PESHAWAR: Peshawar High Court has rejected plea of several franchises of different currency exchange companies, challenging a recent circular of State Bank of Pakistan about conversion of the franchises into branches of the respective companies.

A bench consisting of Justice Ijaz Anwar and Justice Shakeel Ahmad upheld the impugned circular issued on September 6, 2023, by State Bank of Pakistan (SBP) on “reforms in exchange company sector” wherein two options were given to the franchises. They were asked to either merge with the exchange company (franchiser), or sell the franchise to the exchange company (franchiser).

The SBP’s circular provided that the licences of all such franchises, which did not opt for any of the two options in the stipulated time period of 30 days, would stand cancelled.

The petition was filed by Fast Track Enterprises, a franchise of Link International Exchange Company, and several other franchises.

Rejects plea of franchises against their conversion into companies’ branches

The bench ruled: “It is by now well settled that policy guidelines issued by the government or State Bank of Pakistan cannot be called in question in the constitutional jurisdiction of this court, unless it is established, that such guidelines, policy decisions are violative of any expressed provision of law.”

“We have examined the provisions of Foreign Exchange Regulation Act, 1947, and have found that the permission so granted to the ‘company’ for allowing a franchise was conditional to the general or special direction or instructions as State Bank of Pakistan may from time to time issue, thus, where the ‘company’ who was given such approval to enter into franchise agreement with the petitioner, has not questioned the validity of impugned circular, as such, the petitioners have got no locus standi, whatsoever, to question the vires of the impugned circular,” the bench ruled.

The bench observed that the permission of franchise agreement was in fact given to the exchange companies, which were bound by the policy matters and guidelines of State Bank of Pakistan issued from time to time in terms of Regulation 3 AA of Foreign Exchange Regulation Act, 1947.

“Thus, the franchise can under no circumstances question the circulars or letters of State Bank of Pakistan.”

The bench pointed out when it questioned both the parties as to whether the impugned circular letter was questioned by any of the exchange companies throughout Pakistan, the answer was in negative, rather the counsel for the petitioners stated that exchange companies were quite happy with the same as thereby, they would be further benefitted, as the whole business would come to their hands.

The petitioners’ counsel stated that petitioners were running franchises within the area of Peshawar under different franchisers and they had obtained their respective licenses from SBP and they were now authorised money changers.

He said that in the meantime, the impugned circular was issued by SBP whereby petitioners were provided two options and were instructed to accept one of it within 30 days.

The counsel contended that the circular was violative of provisions of Foreign Exchange Regulations Act, 1947. He added that as the petitioners had not violated any terms and conditions, as such, no adverse action could be taken against them.

Altaf Ahmad, a deputy attorney general, appeared for the government, whereas Advocate Alamzeb Khan appeared for SBP along with the bank’s senior officer Shehzad Gul, its senior joint director Yaser Arafat and law officer Syed Jibran Mushtaq Gillani.

Alamzeb Khan contended that SBP, being regulator of such matters, was empowered to issue policy guidelines to all exchange companies and the companies were bound under regulation 3AA of the Act to follow the same. He added that the petitioners had no locus standi to question the same as the said circular was never addressed to them.

Published in Dawn, October 21st, 2023