Detailed judgement in SECP chairman case: fair selection process needed for key public sector posts: Supreme Court

The Supreme Court on Thursday released the detailed judgement in the case concerning the appointment of Chairman of SECP Muhammad Ali. The Court had, via its short order on a petition filed by former head of SECP's Law Division Ashraf Tawana last month, declared the SECP Chairman's appointment to be illegal and void.
The detailed judgement, authored by Justice Jawwad S Khawaja, minutely scrutinised the process leading to the appointment of the Chairman in the light of relevant legal requirements. According to the detailed judgement, Section 5 of the SECP Act of 1997 "lays down strict criteria for who may be appointed to the office of Commissioner and Chairman SECP".
"An examination of the official record reveals that the federal government, which is the appointing authority, continually ignored the demands of the law in the matter of appointments. The record makes it amply clear that the process leading to the impugned appointment was neither inclusive, nor competitive nor transparent. The Supreme Court has repeatedly elaborated upon the principles regarding appointments to important statutory offices, most recently in 2011, in its judgement in Chairman Ogra's case. The same principles have been reiterated in today's judgement.
The Court regretted that, "in the last couple of years, the federal government did nothing to rectify glaring flaws in important appointments made by it, including the impugned appointment". Justice Khawaja observed that "issues of appointments to senior positions in public bodies, which have been highlighted in the petition and in other cases which have come up before us, have underscored the need for a transparent, inclusive and demonstrably fair process for the selection of persons to be appointed to such senior positions".
The Court has, therefore, directed the federal government to conduct a review of the process whereby appointments have been, and still are being made and "consider the necessity of putting in place independent mechanisms and of framing open, fair and transparent processes so that the objectives for which public bodies are established can be efficiently achieved".
Copies of the judgement have been sent to the Prime Minister's office and the Law Ministry. The Court also flagged certain unfinished inquiries for the attention of the SECP's Policy Board. A compliance report has been sought within 45 days. The petitioner also apprised the Court that for 13 out of it its 17 years of existence, the SECP was made to function with fewer Commissioners than even the minimum statutory quorum - a situation which confirms the impression that legal requirements were grossly ignored when making important statutory appointments.
To deal with legal conundrums resulting from defective constitution of the Commission, in 2003, Section 5(5), a "saving clause", was added to the SECP statute through a Money Bill. The Court noted that the swift procedure provided for in the Constitution for Money Bills cannot be used for unrelated law-making, such as this one. The insertion has thus been struck down as unconstitutional.
The Court repelled the petitioner's argument that appointing an industry insider, such as a broker, should, on that count alone, be deemed illegal because such appointments always lead to a situation of "regulatory capture". The Court has held that while policy debate on this issue may well be worth the legislature's attention, the Court cannot accept it since the law framed by Parliament does not presently lend it any support.
Instead, experience gained as a broker in the securities market has been positively listed in the Act as a positive qualification, making someone eligible for appointment to the office of Commissioner SECP. The petitioner had also challenged the legality of the SECP's no-cause termination policy, under which even senior officers, such as the petitioner, could be instantly terminated without having to give any reasons.
The Court struck this clause down as illegal and unconstitutional, since neither the SECP Act nor the Constitution allow for such important decisions to be made in an unreasonable, arbitrary or tainted manner. The Court also explained that if the sword of 'no-cause termination' keeps hanging over the heads of employees, "it is hard to expect from them the uncompromising independence and fairness which the job of a public servant requires". To comply with the demands of the law and the Constitution, the SECP has been directed to frame a new termination policy. This petition was directly entertained under Article 184(3) on account of the vast regulatory ambit of the SECP, which extends to businesses and securities markets all over the country, valued at more Rs 4 trillion.
"Questions concerning this institution's affair are, therefore, matters of public importance, being directly related to the enforcement of the fundamental rights of the people of Pakistan. The Court has, however, clarified that since the legal principles have now been elucidated, if similar petitions arise in the future, recourse to the High Courts might be sufficient."-PR