Riasat Zaman Vs Govt of Pakistan etc

JUDGMENT SHEET

PESHAWAR HIGH COURT

ABBOTTABAD BENCH

(Judicial Department)

WP No. 124-A/2025.

Riasat Zaman.

...Petitioner(s)

V e r s u s.

Government of Pakistan through Secretary Ministry of Federal Education & Professional Training, Islamabad & 4 others.

...Respondent(s)

Present: Haji Sabir Hussain Tanoli, Advocate for petitioner.

Mr. Awais Abbasi, Advocate for respondents.

Date of hearing: 13.05.2026.

JUDGMENT

SYED MUDASSER AMEER. J. Through this petition filed under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973, the petitioner seeks declaration that Finance Division’s Office Memorandums dated 16.10.1984 and 21.01.2015 and the pursuant letter bearing No.3089 HAA-591 dated 09.10.2024 issued by respondent No.5 are illegal, without lawful authority and of no legal effect to the extent they deprive the petitioner of gratuity. The petitioner further seeks directions to the respondents to

release and pay gratuity strictly in accordance with the applicable rules.

2.The petitioner was initially appointed as LDC/Typist in the National Book Council of Pakistan on 05.05.1985 and, after merger of the said institution into the National Book Foundation with effect from 01.07.1994, continued his service under the Foundation.

During the course of service, he earned promotions in different cadres and ultimately retired on 06.04.2024 upon attaining the age of superannuation while serving as Assistant Research Officer/Incharge in BPS-17.

3.It is averred that the National Book Foundation is a statutory autonomous body established under an Act of Parliament, managed through its Board of Governors, which is competent to frame rules and regulate the affairs of the Foundation.

4.It is further contended that under the relevant Service Rules and the decision of the Board of Governors, the retired employees of the Foundation are entitled to gratuity in addition to contributory provident fund.

5.After retirement, petitioner was only allowed to withdraw the amount of contributory provident fund through letter dated 09.10.2024, whereas the benefit of gratuity was withheld by the respondents on the basis of

Office Memorandums dated 16.10.1984 and 21.01.2015 issued by the Finance Division.

6.According to the petitioner, the said Office Memorandums cannot override the statutory rules governing the Foundation nor can they deprive him of a vested service benefit which had consistently been extended to other retired employees of the institution.

7.It is maintained that the Board of Governors had already approved the service rules and, until any lawful amendment was made therein, the existing rules continue to govern the field.

8.Arguments heard and record perused.

9.Admittedly, the petitioner remained in the service of the National Book Foundation for about thirty-nine years and retired on attaining the age of superannuation while serving in BPS-17.

10.There is no dispute that the Foundation was established through ‘The National Book Foundation Act, 1972’. Section 3(ii) of the Act provides that the Foundation shall be a body corporate having perpetual succession and common seal with power to acquire, hold and dispose of property. Section 4 vests the management, overall control and supervision of the affairs of the Foundation in the Board of Governors,

whereas section 8 empowers the Foundation to make Rules.

11.Pursuant to powers conferred by section 8 of the Act, the Board of Governors framed the ‘National Book Foundation Service Rules, 1973’. Rule 3 thereof expressly reserves to the Board the authority to amend or change the Rules from time to time. Rule 5 further provides that Government practice shall apply only in matters not otherwise provided in the Rules.

12.Chapter-IX of the Rules dealing with Provident Fund and Gratuity unequivocally provides:

“All the confirmed employees of the National Book Foundation shall be entitled to the contributory Provident Fund Gratuity.

All employees of the Foundation shall be paid gratuity equivalent to one month salary (basic pay) for every completed year of service at the time of retirement or on termination of his services for any reason other than misconduct.

An employee shall be entitled to gratuity only if he remains in service of the Foundation for a minimum of one year.

If the Foundation, at a later stage, decides to introduce a pension scheme the employees shall be given an option between contributory Provident Fund/Gratuity and Pension.”

14.The Board of Governors in its meeting dated 07.11.2000 introduced pension scheme for employees of

the Foundation. The relevant portion of the decision reads as follows:

“The Board agreed for the introduction of pension scheme to the employees of the Foundation following Government rules mutatis mutandis. The employees, however, will have an option to opt for the pension scheme or to continue the existing CP Fund plus gratuity.”

(Underlining supplied)

15.It is thus evident from the statutory rules themselves as well as from the subsequent decision of the Board of Governors that employees of the Foundation were entitled either to pension or to continue under the existing contributory provident fund plus gratuity regime.

16.After retirement, the petitioner claimed both contributory provident fund and gratuity. While withdrawal of contributory provident fund was allowed, gratuity was withheld solely on the basis of Office Memorandums dated 16.10.1984 and 21.01.2015 issued by the Finance Division.

17.The controversy in the present petition, therefore, narrows down to a singular legal question:

whether executive Office Memorandums issued by the Finance Division could legally override the statutory rules and settled service structure of an autonomous statutory body like the National Book Foundation.

18.The respondents have not disputed that under the governing rules and prevailing service regime of the Foundation the petitioner was otherwise entitled to gratuity. Their entire case rests upon applicability of the aforesaid Office Memorandums.

19.The record further reveals that the Board of Governors, being the competent statutory authority under the Act, never amended Chapter-IX of the Rules so as to withdraw gratuity from employees appointed after 16.10.1984. Nor has any material been produced showing that the Board consciously adopted or incorporated the Finance Division Office Memorandums into the statutory service structure of the Foundation.

20.In such circumstances, the central question is whether mere executive instructions issued by the Finance Division could supersede the governing statutory framework of the Foundation.

21.It is by now a settled principle of law that executive instructions, office memorandums or administrative notifications cannot override, amend or nullify statutory rules or rights flowing therefrom.

Where an autonomous statutory body operates under its own parent statute and service rules framed thereunder, the same prevail over inconsistent executive directions

unless lawfully adopted by the competent statutory authority.

22.In Shakeel Ahmed Kayani v. Managing Director/CEO OGDCL (2026 SCMR 449), the august Supreme Court examined an almost identical controversy where pensionary benefits available under statutory regulations of OGDCL were sought to be curtailed on the basis of an Office Memorandum issued by the Finance Division. The Supreme Court emphatically rejected such contention and held that the statutory regulations continued to hold the field notwithstanding the executive memorandum. It was observed:

“The said Regulations are still in the field and enjoy a higher statutory force than a Board Resolution of the Company and unless the said Regulations are amended by the Company with the prior approval of the Federal Government, the decision of the Board of Directors cannot override the said Regulations.”

23.The august Supreme Court further examined the nature and legal effect of the Finance Division’s Office Memorandum itself and held that a general executive memorandum issued for Federal Government employees could not automatically be treated as binding upon an autonomous statutory corporation functioning under its own service structure. The Court observed:

“The OM was issued by the Finance Division of the Federal Government for the regulation of its own employees. It is an admitted position that the employees of the Company are not civil servants...”

The Court accordingly concluded:

“Hence, the OM dated 04.09.2001 cannot be construed as a directive or instruction issued to the Company by the Federal Government...”

24.The principle laid down in Shakeel Ahmed Kayani (supra) squarely governs the present controversy. The National Book Foundation is admittedly a statutory autonomous body established under an Act of Parliament. Its affairs are regulated through its Board of Governors and the Service Rules framed under the statutory framework. The respondents have failed to demonstrate that the Board of Governors ever lawfully amended Chapter-IX of the Rules or consciously adopted the Finance Division Office Memorandums so as to withdraw gratuity from employees appointed after 16.10.1984.

25.The august Supreme Court in Shakeel Ahmed Kayani (supra) also highlighted the constitutional and institutional significance of autonomy enjoyed by statutory corporations. The Court observed:

“Public corporations are designed not as extensions of government departments but as independent bodies entrusted with

bringing efficiency, autonomy, and commercial discipline...”

and further held:

“To hold otherwise would reduce the Board to a mere rubber stamp...”

These observations apply with equal force to the National Book Foundation whose governing statute entrusts regulation of service structure and retirement benefits to its own Board of Governors.

26.Respondents could also derive no assistance from Pakistan v. Sheikh Abdul Hamid (PLD 1961 SC

105)or Province of West Pakistan v. Din Muhammad (PLD 1964 SC 21) because those cases turned upon entirely different statutory settings where the executive instructions had either become integrated into the governing service framework itself or had been issued by the competent rule-making authority acting within statutory competence. In the present case, however, no material has been produced to show that the Finance Division Office Memorandums were ever lawfully incorporated into or adopted by the statutory service regime of the National Book Foundation through the Board of Governors exercising powers under section 8 of the Act.

27.In Messrs Mustafa Impex, Karachi and others v. The Government of Pakistan through Secretary Finance, Islamabad and others (PLD 2016 SC 808), the august Supreme Court emphatically held that executive

actions and subordinate instruments must operate strictly within the framework of law and cannot travel beyond the authority conferred by the governing statute.

The Court further held that where a power is regulated by law, the same must be exercised strictly in accordance with the statutory scheme and not through administrative convenience or executive interpretation.

28.Likewise, in Muhammad Saleem v. Federal Public Service Commission and others (2020 SCMR 221), the august Supreme Court reiterated that Office Memorandums or executive instruments derive validity only so long as they remain consistent with the parent statutory framework and cannot operate in derogation thereof. The Court categorically held that executive arrangements or office memorandums cannot override statutory provisions or rules framed under lawful authority.

29.Reference may also be made to Bahoo Dying Industries (Private) Limited v. Sui Northern Gas Pipelines Limited and others (PLD 2021 Lahore 186), wherein it was held that administrative notifications cannot take away rights conferred by substantive law and that where conflict exists between executive instructions and codified legal provisions, the latter must prevail.

30.The distinction between Government servants and employees of autonomous statutory bodies is legally significant and cannot be ignored. In Shakeel

Ahmed Kayani (2026 SCMR 449), the august Supreme Court specifically held that Office Memorandums issued by the Finance Division for regulation of Federal Government employees do not automatically extend to employees of autonomous corporations governed by their own statutory framework. The Supreme Court observed:

“The OM was issued by the Finance Division of the Federal Government for the regulation of its own employees.”

The respondents have not been able to point out any provision in the National Book Foundation Act, 1972 or the Rules framed thereunder making Finance Division Office Memorandums automatically binding upon the Foundation.

31.It is also significant that employees of the National Book Foundation are admittedly not civil servants nor is the Foundation a pensionable Government department. The respondents themselves acknowledge that retirement liabilities including gratuity are being met from the Foundation’s own resources and not from any specific budgetary allocation of the Federal Government.

32.Once the Foundation independently manages its financial affairs and operates under its own service rules, automatic application of Finance Division instructions meant for Government servants cannot be

presumed in absence of lawful adoption by the competent authority of the Foundation. The impugned action, therefore, suffers from lack of lawful authority and is not sustainable in law.

33.Another important aspect of the case is that gratuity consistently remained part of the service benefits extended to retired employees of the Foundation. The petitioner has specifically asserted that similarly placed employees and even Managing Directors appointed for short tenures were granted gratuity, whereas employees who rendered service for decades have been deprived of the same benefit. This assertion has not been effectively rebutted by the respondents through any material showing uniform implementation of the impugned Office Memorandums.

Such selective application of executive instructions offends the principle of equality enshrined in Article 25 of the Constitution and also violates the mandate of fair treatment contemplated under Article 4 thereof.

34.The stance of the respondents further loses force in view of the fact that audits of the Foundation had continuously been conducted by the Auditor General of Pakistan and no objection regarding payment of gratuity under the existing rules had been raised for a considerable period.

35.Had the service regime actually stood altered through lawful means, the same would have found reflection in amended rules or formal communications issued by the competent authority. Absence of any such material strengthens the petitioner’s contention that the impugned deprivation is based merely upon administrative interpretation rather than any valid amendment in the governing rules.

36.It is settled law that vested and accrued retirement benefits cannot be withdrawn arbitrarily through executive instructions particularly where employees devoted their entire service careers under an existing statutory regime. Gratuity is not a matter of bounty or benevolence but a valuable service right earned through long and continuous service.

37.In Shakeel Ahmed Kayani (2026 SCMR 449), the august Supreme Court reiterated that retirement benefits are inseparably connected with constitutional guarantees of dignity and livelihood. The Court observed:

“Pension is not a matter of bounty, charity, or benevolence... it is a right protected under Articles 9 and 14 of the Constitution...”

and further:

“To deny or withhold pension is to strip a person of the security they have justly earned...”

Though the present case concerns gratuity rather than pension, the underlying constitutional principle remains identical. Retirement benefits earned over decades of service cannot be defeated through mere executive interpretation unsupported by lawful amendment in the governing statutory framework.

38.The respondents have also failed to demonstrate that before taking the impugned decision the matter was ever placed before the Board of Governors for deliberation and approval in accordance with law.

39.The statutory scheme governing the Foundation clearly envisages that policy decisions affecting service structure and retirement benefits must emanate from the competent forum constituted under the Act. Any action taken by subordinate functionaries in derogation of powers vested in the Board of Governors cannot be accorded legal sanctity.

40.Consequently, the impugned letter dated 09.10.2024 withholding gratuity from the petitioner is found to have been issued without lawful authority and in excess of jurisdiction.

41.The plea of financial constraint raised indirectly through reference to Finance Division policy is equally misconceived because the respondents themselves admit that the Foundation generates its own income and gratuity payments are not dependent upon separate

Federal funding. Financial inconvenience by itself cannot furnish lawful justification for withholding accrued retirement benefits in absence of valid amendment in the rules.

42.For what has been discussed above, this petition is allowed. The Office Memorandums dated 16.10.1984 and 21.01.2015, to the extent they have been applied against the petitioner without lawful adoption by the competent authority of the National Book Foundation, as well as letter bearing No.3089 HAA-591 dated 09.10.2024 issued by respondent No.5, are declared to be without lawful authority and of no legal effect qua the petitioner. The respondents are directed to calculate and release gratuity payable to the petitioner strictly in accordance with the applicable service rules and decisions of the Board of Governors within sixty days from the date of receipt of copy of this judgment.

Announced.

(Tahir CS)

JUDGE

JUDGE

Hon’ble Justice Syed Mudasser Ameer and Hon’ble Justice Aurangzeb.

Constitution of Pakistan, 1973 — Article 199 — Autonomous statutory body — National Book Foundation — Statutory Service Rules — Finance Division Office Memorandums — Whether executive instructions can override statutory rules. Where National Book Foundation was a statutory autonomous body established under an Act of Parliament and its Service Rules were framed by the Board of Governors under section 8 of the Act, executive Office Memorandums issued by Finance Division could not override, amend or nullify the governing statutory framework in absence of lawful adoption by the competent statutory authority. (Paras. 11, 12, 19, 20, 21, 24 and 32)

Service Law — Gratuity — Statutory right — Withdrawal through executive instructions — Legality.

Chapter-IX of National Book Foundation Service Rules, 1973 expressly provided that all confirmed employees would be entitled to contributory provident fund and gratuity, while subsequent Board decision introducing pension scheme preserved option of employees “to continue the existing CP Fund plus gratuity.” Held, such accrued retirement benefits could not legally be defeated through mere executive interpretation unsupported by lawful amendment in governing rules.

(Paras. 13, 14, 15, 19, 36 and 37)

Executive instructions — Office Memorandums — Scope and legal effect — Autonomous corporations.

“Executive instructions, office memorandums or administrative notifications cannot override, amend or nullify statutory rules or rights flowing therefrom. Where an autonomous statutory body operates under its own parent statute and service rules framed thereunder, the same prevail over inconsistent executive directions unless lawfully adopted by the competent statutory authority.” (Para. 21)

Finance Division Office Memorandums — Applicability to autonomous statutory bodies — Distinction between Government servants and employees of autonomous corporations. “The distinction between Government servants and employees of autonomous statutory bodies is legally significant and cannot be ignored.” Office Memorandums issued by Finance Division “for regulation of Federal Government employees do not automatically extend to employees of autonomous corporations governed by their own statutory framework.”

(Paras. 30 and 31)

Autonomous statutory bodies — Board of Governors — Competence to regulate service structure.

“The statutory scheme governing the Foundation clearly envisages that policy decisions affecting service structure and retirement benefits must emanate from the competent forum constituted under the Act. Any action taken by subordinate functionaries in derogation of powers vested in the Board of Governors cannot be accorded legal sanctity.”

(Para. 39)

Service Rules — Amendment — Requirement of lawful adoption. Where respondents failed to demonstrate that Board of Governors ever lawfully amended Chapter-IX of the Rules or consciously adopted Finance Division Office Memorandums, gratuity could not

be withheld merely on basis of executive instructions. (Paras. 19, 24 and 38)

Retirement benefits — Constitutional protection — Gratuity not a bounty.

“It is settled law that vested and accrued retirement benefits cannot be withdrawn arbitrarily through executive instructions particularly where employees devoted their entire service careers under an existing statutory regime. Gratuity is not a matter of bounty or benevolence but a valuable service right earned through long and continuous service.”

(Para. 36)

Retirement benefits — Articles 9 and 14 of Constitution — Scope. Though controversy related to gratuity rather than pension, underlying constitutional principle remained identical because “retirement benefits earned over decades of service cannot be defeated through mere executive interpretation unsupported by lawful amendment in the governing statutory framework.” (Para. 37)

Autonomous corporations — Financial autonomy — Effect. “Once the Foundation independently manages its financial affairs and operates under its own service rules, automatic application of Finance Division instructions meant for Government servants cannot be presumed in absence of lawful adoption by the competent authority of the Foundation.”

(Para. 32)

Articles 4 & 25 — Equality and fair treatment — Selective denial of gratuity.

Where similarly placed employees and even Managing Directors had been granted gratuity while employees serving for decades were denied same benefit, selective application of executive instructions offended Article 25 of Constitution and violated mandate of fair treatment contemplated under Article 4 thereof.

(Para. 33)

Financial constraints — Whether valid ground to deny accrued retirement benefits.

“Financial inconvenience by itself cannot furnish lawful justification for withholding accrued retirement benefits in absence of valid amendment in the rules.”

(Para. 41)

Administrative interpretation — Whether can supersede statutory framework.

“Absence of any such material strengthens the petitioner’s contention that the impugned deprivation is based merely upon administrative interpretation rather than any valid amendment in the governing rules.”

(Para. 35)