ISLAMABAD: Assailing the federal government for keeping Zarai Taraqiati Bank Limited (ZTBL) dysfunctional for about three years, the Islamabad High Court on Wednesday ordered constitution of the bank’s board of directors by December 1 and summoned the finance secretary if the court order is not be complied with.

“It is alarming that an important financial institution in the public sector i.e. the Zarai Taraqiati Bank Limited has virtually remained dysfunctional for the last three years because of inaction on the part of the federal government. This indeed is contrary to the principles of good governance, besides violating the fundamental rights of not only the petitioners but the general public as well,” Chief Justice Athar Minallah observed while hearing a set of petitions filed by the ZTBL officials against their demotion.

The officials alleged that in a surprise move on March 6, the present bank management issued letters to around 150 employees, informing them that the promotions they had earned back in 2015 and 2018 stood cancelled. The decision came as a shock because they had not even been provided a right of hearing before their demotion.

Orders constitution of bank’s board of directors by Dec 1, summons finance secretary in case of non-compliance

“The failure on the part of the federal government to constitute the board for the last three years has definitely prejudiced the rights of the petitioners, besides delaying meaningful consideration of the option proposed by the august Supreme Court in its judgement,” the IHC noted.

Justice Minallah regretted that the deputy attorney general, despite his able assistance, was not able to give a plausible explanation for the federal government’s inaction to constitute the board of directors of ZABL.

The court noted that by virtually keeping one of the most important financial institutions in the public sector dysfunctional for the past three years, the federal government had failed in its statutory duty, inter alia, under the Bank Nationalisation Act, 1974. “Such a failure definitely has profound consequences for the constitutionally guaranteed fundamental rights of the petitioners and the general public,” it observed.

The court asked the attorney general to seek instructions from the government and inform the court regarding the constitution of the board of directors of the bank.

“Nonetheless, the federal government is directed to fulfil its statutory duty by constituting the board of the respondent bank before the date fixed. In case the board is not constituted within the specified time, then the secretary, Ministry of Finance, will appear in person to explain the reasons for keeping the respondent bank virtually dysfunctional for almost three years,” the order said.

The hearing was adjourned till December 1.

Justice Minallah had at a previous hearing restrained the ZTBL management from recovering the additional amount which the demoted assistant vice presidents were getting when they were promoted as vice presidents.

From 1960 to 2002, the ZTBL functioned as an attached government department. After it was reformed in 2002, it was converted into a public sector company whose affairs were to be run by a board of five to seven independent and tenured directors.

In 2005, the ZTBL board had decided to reform the service structure of employees. Accordingly, all the existing employees were offered the option to shift from government-style employment terms to more corporate-style employment terms. This new structure was called “Options”.

In 2013 and 2018, the Supreme Court upheld the vires of the Options, providing the switchover of employees from the earlier service structure to Options is demonstrably voluntary.

Petitioners Nadeem Akhtar Malik and others have claimed that through the impugned demotion orders, the bank’s current management has altogether resiled from the 2005 Promotion Policy as well as all Options signed thereunder. This has been done by the bank’s management allegedly in the garb of implementing a Supreme Court order.

The petitioners’ counsel, Umer Gillani and Barrister Afzal Hussain, claimed that as a matter of fact the Supreme Court never ordered en masse demotions or recovery of salaries earned in the past.

Also, under the Public Sector Companies (Corporate Governance) Rules, 2013, all matters regarding the implementation of judgements have to be put before the board. However, in the present case, the management bypassed the board and took decisions which it had no jurisdiction to take. This is because the ZTBL board, which is a statutory body, is currently non-existent because the federal government has not bothered to appoint one for years. As a result of which, the bank’s affairs are in complete disarray.

It is claimed by the aggrieved employees that this lacuna has been exploited by those who are in the SPPC as the demotion order was issued at the behest of SDPC whose members have a conflict of interest as their own promotions will benefit from the demotion of those who had chosen the service structure under Options.

Accordingly, the petitioners pleaded that the IHC may set aside their demotion orders and they may be restored to the post of vice president.

Published in Dawn, October 29th, 2020