MINUTES OF THE MEETING OF SENATE STANDING COMMITTEE ON DEFENCE AND DEFENCE PRODUCTION HELD ON 17th MAY, 2013.

A meeting of the Senate Standing Committee on Defence and Defence Production was held on 17th May, 2013 at 11:00 a.m. in Committee Room No. 4, at the Parliament House, Islamabad. The Meeting was presided over by Senator Mushahid Hussain Sayed, Chairman SSC on Defence and Defence Production. Following Members attended the meeting:-

1) Senator Mushahid Hussain Sayed - Chairman

2) Senator Farhatullah Babar - Member

3) Senator Haji Mohammad Adeel - Member

4) Senator Col. ® Syed Tahir Hussain Mashhadi - Member

2. The meeting started with the recitation from the Holy Quran.

3. The agenda before the Committee was as under:-

i) Sale of KPT and PQA land to DHA for a pittance as reported in daily the News of April 28, 2013.

ii) Issue of AFV Ranges Nowshehra in the light of court verdicts and earlier deliberations.

iii) Issue of Building rights by CB Rawalpindi to owners of plots near old jail in the light of court verdict and earlier deliberations.

iv) Briefing on CSD shops; setting up and operational procedures, appointment of staff procedures and staff status. Whether CSD shops pay income tax & sales tax and/or these shops are allowed to sell to civilians?

v) Any other item with permission of the Chair.

4. Before the Committee took up the agenda items, Senator Farhatullah Babar drew the attention of the Chairman and Members of the Committee to the fact that the Working Paper containing official position on issues to be taken up during the meeting was provided just before the start of meeting despite his visit to the Secretary Committee office two days back asking for the same. The Secretary and staff of the Committee had been continuously pursuing with the Ministry of Defence for timely submission of Working Paper but it has become a regular feature that the Ministry does not provide working paper before the meeting which denies Members the time to prepare themselves for meaningful discussion.

5. The Chairman of the Committee taking note of the genuine and serious issue pointed out by Senator Farhatullah Babar directed the Ministry to submit working paper timely to the Senate Secretariat. The Additional Secretary MOD accepted the view point on delayed submission and assured that in future working papers will be submitted in time.  He however said that delayed submission was not by design as this time many departments were involved and the Ministry wanted to submit consolidated working paper. The Chairman and Members of the Committee reiterated the need and importance of timely compilation and submission of working papers in future.

6. The Chairman Committee decided to first take up the agenda items and issues already under consideration of the Committee and asked for an updated briefing by the relevant organizations representatives. The Director General of the Military Land and Cantonment Maj. Gen. Tahir Masood gave a brief background of the AFV Rangers Nowshehra issue and said that as per the view point of Senator Farhatullah Babar the issue has attained finality in the light of Peshawar High Court December, 2012 decision. However, since the Department / Ministry has filed four petitions / appeals regarding the matter in the Supreme Court which has neither accepted nor rejected the petitions, in their view the matter was yet to be decided by the Court and has therefore not attained finality. The Director General agreed that no stay order has been granted by the Supreme Court but said that the office of the Registrar of the Supreme Court has been issuing Notices to the parties involved which means the case was still alive and under process.

7. Senator Farhatullah Babar based on the understanding that the DG MLC&S had stated that the PHC verdict of December 6, 2012 had acquired finality appreciated the clear position taken by DG ML&C. However the DG MLCS denied having made such an admission clearly stating his position that the said verdict had not attained finality and the matter was before the Supreme Court. Senator Farhatullah Babar insisted that DG MLCS had indeed admitted in his opening remarks and demanded a copy of tape of the proceedings. The Chairman said that a copy of tape be provided to him.

8. Contesting the official position that the PHC verdict had not attained finality Senator Farhatullah Babar demanded copy of the order of the SC staying the PHC verdict of December 6, 2012. The DG MLCS admitted that there was no stay order against this particular verdict of PHC which he said was an execution order while the basic case regarding rate of the private land acquired by the army for the AFV ranges was yet to be finally decided at the Supreme Court level in which the parties involved were not appearing despite notices.  The DG MLCS stated that a number of related cases / issues were pending in the Supreme Court involving different aspects ranging from the 6% interest, the 25 % solatium and the applicability of the verdict to those who were initially not a party to the petition. He said that it could be inferred from this that the case was subjudice and had not attained finality as averred by Senator Farhatullah Babar.

9. Senator Farhatullah Babar contended that it was besides the point as to whether and how many petitions had been filed either by the department or by anyone else in the Supreme Court on any aspect of the issue. The critical issue, he said, was whether the PHC verdict of 06-12-2012 had been stayed or suspended or vacated by the Supreme Court or not. In the absence of any stay order the PHC verdict had attained finality unless the department proved otherwise. He also referred to the minutes of the last meeting held on March 4, 2013 on the subject. The meeting had expressed shock over the delay in making payment and had called for urgent action for allocation of funds either by the government or through some other internal adjustments to for payment to the affectees to settle the issue.

10. After discussion on the matter, the Committee concluded that it was clear that the PHC verdict was the final standing judicial decision in the matter and in the light of that decision the Ministry and Department should move towards closure of the case so far as compensation of principal amount was concerned as other related matters of solatium, interest etc. may be decided in due course. The Committee was of the view that the law should be upheld and orders of the Courts should be implemented by all organizations and individuals.

11. Taking up the third agenda item regarding denial of building rights by Cantonment Board Rawalpindi. The DG ML&C gave a historical background of the case to which Government of Punjab was one of the main parties both in allotment of plots as well as Court cases. He mentioned in detail the Lahore High Court Rawalpindi Bench decision dated 4th July, 2000 whereby the land of Block-“C” was to vest with the Ministry of Defence and the owners were to be duly compensated along with 12-1/2% markup by the Housing and Physical Planning Department, Government of the Punjab. He said that Punjab Government is delaying compensation and also asking for alternate land. He said that in an other order which was for Execution / implementation the Court had passed some directions to allow construction to the owners who still remained uncompensated but the main case was decided and disposed off as mentioned above.

12. Senator Farhatullah Babar however focused on the Court Verdict directing that owners be allowed to build houses on their plots and cases be registered against those obstructing it had still not been implemented. He said that the weakness in the legal position of the department came to light during last meeting of the Committee in which the official brief also contained a letter from the QMG to the Ministry proposing that the land be acquired under the Land Acquisition Act.

13. Both the DG MLC&S and the Additional Secretary Defence however assured the Committee that the letter by QMG on the subject notwithstanding, there was no move to acquire the land/plots under the Land Acquisition Act and that any apprehensions on this score should be set aside. The Committee members welcomed this categorical statement. DG MLC&S and the AS Defense stated that the issue related more to the Punjab government which, they contended, should refund the money to the allottees and pay compensation to them also to settle the issue. DG MLC&S also said that it had become a humanitarian issue and that the Punjab government should settle the issue at the earliest. Contesting this position Farhatullah Babar pointed out that in the last meeting of the Committee the department had stated that there were more than one court decisions which had resulted in some misunderstandings and that the department had sought clarity in the matter from the court. He expressed surprise that ignoring its stated position the department, disregarding the LHC verdict was now trying to throw the ball in the court of the Punjab government.

14. After discussion in the matter, it was decided that the representatives of Punjab government be also invited to the next meeting of the Committee to give their point of view.

15. On the 4th agenda item Maj. Gen. ® Anwar Saeed Khan, Managing Director, Canteens Stores Department (CSD), gave a detailed presentation about the historical evolution of the Organization which he said was currently purely a non governmental commercial organization since 1995 although previously it had been treated as a public sector organization and the decisions / policy in this regard had been changing. He said that no subsidy was being given to the Organization and it was facing losses because of operating in totally non commercial areas such as Khuzdar, Kashmor and other far flung areas in the country because its primary objective was to serve the defence forces personnel and their families. He said that mostly in focus were the CSD shops in highly commercial areas in some provincial capital cantonments but these were only a few of the 126 shops majority of which was in those areas where no private commercial entrepreneur will invest. He gave an overview of the organizational structure and management of CSD, emphasizing on the private competitive nature of the job especially the status of the staff which was private and not civil servants or defence personnel. He said that shops are primarily established for the Armed Forces personnel these are generally located in the Army Garrisons/Navy Establishment/Air Bases. At present CSD has 126 such shops, spread all over the country (including AJK & GB). He further said that the CSD shops are set up after approval by the Chairman Board of Control CSD (Quartermaster General, General Headquarters). He said that the staff of CSD is appointed after detailed scrutiny and elaborate procedural formalities / selection process, as per the best Human-resource Management practices. CSD being a Non-Government Commercial Organization, the staff has the status of employment in a private enterprise. CSD is exempted from Income Tax by the Govt. of Pakistan, however, sales tax and all other Government taxes / levies are paid by CSD in full, without any concession / relief, he added.

16. Senator Haji Mohammad Adeel pointed out that he had been living in areas where CSDs have flourished and were doing great business. He asked that whether the land on which these were established was purchased by CSD or rent was paid. The MD explained that mostly those lands / buildings were provided to CSD which were of no use to the Forces in  cantonment / Garrisons and in case of some infrastructure development investment, rent was paid which was not purely market based. Senator Haji Adeel was of the view that since in this way CSDs were subsidized they should not be allowed to sell to the civilians because other private business owners would have a disadvantage. He said that as originally envisaged the CSDs should preferably be selling to the Armed Forces only on which no one had any objection. The MD, CSD was however of the view that to bear the losses in the non profitable, non commercial areas increased marketing and economies of scale were important.

17. Senator Farhatullah Babar asked whether the setting up of the Department was rooted in any executive order or it had some legislative basis. He said that in a letter of February 10, 2010 addressed by the Defence Ministry to the Zakat and Usher Division it had been stated that the “CSD is wholly owned by the federal government working under administrative control of the Ministry of Defence”. He asked for copies of the relevant executive order and the rules and regulations framed there under for the running of the department of CSD. The MD CSD stated that the CSD was a non- governmental venture created as a result of an executive order and promised to provide a copy to the members. On a question the MD said that he would prefer suitable legislation to regularize the department.

18. Senator Raja Mohammad Zafar-ul-Haq, who could not attend the meeting, conveyed in writing following observations / recommendations regarding CSD:-

• CSD be given a status of Federal Government Department.

• Its statutory rules be formulated and be published in Government Gazette

• Its service, promotion, pension, retirement rules and proper procedure for right / downsizing be devised and adopted.

• All service rules for regular and contractual employees be clearly defined and be followed in letter and spirit.

• Till the formulation of service rules as mentioned above, no employee should be removed / weeded out nor any fresh induction be made as a replacement.

• An independent Audit Team be tasked to look into the present Financial Health of the Department with regard to its bank overdraft, loans, stocks held, expenses to be incurred an projects to be completed to avoid any bankruptcy and default.

• The court cases if decided in favour of employees be adhered to in letter in spirit by the Department instead filing appeals in the next court of law.

19. The Chairman of the Committee appreciating the concern and recommendations of Senator Raja Mohammad Zafar-ul-Haq asked the Ministry and the MD, CSD to seriously look into all these recommendations as other Members have also spoken about the need for legislation. It was decided that the CSD will provide details about the executive orders and other instructions regarding its legal cover and may propose legislation in this regard through the Ministry of Defence.

20. The Committee took the first notified agenda item as the last item of the meeting. Brig. Mohammad Abdullah, the Administrator DHA Karachi briefed the Committee about the purchase of land by KPT and PQA which he said was done through the normal procedure and process and as a result of agreement between parties. He said that if there was an issue of sale on lower prices then the PQA and KPT should be asked to explain but so far as the whole process is concerned DHA can only provide information on its part. He said that one reason the price appeared very low was that it was a lease deed and payment had to be made in installments.

21. Senator Farhatullah Babar, quoting from the 2007 lease deed agreement said that the KPT and PQA had leased several thousand acres of land to DHA for a pittance of Rs 2.50 per square meter. He said that land belonged to the provincial government and both KPT and PQA had to explain as to how they could transfer land not belonging to them to another federal government department. He said that it was most discomforting to note that the KPT and PQA agreed to lease out the land at such low price in return of assurance of getting plots to their officers. This he said was evident from the lease deed itself. On its face it appeared an underhand deal in which one party sought to buy land at a pittance and the other party, which was not even the rightful owner, agreed to sell it on the promise of getting developed plots for its officers. He said no one would have come to know of it if the issue had not come to the fore as a result of the suo moto case of law and order in Karachi by the Supreme Court. He demanded a thorough investigation into the matter. Senator Farhatullah Babar also pointed out that a meeting was held last month in the office of Deputy Commissioner South Karachi to consider implementation of the order of the SC in the suo moto case directing that information be provided regarding allotment of Sindh government’s property by the KPT and PQA to the DHA.  The representatives of KPT, PQ and MEO Karachi did not attend the meeting which seemed to indicate that they were at a loss for appropriate explanation, he said.

22. It was decided that presence of all the stakeholders including KPT and PQA as well as the provincial / district administration was essential for a meaningful debate and inquiry into the matter. The Committee will either invite all stakeholders for a meeting at Islamabad or may take up the issue during visit to Karachi in the presence of all stakeholders.

23. The meeting ended with a vote of thanks to and for the chair.

(Amjed Pervez)                                                                (Mushahid Hussain Sayed)
Special Secretary /Secretary Committee                            Chairman Committee