KARACHI, July 1: Habib Bank’s contention that if it had not acted against the petitioner in Al-Rashid Trust case, its operation in the US would have become impossible, provided no justification for freezing somebody’s account, argued amicus curiae Mushtaq Memon on Monday.

He was arguing before the division bench, comprising Justice Sabihuddin Ahmed and Justice Zia Pervez.

The petition filed by Muhammad Suleman was the consequence of refusal by the HBL to honour its two cheques with an endorsement “stop your account by government of Pakistan”, which the petitioner termed as violation of Articles 23 & 24 of the Constitution.

The arguments centred on international obligations and the need for domestic legislation. It produced interesting but controversial argument on the status of money deposited by an individual in the bank and his proprietary rights.

Mr Memon’s contentions were completely opposed to the position taken by the attorney-general Makhdoom Ali Khan and another amicus curiae Kazim Hassan on May 24.

The attorney-general had submitted that “if the government had not accepted the directions of the Security Council, it would have resulted in the closure of Habib Bank’s branches the world over and the country could have faced great economic difficulties. Where was the choice. You want closure of branches or comply with the resolutions”.

Thrust of Mr Memon’s argument was on the preservation and maintainability of sovereignty of each member state of the UN. His contention was that Article 23 of the Constitution provided to every citizen the right to acquire or to hold the property and maintained that the Security Council resolution under which the respondents had sought refuge for justifying action against the petitioner was not applicable.

Security Council has no right to take away individual or collective rights of citizens of any member county, he said.

Individual’s properties have to be regulated through municipal laws, he said and added that in Pakistan also municipal law would take precedence over international law. But if the two were in conflict the court would decide. In this context, he said only in Germany’s constitution it was mentioned that international law will have precedence.

He also mentioned Supreme Court’s judgement in foreign currency account holder case and conceded that the present action of the banks does not stand the test of applicability. Mr Memon also referred to Shaukat Ali Mian’s case and Farooq Ahmed Khan Leghari’s case in support of his contentions.

He questioned as to where was the provision in the Banking Companies Ordinance for causing such an action. The United Nations Charter does not say that properties of individuals can be seized.

He said that sovereignty of every member state has to be maintained. No executive in Pakistan can follow the dictates not comingfrom the UN but from the US, he contended. When Justice Sabihuddin inquired if there was any mention of property in the UN Charter, counsel for the petitioner referred to Article 17 of the Universal Declaration of Human Rights.

Barrister Zahid Usman Jamil appearing on behalf of the State Bank of Pakistan (Respondent No 2) contended that the petition was not maintainable against the SBP and the direction of central bank of Sept 25, 2001, since the petitioner had not impugned or challenged the same. He argued that in fact the petitioner had not prayed for any relief or direction against the State Bank of Pakistan, its order or its actions.

At this point, Justice Sabihuddin Ahmed observed that “either you defend or say you have nothing to do”.

In reply to the contentions of the petitioner and the amicus curiae, Mr. Mushtaq Ahmed Memon, that freezing of the account was a deprivation of property, Barrister Zahid Jamil stated that, in fact, under settled law of banking in all common law jurisdiction (USA, England etc.) and under judgments of the sub-continent and Pakistan, the relationship between a banker and customer is that of a debtor and creditor.

Once a deposit is made, the title of the money passes to the bank and mixes with its funds leaving the depositor/customer with a contractual right/debt to be repaid on demand, he claimed relying on the US, British, Indian and House of Lords authorities on this point.

It was also his contention that the petition was not maintainable since it required investigation, leading of evidence and disputed questions of fact which could be settled in a writ jurisdiction, specially since the allegation mentioned in the affidavit by the State Bank had not been rebutted by the petitioner. It thus stood either admitted or alternatively if the petitioner wished to deny the same, it was the right of the respondent to cross-examine and adduce evidence on the issues which cannot be done in writ jurisdiction, he contended.

It was his premise that the petition was also not maintainable and premature since the petitioner had not availed the alternative remedial machinery which was speedy and efficacious as provided for under Section 41(2) of the Banking Companies Ordinance 1962.

On merits of the case, the counsel stated that action under Section 41 of the Banking Companies Ordinance 1962 was a duty and obligation of the State Bank of Pakistan.

He claimed that apart from the violation of the international obligations the actions of the petitioner were, in fact, a violation of numerous sections of the Anti-Terrorist Act, 1997. The SBP, as the regulatory authority was obliged and under a duty to ensure that its regulatees did not violate the law and prejudice the rights and interests and duties owed to the depositors of the bank; the interest of the Banking Management; and public policy

He stated that Section 11A to 11W of the ATA 1997 had, in fact, been violated. In particular, the counsel for the State Bank referred to the publications of the petitioner on the internet and the petitioner’s press publication of Zarb-i-Momin. In particular, the advertisement, invitation and solicitation of the petitioners stated that Christians were killing Muslims, including numerous statements purportedly projecting Osama Bin Ladin and the Taliban referring to them as heroes and purportedly attempting to create religious, sectarian and ethnic hatred.

“They have incited hatred against the Christians,” he argued.

He also pointed out the request of the petitioner to the general public not to deposit donations in their account but provide the same directly by cash, which itself is a violation of the Income Tax Law. He also read out Section 11W of the ATA.

He also stated that the specific provisions prohibiting the use, possession, retention, control and removal from jurisdiction of terrorist funds are, in fact, a violation of the Anti- Terrorist Act, 1997.

“We say these are proceeds for terrorist fundings and that is why we froze their account,” claimed the counsel for the SBP.

Justice Sabihuddin Ahmed observed that “can you take away the property without confronting them with evidence. You decided to use power which is someone else’s jurisdiction”.

Barrister Zahid Usman Jameel claimed having “visible evidence” and submitted that, in fact, the action of the State Bank of Pakistan was taken both independently and as a result of and on the advice of the Ministry of Finance on the basis of the evidence provided by the US Banking Regulators and also the State Bank of Pakistan and the Government of Pakistan, on cognizance of the purported violations of the Anti Terrorist Act 1997 (Amendment of 2001). He stated that Section 14(2) of the Banking Companies Ordinance 1962 which allowed the right of representation to the petitioner before the State Bank of Pakistan was the proper forum for settlement of this dispute since it required leading of evidence. He also stated that the actions were taken in accordance and as a result of violations of Pakistani Law and there was no question of Pakistan’s sovereignty being the prejudiced or becoming a colony as suggested by the petitioner.

The matter was adjourned for Tuesday.