Petition against SECP chairman: Supreme Court asks Finance Secretary to submit report

The Supreme Court on Thursday issued directives to Federal Finance Secretary to submit a detailed report within a fortnight in response to a petition challenging the appointment of Muhammad Ali Ghulam Muhammad as Chairman of the Securities and Exchange Commission of Pakistan (SECP).
A three-member bench of Justice Mian Shakirullah Jan, Justice Anwar Zaheer Jamali and Justice Tariq Parvez also issued notices to respondents - the Federal government through Finance Secretary, Chairman SECP, Chairman Securities and Exchange Policy Board, Commissioner (company law division) SECP and Director of the SECP's Human Resource department to file a reply in the matter.
The bench directed all the respondents to file a reply because petitioner's counsel Afnan Kundi filed an amended petition with a plea to the court to stop the incumbent Chairman SECP from working, but the bench observed that right of defence must be given to the respondents to present their point of view before the court. Appearing on notice, Finance Secretary Abdul Wajid Rana sought some time to file a reply, saying that he had assumed the charge of his office a week ago. He assured the bench that he would comply with court orders.
The petition challenging the appointment of SECP chairman was moved by former Chief of the SECP's legal department Muhammad Ashraf Tiwana, seeking court direction to the government for immediate appointment of a new Chairman SECP and to complete the constitution of the commission with persons of integrity, competence and professionalism who have no direct or remote conflict of interest and are not nominees and cronies of lobbies and interest groups in the regulated sectors.
Being an autonomous statutory body, the SECP regulates corporate and financial sectors and all corporate entities and companies across Pakistan, including the securities market, non-banking finance sector, insurance industry, stock markets, credit rating agencies, brokers, surveyors and auditors.
The petitioner pleaded the apex court to declare the appointment of individuals who are either members of stock and commodity exchanges or brokers, directors or shareholders of brokerage companies as Commissioners or Chairman of the SECP as against the law, equity, justice, fairness, public policy and ultra vires of the law, constitution and principles of natural justice.
The petitioner also requested the court to strike down Section 5 (5) of the SECP Act introduced through Finance Act 2003 for violating constitutional provisions like Articles 73 (procedure with respect to money bills) and 75 (president's assent to bills). Sub-section 5 of Section 5 of the SECP Act 1997 states: "No act or proceeding of the Commission shall be invalid by reason only of the existence of a vacancy in, or defect in the constitution of the Commission."
This insertion was given an effect through the Finance Act 2003, but the Supreme Court through the 2009 Sindh High Court Bar Association case and the 2010 National Bank of Pakistan case held that changes introduced through the Finance Act were unconstitutional.
The petitioner argued that the commission is not properly constituted and its affairs are being illegally run by the Chairman and Commissioner Tahir Mehmood under the garb of Section 5(5) of the SECP Act and thus contributing to the failure of the apex regulator to discharge its duty in accordance with law.
The petitioner called for necessary amendments to the existing SECP Act as well as to a new SECP bill pending in Parliament in a way to prohibit appointment of individuals with conflict of interest as commissioners and chairman of the SECP in future and ensure avoidance of "regulatory capture" of the organisation in line with best international practices.
The petitioner requested the court to strike down June 13, 2011 termination order of the petitioner and declare the decision to abolish the SECP's law division as illegal for being mala fide and against public interest. He requested the court to direct the government to introduce necessary amendments in the SECP Act as well as the new SECP Bill pending in parliament to prohibit the appointment of individuals with conflict of interest as commissioners and chairman SECP in future.