All
Scheduled Banks, Investment
Banks and NBFIs Authorised to
deal in Foreign Exchange.
Dear
Sirs,
FOREIGN
CURRENCY ACCOUNTS
We
forward herewith a copy of the Order announced by the honourable
Supreme Court of Pakistan on 18th day of June,
1999 in connection with the Appeal relating to the cases
of Foreign Currency Accounts. It would be observed therefrom
that paragraph (iv) is required
to be implemented by the respective banks/institutions holding
foreign currency deposits (including COis). Interest/profit
is required to be paid to the foreign currency Account holders
at rates already agreed as per original arrangements between
them and the respective banks. Our interpretation is that
such interest/profits are required to be paid in those cases
where the foreign currency accounts continue to exist, and
that the amounts of interest/profits are to be credited
in foreign exchange to the accounts of the respective Account
holders. You are advised to implement he Order accordingly.
2.
As regards remittance abroad of interest/profit by non-resident
Pakistanis and foreigners (including non-resident firms,
companies and other institutions) covered by para
(v) of the Order, as and when any of the eligible Account
holders wishes to remit interest/profits abroad, an application
may be sent to the undersigned on Form
M alongwith a covering letter which should
indicate the name, nationality and residential status of
the Account holder, the balance in the account on the date
of application as well as on 28-05-1998, and the period
during which such interest/profits were earned. The State
Bank will give approval within a week, if the documents
are in order.
FE-45
deposits will continue to be governed by the agreement reached
between the State Bank and commercial banks/NBFIs.
IN
THE SUPREME COURT OF PAKISTAN
(Appellate
Jurisdiction)
PRESENT:
Mr. Justice Ajmal Mian, C.J
Mr. Justice Saiduzzaman Siddiqui
Mr. Justice Irshad Hasan Khan
Mr. Justice Raja Afrasiab Khan
Mr. Justice Muhammad Bashir Jehangiri
Mr. Justice Nasir Aslam Zahid
Mr. Justice Munawar Ahmed Mirza. |
CIVIL
APPEAL NO. 319 OF 1999
CONSTITUTION PETITION NO. 26 OF 1998,
CONSTITUTION PETITION NO. __ OF 1999
CIVIL PETITIONS NOS. 524 TO 633,635 TO
643,645 AND 825 TO 832 OF 1999.
|
(on
appeal from the judgment dated 27.1.1999 of the
Lahore High Court, Lahore in ICA NO.679/98 etc.etc.)
|
Federation
of Pakistan etc. |
.
Appellants |
Versus
|
Shaukat
Ali Mian etc.etc. |
.
Respondents |
.........................................
|
For
the appellant/Petitioners in all except CP 26/98 |
Ch.
Muhammad Farooq Attorney General
Mr. Sher Zaman Khan, DY A.G.
Ch. Akhtar Ali, AOR |
For
the petitioner in CP 26/98 |
Dr.
Farooq Hassan, Sr. ASC. |
For
the petitioner in CP_/99 |
Petitioner
Munirul Huda Ch. in person. |
For
the respondent-1 in CA 319/99 |
Mr.
Salman Akram Raja Advocate
(With special permission) |
For
the respondents in CPs 601 & 635/99 |
Mr.
Maqbool Elahi Malik, Sr. ASC |
For
the respondent in CP 541/99 |
Raja
M. Akram Sr. ASC |
Date
of hearing |
7.6.1999
to 10.6.1999 at Karachi 15.6.1999 & 17.6.1999
at Islamabad. |
CA319/99
etc.
ORDER
For
the reasons to be recorded later, the above appeal, petitions
for leave to appeal and constitution petitions are disposed
of as under :-
i)
We are perturbed to note that despite the assurance given
by the Legislature in subsection (4) of section 5 of the
Protection of Economic Reforms Act. 1992 (Act XII of 1992)
to the effect that The State Bank of Pakistan or other
banks shall not impose any restriction on deposits in and
withdrawals from the foreign currency accounts and restrictions,
if any, shall stand withdrawn forthwith, the successive
Governments improperly utilised the foreign exchange deposits
of the Foreign Currency Accounts holders in breach of the
above solemn commitment and the State Bank of Pakistan also
failed to perform its statutory duty to protect the interests
of the Foreign Currency Account holders, thereby creating
a situation where at present it has become practically impossible
to honour the above solemn undertaking given by the Legislature.
ii)
Section 2 of the Foreign Exchange (Temporary Restrictions)
Act, 1998 (Act IV of 1998) (hereinafter referred to as the
Act) is intra vires of the Constitution subject to the declaration
that the same does not confer any power on the Federation
or on the State Bank of Pakistan to compel Foreign Currency
Account holders to convert their foreign exchange holdings
into Pak Rupees at the officially notified rate of exchange,
or to compel the said account holders to liquidate their
above accounts into Pak Rupees which foreign exchange holdings
had been accepted by the respective banks as security against
any loans or other facilities extended to them.
iii)
The BPRD Circular No.23 dated 2-7-1998 read with BPRD Circular
No.29 dated 17-11-1998 to the extent of providing that "It
has been decided that encumbrance or lien of any kind upon
any foreign currency deposit/foreign currency certificate
as a cover against any direct or indirect liability of the
depositors must be removed by July 31, 1998 through set
off or direct liquidation of the liabilities so covered
by the borrowers", is illegal and of no legal consequence,
besides the above Circular has been withdrawn by the State
Bank of Pakistan as stated by the learned Attorney General
in the Court before us on 9.6.1999 and, therefore, it does
not hold the field.
iv)
That the Foreign Currency Account holders are entitled to
receive interest/profits in foreign exchange on their deposits
at rates already agreed as per original arrangements between
them and the respective banks.
v)
That the non-resident Pakistanis and foreigners maintaining
Foreign Currency Accounts as on 28.5.1998 will be entitled
to utilise the interest/profits, payable to them under the
above arrangements between them and the banks concerned,
in any manner including the right to remit the same abroad.
vi)
That in order to restore the confidence of the existing/prospective
Foreign Currency Accounts holders, the Federation/State
Bank of Pakistan shall evolve a scheme within a reasonable
period keeping in view the foreign exchange position of
the country for gradual removal of restrictions on operation
of Foreign Currency Accounts imposed by Section 2 of the
Act, and that, in any case, in every annual budget a reasonable
provision in this regard shall be made.
2.
That pursuant to the direction of the Court, the learned
Attorney General has furnished on 17-6-1999 particulars
of the Foreign Currency Account holders who had withdrawn
foreign currency from their respective accounts during the
period from 11.5.1998 to 28.5.1998. The same will be examined
for initiating suitable action in accordance with law, if
so warranted.
Announced
at Islamabad
This 18th day of June, 1999