Law: National Bank of Pakistan Ordinance, 1949

Section: 32(2)(xxviii)

Law: Banks (Nationalization) Act, 1974

Section: 11

Law: General Clauses Act, 1897

Section: 27

REMARKS

Based on our review of Bye-law 51 of the 2015 Bye-laws and Sections 11, 13, and 20 of the Act of 1974, it is evident that these provisions grant the Board of Directors of NBP broad authority over policymaking, administration, and management of the bank\'s affairs. While the Board is vested with executive powers to oversee operations, shape policies, and ensure compliance with banking regulations, these provisions do not extend its authority to framing rules governing the terms and conditions of bank employees. In contrast, Section 32 of the Ordinance of 1949 explicitly empowers the Central Board, with prior approval of the Federal Government, to formulate Bye-laws concerning the recruitment, employment terms, and service conditions of NBP officers and staff. Specifically, Section 32(2)(xxviii) underscores that the Board\'s authority extends to structuring the employment framework, including recruitment policies, service terms, and staff benefits. Thus, while the Board exercises overarching control over policy and operational matters, the power to regulate the service conditions of bank employees is exclusively conferred through Bye-laws framed under Section 32 of the Ordinance of 1949.
The primary contention raised by the learned counsel for the petitioners centered on the judgment rendered by the Apex Court in the case of Muhammad Zaman (supra). We have carefully examined the said judgment. However, with the utmost respect, we find that both the factual matrix and the legal principles enunciated therein bear no direct relevance to the present case. In Muhammad Zaman\'s case, the State Bank of Pakistan Act, 1956 (\"Act of 1956\") originally mandated, through Section 54, that the Central Board of Directors could frame regulations only with the prior approval of the Federal Government. However, this requirement was subsequently omitted through the State Bank of Pakistan (Amendment) Act, 1994 (\"Act of 1994\". Consequently, following the enactment of the Act of 1994, the rules framed by the Central Board of the State Bank of Pakistan no longer required the Federal Government\'s prior approval. In light of this legislative change, the Apex Court held that rules framed by the Central Board post-1994 were non-statutory. Thus, the Muhammad Zaman case hinged on a specific legislative amendment that removed the requirement for Federal Government approval, thereby altering the legal character of the rules. Since no such analogous amendment exists in the present matter, reliance on Muhammad Zaman\'s precedent is misplaced and legally inapplicable.
In the present case, no amendment has been introduced in the Ordinance of 1949. Likewise, the legal principles established by the Lahore High Court in Umar Asghar Quresh\'s case and by the Islamabad High Court in W.P. No. 3008/2021 are clearly distinguishable and bear no direct relevance to the present controversy. The core issue before the Lahore High Court and the Islamabad High Court was the status of the Rules of 2021, not their vires. Both Hon\'ble Courts held that the Rules of 2021 were non-statutory, and we respectfully concur with this observation to that extent. However, the present case concerns the vires of the Rules of 2021, and for the reasons elaborated above, we hold that the Rules of 2021 were framed without lawful authority by the NBP, rendering them legally untenable.

Summary:Two-word description:
Rules invalidity
The case deals with the validity of NBP’s 2021 Staff Service Rules and whether they were legally framed under the NBP Ordinance, 1949. The Court ruled the rules were ultra vires because they lacked the Federal Government’s prior approval required by law. The power to frame such rules lies solely under Section 32(2)(xxviii) of the 1949 Ordinance, not under other laws cited by the bank.