assist and aid the 
developing countries in their march towards economic progress. 
International Monitory Fund is one of those institutions which has 
played its role in several countries. Though its policies some 
times may be open to criticism but that is for the concerned 
economists in the government or academics to examine and 
opine but once the Competent Authority in the government has 
taken a decision backed by law, it would not be in consonance 
with the well established norms of judicial review to interfere in 
policy making domain of the executive authority. In Asia 
Foundation & Construction Ltd Vs. Trafalgar House Construction 
(I) Ltd ((1997) 1 Supreme Court Cases 738), the Indian 
Supreme Court annulled the judgment of the High Court whereby 
the said Court had quashed the award of contract to a Company 
on the ground that the contract was awarded at the behest of 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
34 
Asian Development Bank who had partly funded the project. The 
Court observed as follows: -  
 
“It is well known that it is difficult for the country to go 
ahead with such high cost projects unless the financial 
institutions like World Bank or the Asian Development 
Banks grant loan or subsidy, as the case may be. When 
such financial institutions grant such huge loan they 
always insist that any project for which loan has been 
sanctioned must be carried out in accordance with the 
specification and within the scheduled time and the 
procedure for granting the award must be duly adhered to. 
In the aforesaid premises on getting the valuation bids of 
the appellant and respondent no. 1 together with the 
consultant's opinion after the socalled corrections made 
the conclusion of the bank to the effect "the lowest 
evaluated substantially responsive bidder is consequently   
AFCONS" cannot be said to be either arbitrary or capricious 
or illegal requiring court's interference in the matter of an 
award of contract. There was some dispute between the 
Bank on one hand and the consultant who 
was 
called 
upon to evaluate on the other on the question whether 
there is any power of making any correction to the bid
 
documents after  a specified period. The High  Court 
in  construing certain clauses of  the bid documents has  
come to the conclusion that such a correction was 
permissible  and, therefore,  the Bank could  not have 
insisted  upon granting  the  contract in  favour  of the 
appellant. We  are of the considered opinion that it was not 
within the permissible limits of interference for a court of 
law, particularly  when there  has  been  no  allegation  of 
malice or  ulterior motive  and particularly  when the court 
has not found any mala fides or favouratism in the grant of 
contract in favour of the appellant.  
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
35 
 
23. 
In Tata Cellular v. Union of India (36(1994) 6 SCC 
651), the Court while dilating on the parameters of judicial 
review in matters of awarding of contract by the Government 
candidly laid down as follows:- 
“77. The duty of the court is to confine itself to 
the question of legality. Its concern should be: 
 
1. 
whether 
a 
decision-making 
authority 
exceeded its powers? 
2. 
committed an error of law, 
3. 
committed a breach of the rules of natural 
justice, 
4. 
reached a decision which no reasonable 
tribunal would have reached or,  
5. 
abused its powers. 
Therefore, it is not for the court to determine 
whether a particular policy of particular decision 
taken in the fulfillment of that policy is fair. It is 
only concerned with the manner in which those 
decisions have been taken. The extent of the 
duty to act fairly will vary from case to case. 
Shortly 
put, 
the 
grounds 
upon 
which 
an 
administrative action is subject to control by 
judicial review can be classified as under:- 
 
(i) 
Illegality: This means the decision-maker 
must understand correctly the law that 
regulates his decision-making power and 
must give effect to it. 
(ii) 
Irrationality, 
namely, 
Wednesbury 
unreasonableness. 
(iii) 
Procedural impropriety. 
The above are only the broad grounds but it does 
not rule out addition of further grounds in course of 
time.” 
 
 
24. 
In R v. Deptt. Of Constitutional Affairs [2006 All ER 
(D) 201] even some deviation from the best practice was found 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
36 
to be no justification for judicial review. The Court held that, “It 
is not every wandering from the precise paths of best practice 
that lends fuel to a claim for judicial review.” In Reliance Airport 
Developers (P) Ltd v. Airports Authority of Indian and others 
[(2006) 10 SCC], the ratio of the afore-referred judgment was 
reiterated and it was observed that the power of judicial review 
would be available ‘only if public law element is apparent which 
would arise only in a case of “bribery, corruption, implementation 
of unlawful policy and the like.” In the cases of commercial 
contracts, the Courts’ lack of expertise was taken note of in Paras 
50 and 51, in terms as follows:- 
”It does not have the material or expertise in 
this context to ‘second guess’ the judgment of 
the panel. Furthermore, this process is even 
more clearly in the realm of commercial 
judgment for the defendant, which judgment 
cannot properly be the subject of public law 
challenge on the grounds advanced in the 
evidence before me.” 
 
 
 
To argue that better performance and rising profits of 
HBL after privatization be considered as proof that privatization 
was flawed or was done in utter haste under some external 
pressure amounts to a twisted logic. These positive results have 
on the contrary vindicated the impugned process of sale and 
made it a credible exercise.  
Question Nos. ii & iii: 
ii) 
Whether the procedure adopted 
to privatize HBL was tainted with 
mala 
fides 
and 
violative 
of 
the 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
37 
provisions of Privatization Commission 
Ordinance and the Rules framed there 
under? 
 
iii) 
Whether the approval of the 
highest bidder AKFED by the Cabinet 
Committee on Privatization in its 
meeting held on 1.1.2004, was an 
improper exercise of discretion and 
amenable to interference in accord 
with the well recognized principles of 
judicial 
review 
of 
administrative 
action; 
 
(Question Nos. ii & iii have close 
nexus 
and 
are 
dilated 
upon 
together) 
 
25. 
Question No. 2 has two dimensions i.e. (i) mala fides 
or collusion and (ii) violation of mandatory provisions of law and 
the rules framed thereunder. The allegations of mala fides and of 
the impugned exercise being collusive are questions of fact 
requiring factual inquiry. It is by now a well established principle 
of judicial review of administrative action that in absence of some 
un-rebuttable material on record qua mala fides, the Court would 
not annul the order of Executive Authority which otherwise does 
not reflect any illegality or jurisdictional defect. In Federation of 
Pakistan Vs. Saeed Ahmed Khan (PLD 1974 SC 151), this Court 
was called upon to dilate upon the mala fides as a ground for 
exercise of power of judicial review of administrative action and 
the Court observed as follows: -  
“Mala fides is one of the most difficult things to prove and 
the onus is entirely upon the person alleging mala fides to 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
38 
establish it, because, there is, to start with, a presumption 
of regularity with regard to all official acts, and until that 
presumption is rebutted, the action cannot be challenged 
merely upon a vague allegation of male fides. As has been 
pointed out by this Court in the case of the Government of 
West Pakistan v. Begum Agha Abdul Karim Shorish 
Kashmiri (PLD 1969 SC 14), mala fides mutt be pleaded 
with particularity, and once one kind of mala fides is 
alleged, no one should be allowed to adduce proof of any 
other kind of male fides nor should any enquiry be 
launched upon merely on the basis of vague and indefinite 
allegations, nor should the person alleging male fides be 
allowed a roving enquiry into the files of the Government 
for the purposes of fishing out some kind of a case. 
"Male fides" literally means "in bad faith". Action taken in 
bad faith is usually action taken maliciously in fact, that is 
to say, in which the person taking the action does so out of 
personal motives either to hurt the person against whom 
the action is taken or to benefit oneself.”  
26. 
There is no allegation that any member of the CCOP 
or PC or the Financial Advisor had made some personal gain, or 
that any one of them wanted to help the highest bidder for mala 
fide reasons. The general allegations of being influenced by IMF 
or ‘crony capitalism’ are hardly sufficient to establish that the 
impugned privatization was tainted with mala fides warranting 
interference in judicial review.  
27. 
Coming to the second tier of the question i.e. the 
alleged violation of law, it would be pertinent to refer to some 
provisions of the Privatization Commission Ordinance, 2000, 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
39 
which may have bearing in the instant case. Those provisions are 
as follows: -  
 
 
Rules 3,4,5 & 6 of the Privatization (Modes and 
Procedures) Rules, 2001.  
3. Manner and procedure for privatization.--(I) The 
manner for carrying out the privatization programme 
under section 22 of the Ordinance and the procedure for 
modes of privatisation under section 25 thereof shall, if, 
and to the extent, the Commission deems necessary, 
include -  
(a) 
legal, technical and financial due diligence of the 
property being privatised in order to, inter alia.  
(i) 
identify any obstacles to privatisation and 
suggest, where possible, ways to remove them;  
(ii) 
allow a fair and independent valuation of the 
property being privatised ; and  
(iii) 
prepare a suitable information memorandum 
together with other marketing instruments;  
(b) 
pre-qualification of prospective bidders to evaluate, 
where a privatization requires it, .that the prospective 
bidders are technically and financially in a position to own, 
manage and operate the assets being privatised;  
(c) 
preparation of bid documents which. shall include 
instructions to bidders and proforma sale instruments and 
the bid documents shall include appropriate disclaimers to 
protect the Federal Government, Commission and their 
respective officers, employees, consultants and advisers in 
respect of the information provided to the bidders;  
(d) 
holding of pre-bid conferences to discuss concerns of 
prospective bidders;  
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
40 
(e) 
creation of an enabling environment; and 
(f) 
 carrying out of a bidding process.  
2. Subject to the terms of appointment of an adviser, 
where an adviser has been appointed for the privatisation, 
it shall carry out or advise on any or all of the steps 
specified in clauses (a) to (f) of sub-rule (1).  
4. Approval or rejection of highest ranked bidder.--
(1) Save in the case of negotiated sale process, the 
Commission shall carry out a bidding process which is 
suited to the needs of the privatization with the objective 
of selecting the highest ranked bidder amongst the bidders 
that he.--  
(a) 
has satisfied the pre-qualification criteria determined 
by the Commission, if required; and 
(b) 
complied with instructions for bidding provided by 
the Commission to bidders.  
(2) 
Upon selection of a highest ranked bidder as 
specified in sub-rule (1) the Board shall refer the matter 
for approval, or rejection of such highest ranked bidder 
with full justification, to the Cabinet.  
 
5. Additional modes of privatization. --- In terms of 
clause (f) of section 25 of the Ordinance, there shall be the 
following additional modes of privatisation, namely:-  
(a) 
public offering of shares other than through a stock. 
exchange; and  
(b) 
sale of shares, assets, business and property to a 
person that has a pre-emptive right to acquire the 
same (or any part thereof) subject to fulfillment of 
conditions attached to such rights.  
 
6. Negotiated sale.---(1) The Commission may adopt he 
negotiated sale process for any of the modes of 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
41 
privatization specified in section 25 of the Ordinance and 
rule 5 of these rules, if--- 
(a) 
in the opinion of the Board, sufficient interest for a 
privatization has not been received. 
(b) 
the Board has recommended to the Cabinet and the 
Cabinet has authorized the Commission to initiate 
the negotiated sale process;  
(c) 
the Board has approved the party or parties 
interested in purchasing the property being privatize; 
(d) 
a team for carrying out the negotiated sale process 
has been constituted by the Board which shall 
include a representative from the Ministry under 
whose jurisdiction the entity being privatized falls; 
and 
(e) 
the Board has delegated full power to the negotiation 
team for carrying out the negotiated sale process 
and defined the parameters for negotiation. 
(2) 
On conclusion of the negotiated sale process, the 
terms and conditions of the transfer of the property 
to be privatized to the interested party shall be 
submitted to the Cabinet for consideration and 
approval.”  
 
 
Regulation Nos. 3 of the Privatization Commission 
(Hiring of Valuers) Regulations, 2001 
“3. Manner and procedure for hiring of valuers by the 
Commission(1) If, and to the extent, the Commission 
deems necessary to allow a fair and independent valuation 
of the property being privatised in terms of sub-clause (ii) 
of clause (a) of sub-rule (1) of rule 3 of the Privatisation 
(Modes and Procedures) Rules, 2001, by hiring a valuer, 
the terms of reference of valuation shall include inter-alia, 
a brief history of the entity, the financial position, a 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
42 
description of the product line/ service of entity, if any, a 
description of land, buildings, plant & machinery, the 
current assets and liabilities, and the current state of the 
industry. 
(2) The Commission shall maintain a panel of valuers with 
the approval of the Board of the Commission. 
(3) Terms of reference formulated vide sub regulation (1) 
shall be sent to at least three valuers on the panel of 
valuers. 
(4) The valuer quoting lowest rate shall be selected for 
carrying-out valuation as per terms of reference; 
Provided that the valuer other than the valuer giving lowest 
quotation may be selected after recording reasons in writing. 
 
 
 
Rules 4, 5 & 6 of the Privatization Commission 
(Valuation of Property) Rules, 2001. 
“4. 
Manner and procedure for valuation of property 
by the valuer hired by the Commission. (1) The valuer 
appointed in terms of Privatization Commission (Hiring of 
Valuers) Regulations, 2001, shall associate a legal firm, a 
firm of chartered accountants, chartered surveyors, 
surveyor and other experts as may be applicable and 
include their reports with the valuation report.  
(2) 
The valuer shall submit a valuation report containing 
an executive summary, terms of reference provided by the 
Commission, summary of valuation, the different bases 
used 
for 
carrying 
out 
valuation 
alongwith 
a 
recommendation on the recommended basis of valuation 
and a value of the entity for the purpose of determining a 
reference price.  
 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
43 
5. 
Manner and procedure for valuation of property 
by the adviser hired by the Commission.--- The 
adviser hired by the Privatization Commission as per 
procedure shall carry out the valuation in terms of 
Financial Advisory Services Agreement. 
 
6. 
Processing of valuation report.- (1) Upon receipt 
of the valuation report from the valuer or the adviser, a 
valuation note shall be prepared in the Commission and 
submitted 
to 
the 
Board 
of 
the 
Commission 
for 
recommending a reference price.  
(2) 
The reference price recommended by the Board of 
the Commission shall be submitted to the Cabinet for 
approval.”  
 
28. 
We have already noted that the decision to privatize 
HBL was taken as far back as 1995. However, on account of 
political instability, discouraging market forces and lack of 
positive response from the potential investors / financial 
institutions, the privatization remained abortive. The first step 
taken in the latest round culminating in the impugned 
privatization was in the year 2000. In the concise statement filed 
by the Privatization Commission which has not been controverted 
by the petitioners’ learned counsel, it has explained in graphic 
detail various steps taken from the enactment of law and 
commencement of the privatization process to the culmination of 
approval of the highest bid to bring home the point that there 
was substantial compliance with law, the Rules and Regulations 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
44 
framed thereunder. After putting in place the legal regime, some 
of the important steps were appointment of AF Ferguson as 
Financial Advisor because international response for the search 
remained sluggish (Regulation No. 3 of the Privatization 
Commission (Hiring of Valuers) Regulations, 2001), calling for 
Expressions of Interest through advertisement (2.6.2002), 
requisition of Statements of Qualification (SOQs) from bidders, 
constitution of a Pre-qualification Committee (in terms of the 
Privatization Commission (Modes & Procedures) Rules, 2001), the 
screening of three parties by the said Committee, the 
recommendations of three parties by the Pre-qualification 
Committee for undertaking due diligence. These parties were 
invited to review the documentation relating to HBL, however 
only AKFED submitted a Confidentiality Agreement in December 
2002. If the PC intended to help AKFED, it could have had 
declared it the highest bidder there and then, instead in April 
2003, the PC again called for Expressions of Interest (EOIs) 
through advertisements in newspapers, from parties interested in 
purchasing a minimum of 26% share of HBL along with transfer 
of management. Only 19 parties submitted Expressions of 
Interest. They were requested to tender SOQs; only seven of 
them 
submitted 
those. 
The 
Pre-qualification 
Committee 
recommended AKFED and two others (CCIC and SCEAI). The 
Board of PC approved the report of the Pre-qualification 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
45 
Committee on 26.12.2003. Data Room of HBL remained opened 
from September 18, 2003 to November 25, 2003. Foregoing was 
the process of pre-qualification. The PC simultaneously was 
finalizing the mode of privatization. Various steps taken were as 
follows (Rules 3,4,5 of the Privatization Commission (Modes & 
Procedures) Rules, 2001):- 
“a. 
In its meeting dated 17 November 2003, CCOP 
decided that potential investors would be 
required to bid for 51% of the shareholding of 
HBL, but would be given the option to acquire 
51% equity in one go or to acquire 26% equity 
initially along with transfer of management 
control.  
 
b. 
In the case of the second option, it was 
determined 
that 
shares 
representing 
the 
remaining 
25% 
equity 
of 
BL 
would 
be 
transferred in the name of the successful 
investor only upon the full and punctual 
payment for the same in two installments over 
a maximum period of two years.  
 
c. 
It was also determined that payment for the 
balance stake would include, in the case of 
payment in US $, an interest rate of LIBOR 
plus 250 basis points while in the case of Pak 
Rs., mark up of PIB plus 250 basis points.  
 
d. 
Finally, it was decided that in case of default in 
payment of the balance stake, the transaction 
would be unwound and the shares earlier 
transferred would be bought back at a 
minimum 25% discount and that the US$ 10 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
46 
million Stand By Letter of Credit provided by 
the successful bidder would be encashed. 
 
e. 
Thus, the financial consequences of the two 
options were made equal while protection was 
also provided in the form of heavy penalties 
against a defaulting bidder.” 
 
29. 
Ultimately, only two parties (namely AKFED and 
SCEAI) participated in the bidding on 29 December 2003 and the 
bid of AKFED as noted earlier was not only the highest but also 
was higher than the “reference price” approved by the CCOP on 
26 December 2003. (Rule 6(2) of the Privatization Commission 
(Valuation of Property) Rules, 2001) 
30. 
A careful perusal of the steps taken in the process for 
privatization of HBL referred to in the preceding paragraph would 
indicate that there was substantial compliance with the relevant 
provisions of the Privatization Commission Ordinance, 2000 and 
the Rules / Regulations framed thereunder. A minor deviation of 
Rules or Regulation, if any, in absence of any credible allegation 
of mala fides or corruption would not furnish a valid ground for 
interference in judicial review. 
31. 
The transfer of non-performing loans having a book 
value 
of 
Rs.1.283 
billion 
to 
CIRC 
(Corporate 
Industrial 
Restructuring Corporation) and issuance of recovery bonds to the 
tune of Rs.9.804 billion in respect of tax refunds as also injection 
of Rs.17.00 billion in HBL prior to privatization were cited as 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
47 
some of the instances of mala fide acts designed to extend undue 
favour to the prospective highest bidder at the cost of public 
exchequer. There is force in the submissions of Mr. Makhdoom Ali 
Khan, learned Sr. ASC that the transfer of non-performing loans 
to CIRC (Corporate Industrial Restructuring Corporation) was 
carried out in an entirely transparent manner and all the bidders 
were informed in advance. He explained that a total of 22 non-
performing loans worth Rs. 309.815 million were first transferred 
to CIRC by HBL in 2001 followed by a further 69 loans worth 
Rs.894.587 million in 2003. Some loans were then transferred 
back and various other amounts were also adjusted by mutual 
consent after which an amount of Rs.994.076 million was paid to 
HBL by CIRC on 18.9.2006 vide CIRC’s letter bearing Ref. No. 
CIRC/MF-MA3665. More generally, the transfer of bad loans to 
CIRC was a well thought out and fully planned strategy which 
had the effect of enhancing the value of HBL. Contact was 
established between HBL and officials from the Ministry of 
Finance on a regular basis in order to execute the transfer 
efficiently. The transfer to CIRC was accomplished after the 
completion of CIRC due diligence and resolution of HBL’s non-
performing loans with the SBP Resolution Committee. 
32. 
Similarly the issuance of bonds by the Federal 
Government against the admitted tax liability cannot be taken 
exception to because the taxation authorities had collected taxes 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
48 
from HBL in excess of the actual liability. Both the transfer of 
non-performing loans to CIRC as also issuance of bonds were 
duly considered by the valuer in assessing the value of HBL. So 
far as the valuation of HBL is concerned, we could not find any 
material on record which could persuade us to hold that either 
the valuer was appointed collusively or the valuation carried out 
by it was against the Rules or best practices being followed. In 
the concise statement filed by the PC, the valuation and 
determination of fair price was defended by submitting that: 
“The reserve price of HBL was determined by the 
best experts available on the basis of the most well-
recognized and internationally accepted accountancy 
methodologies. More importantly, that reserve price 
was based upon an 18-month long study of massive 
quantities of data, which data was also made 
available to the bidders through a data room.--------
----The reserve price of HBL was fixed on the basis 
of a methodology known as “discounted Dividend 
Method” (or “DDM”) which is different from the 
“Discounted Cash Flow” (or “DCF”) methodology 
generally used to determine reserve prices in the 
case of privatizations of industrial units. More 
specifically: 
a. 
DDM is used in the case of banks (rather than 
DCF) because one of the major components of 
bank value is the ability to obtain deposits which 
is an asset value not captured through cash flow. 
Hence the future flow of dividends is estimated 
(as opposed to future cash streams) in order to 
determine potential investor value. 
b. 
Methodologies such as DDM and DCF are intended 
to produce valuations inclusive of the value of all 
assets, albeit on the assumption that those assets 
will continue to be used for the purposes for 
which they were earlier being used. The valuation 
of HBL was thus inclusive of the value of HBL’s 
other assets, such as licenses to operate branches 
in various countries as well as numerous pieces of 
real property.” 
i. 
This valuation concluded that the value of 
HBL’s 
assets 
if 
broken 
up 
and 
sold 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
49 
separately (the net asset value) was Rs.22 
billion as of 30 June 2003 and Rs. 23.7 
billion as of 31 December 2003. 
ii. 
However, the valuation of HBL by the 
winning bidder (for 100% of the shares) 
was approximately Rs. 43.94 billion, which 
is almost twice that of the net asset value of 
30 June 2003. 
iii. 
This massive differential makes it clear that 
the value at which HBL was privatized was 
inclusive of goodwill as well as all other 
intangible factors, such as the fact that the 
winning bidder would be acquiring control 
over HBL.” 
 
 
33. 
No counter affidavit was filed by either of the 
petitioners to controvert the afore-referred stance of the PC. 
Moreover, it has not been disputed that the valuation was carried 
out in terms of the Financial Advisory Services Agreements; that 
the mode of valuation adopted by the valuer was permissible 
under the Privatization Commission (Valuation of Property) Rules 
2001 and that the valuation report was processed by the Board 
of the PC in accord with the afore-referred Rules. For afore-
referred reasons, the approval of the highest bid of AKFED by the 
CCOP being higher than the reference price was neither improper 
nor violative of the law governing the process of privatization to 
call for judicial review.  
34. 
The Courts while dealing with cases relatable to 
financial management by the government or awarding of contract 
by it must appreciate that these are either policy issues or 
commercial transactions requiring knowledge in the specialized 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
50 
fields. The Courts lack the expertise to express any opinion on 
the soundness or otherwise of such acts / transactions. The 
question whether a contractual transaction or decision taken in 
the exercise of executive authority by the Government can be 
subjected to judicial review has engaged the attention of 
constitutional courts in several countries and the judicial 
consensus generally has been that the Courts should ordinarily 
refrain from interfering in policy making domain of executive 
authority or in the award of contracts unless those acts smack of 
arbitrariness, favoritism and a total disregard of the mandate of 
law. In Watan Party Vs. Federation of Pakistan (PLD 2006 SC 
697), the Court annulled the privatization of Karachi Steel Mill 
not merely because of violation of a single rule or regulation but 
there were several factors that weighed with the Court which 
included the abdication of the authority by the Cabinet 
Committee on Privatization to the Privatization Commission to 
issue letter of acceptance to whoever may be the highest bidder, 
the net assets of the Steel Mill which was privatized had not been 
included in the valuation report, the decision 
that the 
Government of Pakistan shall bear a huge financial liability of the 
VSS Scheme for the employees of the Steels Mill which was not 
part of the initial public offering to the bidders through the 
advertisement, the credentials of the highest bidder seriously 
impinged on its integrity as also the fact that the major share 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
51 
holding in the highest bid was that of a company which had off 
shore offices. At page 763 of the Watan Party supra case, this 
Court commented in detail on the corporate credentials of a 
member of the consortium that had purchased it which reflected 
that the Privatization Commission had not kept in view the 
mandatory requirements of the process of pre-qualifying a 
bidder. There were 9 instances of financial irregularities in the 
corporate profile of the said member of the consortium, which 
were specifically noted in the para 87 of the said judgment. 
35. 
As against this, in the instant case, the highest bidder, 
the AKFED is part of the Agha Khan Development Network, which 
has placed its company profile before this Court. Mr. S. M. Zafar, 
ASC submitted a detailed concise statement on its behalf wherein 
it has been averred that: -  
“AKDN is a group of private, International, non 
denominational agencies working to improve living 
conditions and economic opportunities for people in 
various regions of the developing world. The Network's 
organizations have individual mandates that range from 
the fields of health and education to architecture, rural 
development and promotion of private sector enterprise. 
Together they collaborate in working towards a common 
goal to build institutions and programs that can respond to 
challenges of social, economic and cultural change on an 
ongoing basis. 
………………………………………………………………………………………………
……………………………………………………………………………………………… 
In the context of Pakistan in particular, it is submitted that 
the AKDN, including by virtue of its economic development 
arm AKFED, has a very special and dear relationship with 
Pakistan and its people. Under the vision and leadership of 
His Highness the Aga Khan, the AKDN has a long-standing 
history in the nation's development. His Highness' 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
52 
grandfather, Sir Sultan Mohamed Shah, Aga Khan III, is 
regarded as an important contributor to the founding of 
Pakistan. After the partition in 1947, Sir Sultan Mohamed 
Shah, Aga Khan III, worked for the wellbeing of the 
nation; his contributions in the area of health and 
education are widely known to all in the country. His 
Highness the Aga Khan has upheld the traditions of his 
grandfather Sir Sultan Mohamed Shah, Aga Khan III, 
which have led to the creation of pioneering institutions 
such as the Aga Khan University (AKU), which is today 
recognized as a premier provider of health and medical 
services in the country and which has also gained 
international recognition, and the Aga Khan Rural Support 
Program (AKRSP), which has essentially transformed rural 
lives in the poor and remote areas of Northern Pakistan. 
Under the aegis of the Aga Khan Development Network 
around 185 schools and centers of learning impart 
education to almost 40,000 students in the country, and 
around 200 health units and hospitals operate across 
Pakistan, serving its populations in the rural as well as 
urban areas. 
It may be mentioned to the Honorable Court that when the 
Government of Pakistan decided to sell its controlling 
interest in HBL in the last round of efforts which 
commenced in 2000, Pakistan was going through political, 
economic and law and order crisis: the era of post 9/11 
may be described as somewhat challenging for this 
country. The Honorable Court may agree that foreign 
investment in any country requires confidence in the 
country's economic and political stability, its consistency in 
policies, availability of resources, labor and other business 
related factors, a general condition of law and order, and 
on a sound legal system. Owing to negative impact of the 
adverse publicity and harsh on-the-ground realities at that 
time, the conditions for investment in Pakistan were not 
encouraging. Global investors as such were reluctant and 
this was further exacerbated by their awareness that the 
Government of Pakistan had been trying to move forward 
with its privatization plans, including the privatization of 
HBL, for quite some time but all efforts to that effect, were 
proving unfruitful. Under these circumstances, AKFED took 
the view that its participation in the privatization process 
would send a very positive signal to the rest of the world 
by showing that a premier institution such as AKFED was 
ready to invest and was willing to take on the challenge of 
contributing towards the country's development in times of 
difficulty.   
………………………………………………………………………………………………
………………………………………………………………………………………………. 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
53 
As the details submitted in the paragraph below will show, 
following its participation in an open and transparent 
bidding process and being declared as successful and 
highest bidder, and having acquired controlling shares in 
HBL, AKFED has achieved the above-described objectives 
and aims. HBL is now a thriving profit-making venture and 
is among the best-run banking institutions worldwide. This 
is recognized by the fact that HBL received the Best Bank 
Award by Global Finance (2008), Best Bank Emerging 
Markets by Global Finance (2008), Best Bank of the Year 
by the Banker (2009), Best Bank - Pakistan by Global 
Finance (2009), Global Finance Award for the World's Best 
Emerging Market Bank in Asia (2010), Global Finance 
Award for Best Bank in Pakistan (2010), Global Finance 
Award for World's Best Trade Finance Bank 2011, among 
other such awards" (Emphasis is supplied). 
 
36. 
The AKFED has an impressive profile both in the 
corporate and social sectors. The HBL’s performance after 
privatization recapitulated in the preceding paragraphs (which 
has not been controverted through a counter affidavit) have 
vindicated the process of privatization under challenge. The post 
privatization performance may be a hindsight reasoning as we 
have been called upon to decide it after a period of almost 6/7 
years of the sale of HBL but the Court can take note of that in 
the peculiar facts of this case. This Court has generally exercised 
judicial restraint in interfering with the policy making domain of 
the executive authority while exercising the power of judicial 
review of administrative actions. In the case of Watan Party 
supra (Pakistan Steel Mills Case), the well established principles 
governing the power of judicial review were reiterated by holding 
that: 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
54 
“in exercise of the power of judicial review, the 
courts normally will not interfere in pure policy 
matters (unless the policy itself is shown to be 
against Constitution and the law) nor impose its own 
opinion in the matter.” 
 
 
 
The Court quoted with approval the law laid down in 
Messrs Elahi Cotton Mills Ltd. v. Federation of Pakistan (PLD 1997 
SC 582) & BALCO Employees Union (Regd.) v. Union of India 
(AIR 2002 SC 350). In the latter judgment, the Indian Supreme 
Court held as follows: -  
"Process of disinvestments is a policy decision involving) 
complex economic factors. The Courts have consistently 
refrained from interfering with economic decisions as it has 
been 
recognized 
that 
economic 
expediencies 
lack 
adjudicative disposition and unless the economic decision, 
based on economic expediencies, is demonstrated to be so 
violative of constitutional or legal limits on power or so 
abhorrent to reason, that the Courts would decline to 
interfere. In matters relating to economic issues, the 
Government has while taking a decision, right to "trial and 
error" as long as both trial and error are bona fide and 
within limits of authority." 
 
37. 
Similarly in Tata Cellular Vs. Union of India ((1994) 6 
Supreme Court Cases 651), the Court laid down that the power 
of judicial review would be available qua the contractual powers 
of the government bodies to prevent arbitrariness or favourtism. 
However, the Government being guardian of finances is expected 
to protect the financial interest of the State. The Court 
nevertheless enunciated the principle of judicial restraint by 
holding that it does not sit as a court of appeal but merely to 
review the manner in which the decision was taken. This is so 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
55 
because the Court does not have the expertise in the domain of 
administrative decision making.  
38. 
In Sterling Computers Ltd Vs. M & N Publications Ltd 
((1993) 1 Supreme Court Cases 445), the Court outlined 
parameters of judicial review in terms as follows:-  
"While exercising the power of judicial review, in respect of 
contracts entered into on behalf of the State, the Court is 
concerned primarily as to whether there has been any 
infirmity in the "decision making process’….. By way of 
judicial review the Court cannot examine the details of the 
terms of the contract which have been entered into by the 
public bodies or the State. Court have inherent limitations 
on the scope of any such enquiry. But at the same time 
the Courts can certainly examine whether "decision making 
process" was reasonable rational, not arbitrary and 
violative of Article 14 of the Constitution.” 
 
39. 
In Air India Ltd Vs. Cochin International airport Ltd 
((2000) 2 Supreme Court Cases 617), the Court held that the 
award of a contract, whether by a private party or by a State, is 
essentially a commercial transaction. It can choose its own 
method to arrive at a decision and it is free to grant any 
relaxation. Nevertheless it was observed, the State, its 
corporations, instrumentalities and agencies have the public duty 
to be fair in their transactions. In the event of some irregularity 
in the decision making process, it was further observed, the 
Court must exercise its discretionary powers of judicial review 
with circumspection and only in furtherance of public interest and 
not merely making out of a legal point. It should always keep the 
larger public interest in mind to interfere or not to interfere. Only 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
56 
when the public interest overwhelms any other consideration, the 
Court should interfere. In Master Marine Services (P) Ltd Vs. 
Metcalfe & Hodgkinson (P) Ltd ((2005) 6 Supreme Court Cases 
138), the Indian Supreme Court set aside the judgment of the 
High Court whereby the contract awarded to a party was 
quashed. 
Question No. IV: 
Whether injecting an amount of Rs. 17.7 
billion in HBL and thereafter offering it for 
privatization 
was 
an 
act 
of 
financial 
mismanagement of a financial institution 
causing loss to the public ex-chequer and 
against the best practices? 
 
40. 
It has not been disputed before us by the respondents 
that the government had contributed a sum of Rs.17.7 billion to 
recapitalize HBL but the reason being pressed into service is that 
if it had not been done, the institution would have been close to 
bankruptcy. In examining this issue, we have kept in view the 
financial crisis of 1980s, the banking bailouts in other countries 
and the condition of HBL at the time when this capital was 
injected as also the best practices being followed in similar 
situations. There is force in the submissions of Mr. Makhdoom Ali 
Khan, learned Sr. ASC that injecting money into financial 
institutions and particularly banks has been a worldwide 
phenomenon during the period of financial crunch which 
commenced in the last decade and still continues to an extent.  
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
57 
41. 
George W. Bush has been the President of United 
States in country’s worst economic crisis after the great 
depression of 1930’s. There were many factors which led to this 
economic meltdown but one of the major factors was the huge 
advances made by the banks to the housing sector. In his 
autobiography “Decision Points”, he devotes a full chapter on 
“Financial Crisis” and describes how he faced that challenge and 
how some of those banks were saved from bankruptcy through 
various measures including injecting huge capital. One of those 
banks was Bear Stearns which then was one of the largest 
American banks and if it had failed, it could have a domino effect. 
To prevent that situation, the Government not only injected 
billion of dollars into it but also negotiated its purchase by J.P. 
Morgan Chase. He says that: 
“Hank 
shared 
my 
strong 
inclination 
against 
government intervention. But he explained that a 
collapse of Bear Stearns would have widespread 
repercussions for a world financial system that had 
been under great stress since the housing crisis 
began in 2007. Bear had financial relationships with 
hundreds 
of 
other 
banks, 
investors, 
and 
governments. I the firm suddenly failed, confidence 
in other financial institutions would diminish. Bear 
could be the first domino in a series of failing firms. 
While I was concerned about creating moral hazard, 
I worried more about a financial collapse.  
 
“Is there a buyer for Bear?” I asked Hank. 
Early the next morning, we received our answer. 
Executives at JPMorgan Chase were interested in 
acquiring Bear Stearns, but were concerned about 
inheriting Bear’s portfolio of risky mortgage-backed 
securities. With Ben’s approval, Hank and Tim 
Geithner, the President of the New York Fed, devised 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
58 
a plan to address JPMorgan’s concerns. The Fed 
would lend $30 billion against Bear’s undesirable 
mortgage holdings, which cleared the way for 
JPMorgan to purchase Bear Stearns for two dollars 
per share.” 
 
 
42. 
In his book ‘On the Brink’ Mr. Henry M. Paulson, Jr. 
(former CEO of Goldman Sachs and George Bush’s Treasury 
Secretary during his second term) explains how a bipartisan 
approach was adopted by the Congress to meet the financial 
crisis; how the latter empowered the Treasury Secretary to 
advance a sum of US Dollars 350 billion to troubled banks; how it 
unanimously passed the Troubled Assets Relief Program (TARP); 
and how a sum of US Dollars 250 billion1 in equity were 
transmitted to the banking system. The breakup of the amount 
injected into various financial institutions is as follows:- 
“Tim subsequently announced the capital amounts 
that regulators had settled upon just hours before: 
$25 billion for Citigroup, Wells Fargo, and JPMorgan; 
$15 billion for Bank of America; $10 billion for Merrill 
Lynch, Goldman Sachs, and Morgan Stanley; $3 
billion for Bank of New York Mellon; $2 billion for 
State Street Corporation.” 
 
 
43. 
Recounting the lessons learnt during the period he 
was at the helm of affairs, he lamented that the crisis was 
allowed to fester; that corrective measures were not taken in 
time to save the financial/banking institutions and described it as 
a ‘troubling political dysfunctioning’. It would be in order to refer 
to the following quote from his book. He says: 
                                                
1 Page 358. 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
59 
‘In 
my 
time 
in 
Washington, 
I 
learned 
that, 
unfortunately, it takes a crisis to get difficult and 
important things done. Many had warned for years of 
impending calamity at Fannie Mae and Freddie Mac, 
but only when those institutions faced outright 
collapse did lawmakers enact reforms. Only after 
Lehman Brothers failed did we get the authorities 
from Congress to inject capital into financial 
institutions. Even then, despite the horrific conditions 
in the markets, TARP was rejected the first time it 
came up for a vote in the U.S. House of 
Representatives. And, amazingly enough, as I write 
this in late 2009, more than one year after Lehman’s 
fall, U.S. government regulators still lack the power 
to wind down a nonbank financial institution outside 
of bankruptcy.  
I am not sure what the solution is for this ever more 
troubling political dysfunction, but it is certain that 
we must find a way to improve the collective 
decision-making process in Washington. The stakes 
are simply too high not to. Indeed, we are fortunate 
that in 2008 Congress did act before the financial 
system collapsed. This took strong leadership in both 
the House and the Senate, because all who voted for 
Tarp or to give us the emergency authorities to deal 
with Fannie and Freddie knew they were casting an 
unpopular vote2.” 
 
 
44. 
Similarly Gordon Brown, former Prime Minister of UK, 
in his book “Beyond the Crisis” provides a telling account of how 
billions of Pounds were injected into collapsing Banks in Europe 
to prevent the crisis from going worse and to save the 
economies: 
 
“On Monday morning, October 13, as markets 
opened, we announced a £37 billion recapitalization 
of RBS, Lloyds, and HBOS. We would take a 57 
percent stake in RBS and a 58 percent stake in 
HBOS, with a 32 percent stake in Lloyds subject to 
their mergers. The detailed terms of our £250 billion 
credit-guarantee scheme was also announced, along 
with 
new 
arrangements 
for 
dividends 
and 
remuneration and a commitment to keep credit 
flowing. 
                                                
2 Page 439. 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
60 
 
I had long felt that we were dealing not only 
with a technical failure, but a moral failure too. So 
for me, a crucial part of the announcement was that 
some degree of justice was secured: remuneration 
was cut back, dividends were cancelled, and the 
chief executive and the chair of RBS both tendered 
their resignations. And the CEO of HBOS would not 
be working for the merged entity any more. 
 
On the same day Germany announced €400 
billion 
in 
guarantees 
and 
€100 
billion 
in 
capitalization; France €320 billion in guarantees of 
medium-term debt and €40 for capitalization; Italy 
€40 billion in capitalization and ‘as much as 
necessary in guarantees. Holland added €200 billion 
in guarantees, and Spain and Austria €100 billion 
each. 
 
That day saw a 10 percent rise in the European 
stock exchange, the biggest rise ever. 
 
At no point in history have governments ever 
injected so much money into buying up assets in the 
banking system, with capital and guarantees running 
into trillions. When officials gave me a list of all the 
countries 
that 
had 
followed 
Britain’s 
lead-----
Germany, France, Spain, Denmark, Portugal, the 
Netherlands, Austria, Switzerland, and America-----I 
knew that we had come through this in one piece. 
The patient was out of the emergency room and into 
intensive care.”   
 
 
 
In a seminal paper titled as ‘White Paper on All the 
Options for Managing a Systemic Bank Crisis’ co-authored by 
three academicians3 of repute, precisely this issue has been 
addressed. According to them: 
“The short answer as to why banks are being saved 
is fear that the 1930 Depression nightmare would 
again become a reality. Since banks enjoy the 
monopoly of creating money through providing 
loans, bankrupt banks means reduced credit, which 
in turn results in a lack of money for the rest of the 
economy. Without access to capital, business and 
the means of production contract, which, in turn, 
causes mass unemployment and a host of collateral 
social problems. Thus, when banks are in trouble, 
                                                
3 Bernard Lietaer from University of California, Dr. Robert Ulanowicz from University of Maryland and 
Dr. Sally Goerner from Integral Science Institute Chapel Hill, NC. 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
61 
they can trigger what is know as a Second 
Wavecrisis, through a ferocious circle making a 
victim of the real economy: Bad banking balance 
sheets => credit restrictions => recession => worse 
bank balance sheets => further credit restrictions 
and so the spiral downward goes. 
 
To avoid such a tailspin - governments feel the need 
to prop up the banks’ balance sheets. This exercise is 
already under way. For instance, several major 
banks were able to refinance themselves earlier in 
2008, mainly by tapping sovereign funds. But, as the 
depth of the – insolvency has become more obvious, 
this has become harder to do. Central banks will step 
in to help by providing an interest yield - that makes 
it easy for financial institutions to earn a lot of 
money, at no risk. 
 
The next logical step is also formulaic. Whenever a 
bank that is too big to fail is in real trouble, the 
recipe has been the same since the 1930s: the 
taxpayers end up footing the bill to bail out the 
banks, so that they can start all over again. Of the 
96 major banking crises around the world that the 
World Bank has counted over a recent 25 year 
period, taxpayer bailouts have been the answer in 
every instance. For example, the United States 
government that had funded Reconstruction Finance 
Corporation during 1932-53 period, repeated the 
exercise with the Resolution Trust Corporation for 
the Savings and Loan crisis in the 1989-95 period, 
and now again with the Troubled Assets Relief 
Program (TARP) of 2008. Other recent examples 
include the Swedish Bank Support Authority (1992-
96) and the Japanese Resolution and Collection 
Corporation which started in 1996 and is still 
ongoing. In the current international crisis, among 
the first institutions that were saved in this way 
include 
Bear 
Stearns 
in 
the 
US, 
and 
the 
nationalization of Northern Rock in the UK. In mid-
October 2008, European governments pledged an 
unprecedented 1.873 trillion Euros, combining credit 
guarantees and capital injections into banks, based 
on the strategy pioneered by the United Kingdom. 
 
These bailouts end up being expensive for the 
taxpayers and the economy at-large. One exception 
has been in Sweden, which ended up costing only 
3.6% of the GNP because important parts of the 
portfolio could be unwound over time at better 
conditions than those when the assets we originally 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
62 
acquired. But such outcomes are rare -. Some 
examples of the staggering cost of bailing out banks 
as a percent of the corresponding countries’ annual 
GNP, as estimated by the World Bank. 
 
• Sweden 1992-96 3.6% 
• USA 1988 3.7% 
• Spain 1977-85: 16.8% 
• Venezuela 1994-5 18% 
• Mexico 1994 19.3% 
• Japan 1997 24% 
• Chile 1981-83 41.2% 
• Thailand 1997-2000 45% 
• Malaysia 1997-2000 45% 
• Argentina 1980-82: 55.3% 
• South Korea 1997-2000 60% 
 
If we add in the Citibank bailout announced in 
November 2008 to all the previous packages already 
approved, the total pledges by the American 
taxpayer of the bailout exceeds now $4.616 trillion 
dollars! In February 2009, the US Treasury Secretary 
Timothy Geithner has unveiled an additional bank 
bail-out plan worth at least another $1.5 trillion9 The 
Bloomberg estimate is even higher: 7.7 trillion, 
which amounts to $ 24,000 for every man, woman 
and child in the country. The only event in American 
history that comes even close to the pledges made 
so far is World War II: Original Cost: $288 billion, 
Inflation Adjusted Cost: $3.6 trillion. It is hard to 
believe, but true, that the US bailout could cost more 
than the inflation adjusted cost of the Louisiana 
Purchase, the New Deal and the Marshall Plan, the 
Korean and Vietnam War, the S&L debacle, NASA 
and the Race to the Moon combined!” 
 
45. 
It is nobody’s case that when the HBL was 
recapitalized or offered for privatization, it had an impressive 
balance sheet. Admittedly when the amount in question was 
injected into HBL, the volume of its non-performing loans was 
huge and the Federal Government and its financial experts 
deemed it proper to finance HBL. Petitioners have not alluded to 
any opinion of some reputed economist holding this bailout to be 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
63 
in-appropriate or unwise or against best practices being followed. 
If we keep the afore-referred opinions of those who were at the 
helm of affairs during one of the worst economic and banking 
crisis in history as also of the academics in the field in 
juxtaposition with the steps taken in Pakistan to forestall 
economic meltdown (including impugned privatization), we find 
that the decision makers by and large were motivated by the 
same bonafide considerations, though at a smaller scale. Rather 
the steps taken in Pakistan perhaps were more timely and that is 
why unlike the West, the banking and financial crisis in Pakistan 
comparatively has not been that serious. Some of the inferences 
that can be drawn in this regard are: first, that banks and 
particularly those who have major share of loans or investment 
in the economy are linked with other financial institutions and 
Government, if such banks fail, it has a domino effect on 
economy; second, that injecting money [(as done by the Federal 
Government in the case of HBL or by US by buying the toxic 
acids of the banks through TARP (Troubled Assets Relief 
Program) 
or 
through 
CIRC 
(Corporate 
and 
Industrial 
Restructuring Corporation) by Government of Pakistan)] are 
some of the known methods to prop up the banks; third, that 
these bailouts are not intended to merely help the Banks, rather 
these are designed for yet another salutary purpose i.e. to keep 
the economy afloat, so that the Banks continue to advance loans 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
64 
for further investment which in turn means more jobs and great 
productivity; Fourth that through a credible mode, a financial 
institution could be sold even through negotiation, if it is deemed 
proper with a view to save the said institution from bankruptcy 
with the resultant meltdown effect on the economy. George W. 
Bush and its financial advisors took recourse to such a mode 
when after injecting a US 30 billion dollars loan by the US Federal 
Reserve Bank into Bear Stearns it was sold to JP Morgan. Even 
under the Privatization Commission (Modes and Procedures) 
Rules, 2001, Rule 3 spells out the manner and procedure for 
privatization. 
Rule 
5 
provides 
for 
additional 
modes 
of 
privatization and Rule 6 even authorizes PC to negotiate sale by 
adopting any of the modes of privatization specified in Section 25 
of the Ordinance and Rule 5 of these Rules in certain situations 
enumerated therein and fifth that the Privatization Ordinance and 
the Rules as also the Regulations framed there under vest a 
certain amount of discretion with the PC and the Board during 
the sale process in line with the best practices in vogue in other 
countries. This discretion is sought to be regulated by the afore-
referred law and Rules and any bona fide decision made in the 
exercise of the said discretion can only be interfered with in 
accord with the well recognized principles of judicial review of 
executive authority discussed while dilating upon question Nos. 2 
& 3. 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
65 
46. 
In view of the above, the various measures taken by 
the Federal Government to recapitalize HBL or to reduce the 
volume of its non-performing loans to make it more attractive for 
sale is neither against the law or the best practices being 
followed, nor does it reflect mala fides to furnish a ground for 
interference in these proceedings. 
 
Question No. V: 
Whether the petitioners have locus standi 
to challenge the privatization of HBL?  
 
47. 
The petitioners in these two petition have admittedly 
no personal interest as petitioner in Constitution Petition No. 5 of 
2011 is a former Federal Secretary, Government of Pakistan and 
the averments made in the petition reflect that he is a public 
spirited person motivated with a desire that the national strategic 
assets if privatized should reflect transparency which allegedly is 
lacking in the instant case. Similarly petitioner in Constitution 
Petition No. 15 of 2004 represents a party which may not claim a 
large constituency but is motivated by a similar spirit. These 
petitions are in the nature of public interest litigation and the 
Courts in exercise of its constitutional jurisdiction qua matters of 
public importance relating to enforcement of Fundamental Rights 
have been liberal particularly if the issue raised is relatable to a 
public injury arising from breach of public duty. In S.P. Gupta 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
66 
and others v. President of India and others (AIR 1982 SC 149), 
the Court observed as follows:- 
“Where a legal wrong or a legal injury is caused to a 
person or to a determinate class of person by reason of 
violation of any constitutional or legal right or any burden 
is imposed in contravention of any constitutional or legal 
provision or without authority of law or any such legal 
wrong or legal injury or illegal burden is threatened and 
such person or determinate class of persons is by reason 
of poverty, helplessness or disability or socially or 
economically disadvantaged position, unable to approach 
the court for relief, any member of the public can 
maintain an application for an appropriate direction, order 
or writ in the High Court under Art. 226 and in case of 
breach of any fundamental right of such person or 
determinate class of persons, in the Supreme Court under 
Art. 32 seeking judicial redress for the legal wrong or 
injury caused to such person or determinate class of 
persons.” 
 
 
48. 
Similarly this Court in Miss Benazir Bhutto v. 
Federation of Pakistan (PLD 1988 SC 416) held that: 
“After all the law is not a closed shop and even in the 
adversary procedure, it is permissible for the next friend 
to move the Court on behalf of a minor or a person under 
disability, or a person under detention or in restraint. 
Why not then a person, if he were to act bona fide 
activise a Court for the enforcement of the Fundamental 
Rights of a group or a class of persons who are unable to 
seek relief from the Court for several reasons. This is 
what the public interest litigation /class action, seeks to 
achieve as it goes further to relax the rule on locus stands 
so as to include a person who bona fide makes an 
application for the violation of any constitutional right of a 
determined class of persons whose grievances go 
unnoticed 
and 
unredressed. 
The 
initiation 
of 
the 
proceedings in this manner will be in aid of the 
meaningful protection of the rule of law given to the 
citizens by Article 4 of the Constitution, that is, "(1) To 
enjoy the protection of law and to be treated in 
accordance with law is the inalienable right of every 
citizen, wherever he may be, and of every other person 
for the time being within Pakistan" 
 
This Article does not say as to what proceedings should 
be followed, then whatever be its nature must he judged 
in the light of the purpose, that is, the enforcement of 
any of the Fundamental Rights. It is, therefore, 
permissible when the lis is between an aggrieved person 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
67 
and the Government or an authority to follow the 
adversary procedure and in other cases where there are 
violation of Fundamental Rights of a class or a group of 
persons who belong to the category as afore-stated and 
are unable to seek redress from the Court, then the 
traditional rule of locus standi can be dispensed with, and 
the procedure available in public interest litigation can he 
made use of, if it is brought to the notice of the Court by 
the person acting bona fide. On the language of Article 
184(3), it ::. needless to insist on a rigid formula of 
proceedings for the enforcement of the Fundamental 
Rights. If the framers of the Constitution had intended the 
proceedings for the enforcement of the Fundamental 
Rights to be in a strait-jacket, then they would have said 
so, but not having done that, one would not read any 
constraint in it. Article 184(3) therefore, provides 
abundant scope for the enforcement of the Fundamental 
Rights of an individual or a group or class of persons in 
the event of their infraction. It would be for the Supreme 
Court to lay down the contours generally in order to 
regulate the proceedings of group or class actions from 
case to case.” 
 
 
49. 
In Al-Jehad Trust v. Federation of Pakistan (PLD 1996 
SC 324), the Court took a similar view and in Wukala Mahaz 
Barai Tahafaz Dastoor v. Federation of Pakistan (PLD 1998 SC 
1263), the Court came to a similar conclusion. In such cases, 
even the existence of an alternate remedy has not prevented the 
Court from exercising its power of judicial review if the said 
alternate remedy is neither efficacious nor expeditious. In Watan 
Party through President v. Federation of Pakistan (PLD 2006 SC 
697), the Court repelled this argument by holding that:- 
“But at the same time, we have also to keep in mind 
another very important principle of law enunciated by this 
Court in the case of Syed Ali Abbas v. Vishan Singh (PLD 
1967 SC 294) i.e. petitioner cannot be refused relief and 
penalized for not throwing himself again (by way of 
revision or review) on mercy of authorities who are 
responsible for such excesses. This principle has to be 
read along with the principle laid down in the case of 
Anjuman-e-Ahmadiya, Sargodha ibid wherein it has been 
held that if an adequate remedy provided by law is less 
convenient, beneficial and effective in case of a legal right 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
68 
to performance of a legal duty, the jurisdiction of the High 
Court can be invoked. Similarly this principle has been 
reiterated in the Murree Brewery’s case ibid wherein it 
has been held that if a statutory functionary acts mala 
fide or in a partial, unjust and oppressive manner the 
High Court in exercise of its writ jurisdiction has power to 
grant relief to the aggrieved party. 
 
Thus we are of the opinion that under the circumstances 
of the case, it would not be in the interest of justice to 
push the petitioners back to the authority who had 
already exercised the jurisdiction and is insisting that the 
action so taken by it is not only in accordance with law as 
it suffers from no legal discrepancy or infirmity but is also 
transparent. Therefore under the circumstances, referring 
the case of the petitioner to the Federal Government or 
this Court directing investigation under section 27 of the 
Ordinance would be inappropriate and an exercise in 
futility and it would also not serve the interests of 
justice.” 
 
 
50. 
While holding that these petitions are maintainable, 
we would like to strike a note of caution. The Court has to guard 
against frivolous petitions as it is a matter of common 
observation that in the garb of public interest litigation, matters 
are brought before the Court which are neither of public 
importance nor relatable to enforcement of a fundamental right 
or public duty. In Ashok Kumar Pandey v. State of West Bengal 
(AIR 2004 SC 280), the Court was seized of such a petition when 
it observed as follows:- 
“Public interest litigation is a weapon which has to be 
used with great care and circumspection and the judiciary 
has to be extremely careful to see that behind the 
beautiful veil of public interest an ugly private malice, 
vested interest and/or publicity seeking is not lurking. It 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
69 
is to be used as an effective weapon in the armory of law 
for delivering social justice to the citizens. The attractive 
brand name of public interest litigation should not be 
used for suspicious products of mischief.  It should be 
aimed at redressal of genuine public wrong or public 
injury and not publicity oriented or founded on personal 
vendetta.  As indicated above, Court must be careful to 
see that a body of persons or member of public, who 
approaches the court is acting bona fide and not for 
personal gain or private motive or political motivation or 
other oblique consideration.  The Court must not allow its 
process to be abused for oblique considerations. Some 
persons with vested interest indulge in the pastime of 
meddling with judicial process either by force of habit or 
from improper motives.  Often they are actuated by a 
desire to win notoriety or cheap popularity.  The petitions 
of such busy bodies deserve to be thrown out by rejection 
at the threshold, and in appropriate cases with exemplary 
costs.” 
 
 
51. 
Foregoing are the detailed reasons for the short order 
dated 29.11.2011 reproduced below in terms of which these 
petitions were dismissed:- 
“This judgment shall dispose of Constitution 
Petitions No. 5 and 15/2004, Civil Miscellaneous 
Application No.4251/2011 and Human Rights 
Case No.14144-S/2009 as they have nexus. 
 
2. 
We have heard learned counsel for the 
parties at some length and have gone through 
the documents annexed as also the precedent 
case law cited at the bar. 
 
3. 
For reasons to be recorded later in the 
detailed judgment, we hold and declare as 
under:- 
 
Const. P. No. 5 & C.M.A. No. 4251 of 2011 & 
Const. P. No. 15 of 2004 AND 
H.R.C. No. 14144-S of 2009 
 
 
 
70 
a) 
that the approval of the privatization of 
Habib 
Bank 
Limited 
by 
the 
Cabinet 
Committee on Privatization was within the 
purview of Privatization Commission; 
b) 
that it does not reflect violation of any 
statutory provisions; 
c) 
that neither the process was tainted with 
lack of transparency or malafides nor the 
successful 
bidder 
lacked 
qualifications 
prescribed in law; and 
d) 
that it is in accord with the best practices 
around the world and the law declared by 
this Court. 
The petitions are dismissed in afore-referred 
terms. 
 
 
JUDGE 
 
JUDGE 
 
JUDGE 
Islamabad, 
29.11.2011 
Khurram Anees 
Approved for Reporting