IN THE SUPREME COURT OF PAKISTAN 
(APPELLATE JURISDICTION) 
 
 
PRESENT: MR. JUSTICE MIAN SAQIB NISAR, CJ 
 
 
MR. JUSTICE UMAR ATA BANDIAL 
 
 
MR. JUSTICE FAISAL ARAB 
 
 
CIVIL APPEAL NO. 1352 OF 2013 
(on appeal from the judgment of the Islamabad 
High Court, Islamabad dated 2.10.2012 passed 
in I.C.A. No.222/2010) 
 
 
Pakistan Telecommunication Employees Trust  
…Appellant(s) 
 
VERSUS 
Federation of Pakistan, etc. 
…Respondent(s) 
 
For the Appellant(s): 
Mr. Hamid Khan, Sr.ASC 
M.S.Khattak, AOR 
 
 
For the Respondent(s):  
Abdul Rasheed Awan, DAG 
Raja Abdul Ghafoor, AOR 
 
 
Date(s) of Hearing: 
  16.05.2017 & 22.05.2017 
    … 
ORDER  
 
 
MIAN SAQIB NISAR, CJ.— The facts of this appeal are that 
the appellant, Pakistan Telecommunication Employees Trust (the Trust), 
manages the Pakistan Telecommunication Corporation Employees 
Pension Fund (the Pension Fund), certain amounts of which were invested in 
various banks and schemes etc. The Zakat and Ushr Department 
deducted zakat in terms of Section 3 the Zakat and Ushr Ordinance, 
1980 (the Ordinance). The appellant challenged such deductions through a 
constitution petition before the learned High Court on the ground that 
the appellant was not a sahib-e-nisab and thus, could not be made 
subject to compulsory deduction of zakat. The writ petition was 
dismissed. The appellant’s Intra-Court Appeal was also dismissed by the 
learned Division Bench of the High Court vide impugned judgment, 
hence this appeal with the leave of the Court dated 5.11.2013, to 
consider, inter alia, the following questions:- 
CIVIL APPEAL NO. 1352 OF 2013 
 
-: 2 :-
(a) 
Whether the appellant, being a trust, does not fall 
within the definition of sahib-e-nisab provided in 
Section 2(xxiii) of the Ordinance being a successor to 
the Pension Fund under Sections 45 and 46 of the Act? 
(b) 
Whether the deduction of zakat in the instant case does 
not fall within the ambit of Section 3 of the Ordinance, 
which is the charging section read with Schedule-I 
appended therewith? 
(c) 
Whether the Pension Fund, on which zakat is to be 
deducted, does not fall within the meaning of annuities 
as defined in the Ordinance? 
(d) 
Whether zakat is not payable under Section 3 of the 
Ordinance by the appellant as it does not own or 
possess any assets rather held the same as amanat, on 
which no zakat is leviable? 
(e) 
Whether zakat is not payable by the appellant as the 
funds being administered by it are not its assets but its 
liability towards the beneficiaries of the Trust in terms 
of Sections 44 to 46 of the Act? 
(f) 
The Pension Fund being a joint account for the 
beneficiaries/pensioners, who themselves might be 
liable to deduction of zakat, whether the deduction of 
zakat prior to the onward payment of money to them 
would amount to double taxation?   
 
2. 
 
Heard. For the sake of brevity, the arguments of the learned 
counsel for the parties are not recorded separately and shall be reflected 
in the course of the opinion. The learned counsel for the respondents 
raised a preliminary objection regarding the maintainability of the writ 
petition before the learned High Court, that the appellant was 
established in 1996 and zakat was continuously deducted since 1997, 
whereas the writ petition was filed in 2004, therefore, the same is hit by 
CIVIL APPEAL NO. 1352 OF 2013 
 
-: 3 :-
laches. We find that the principle of laches does not apply in this case 
because zakat was deducted from the appellant each year which gave 
rise to a fresh cause of action to challenge the validity of such deduction. 
Thus, we hold that the writ petition was maintainable.  
3. 
 
The fundamental question in this appeal is: what is the legal 
status of the appellant and whether it falls within the scope of Section 3 
of the Ordinance for the purposes of deduction of zakat? In order to 
answer this question, we find it expedient to discuss the law pertaining 
to zakat. Section 1(2) of the Ordinance provides for the extent of the 
application of the Ordinance: (i) territorial jurisdiction, in that it extends 
to the whole of Pakistan; (ii) subject matter jurisdiction, in that it 
pertains to payment and recovery of zakat; and (iii) parties’ jurisdiction, 
in that the Ordinance applies only to Muslim citizens of Pakistan and a 
company, or other association of persons, or body of individuals, 
whether incorporated or not, majority of the shares of which is owned, 
or the beneficial ownership of which is held, by such citizens. Section 
3(1) of the Ordinance is important which reads as follows:- 
 
3. Charge and collection of Zakat.– (1) Subject to the 
other provisions of this Ordinance, Zakat in respect of 
assets mentioned in the First Schedule shall be charged 
and collected, on compulsory basis, for each Zakat year, at 
the rates and in the manner specified therein, and as may 
be prescribed, from every person who is on the Valuation 
Date, and for the whole of the preceding Zakat year been, 
sahib-e-nisab, and who owns or possesses such assets on 
the Valuation Date: 
 
The aforementioned section is the charging provision according to which 
zakat is to be compulsorily charged and collected for each zakat year in 
respect of the assets mentioned in the First Schedule from every person 
CIVIL APPEAL NO. 1352 OF 2013 
 
-: 4 :-
who: (i) is, on the Valuation Date, and for the whole of the preceding 
zakat year been, sahib-e-nisab, and (ii) owns or possesses such assets 
on the Valuation Date. Sahib-e-nisab has been defined in Section 2(xxiii) 
as under:- 
 
2(xxiii) ‘sahib-e-nisab’ means a person who owns or 
possesses assets not less than nisab, but does not include:  
(a) 
……………………………………………………............... 
(b) 
a statutory corporation, a company or other 
enterprise, owned wholly, directly or indirectly, by 
the Federal Government, a Provincial Government, 
a local authority or a corporation owned by the 
Federal Government or a Provincial Government, 
either singly or jointly with one or more of the other 
three;  
� 
(i)  
an institution, fund, trust, endowment or society:-  
(a) 
registered as a charitable organization under 
the Societies Registration Act, 1860 (XXI of 
1860), or as a company under section 26 of the 
Companies Act, 1913 (VII of 1913), or 
registered or approved as a charitable or social 
welfare organisation under any other law for 
the time being in force, and  
(b) 
approved by the Central Board of Revenue for 
the purposes of section 47 of the Income Tax 
Ordinance, 1979 (XXXI of 1979); 
[Emphasis supplied] 
 
According to the above definition, sahib-e-nisab is a person who owns or 
possesses assets not less than nisab which has been defined in Section 
2(xva) of the Ordinance as follows:- 
 
2(xva) ‘nisab’ in relation to assets liable to Zakat, except 
agricultural produce and animals fed free in pastures, means 
612.32 grams of silver, or cash or gold, or goods for trade, 
CIVIL APPEAL NO. 1352 OF 2013 
 
-: 5 :-
or any assets liable to Zakat under Shariah, the aggregate 
value of which is equal to the value of 612.32 grams of 
silver, as notified by the Administrator-General for each 
Zakat year or, in the case of a person whose assets liable to 
Zakat consist only of gold, 87.48 grams of gold;   
 
4. 
 
It is not disputed that the Pension Fund was less than the 
nisab prescribed in Section 2(xva) ibid. The main contention of the 
learned counsel for the appellant is that the Ordinance does not apply to 
the appellant as it is not a sahib-e-nisab in terms of Section 2(xxiii)(b) of 
the Ordinance, as it is a statutory corporation wholly owned by the 
Federal Government. In this regard, he relied upon the judgment 
reported 
as 
Administration 
General 
Zakat, 
Central 
Zakat 
administration, Islamabad and others Vs. Pakistan Insurance 
Corporation through Secretary and others (PLD 2016 SC 468). He 
also argued that the Ordinance did not apply to the appellant as 
according to Section 1(2) thereof, it applied only to Muslim citizens which 
he contended the appellant is not. On the other hand, learned counsel 
for the respondents submitted that the appellant is not owned by the 
Federal Government, thus is a sahib-e-nisab and is not exempt from the 
deduction of zakat. Thus, we must examine the nature and status of the 
appellant, 
for 
which 
the 
relevant 
provisions 
of 
the 
Pakistan 
Telecommunication (Re-organisation) Act, 1996 (the Act). Section 2(w) of 
the Act defines ‘Trust’ which “means the Pakistan Telecommunication Employees 
Trust established under section 44;” Section 44(1) of the Act provides that “As 
soon as may be, after the commencement of this Act, the Federal Government shall, by 
notification in the official Gazette, establish a trust to be called the Pakistan 
Telecommunication Employees Trust.” According to sub-section (2) thereof, the 
Trust shall be a body corporate, having perpetual succession and a 
common seal with power (subject to the provisions of the Act) to acquire and hold 
CIVIL APPEAL NO. 1352 OF 2013 
 
-: 6 :-
property, both moveable and immovable, and shall sue and be sued by 
its name. Sub-section (3) stipulates that the Trust is to be managed by a 
Board of Trustees (the Board) consisting of six trustees, three to be 
appointed by the Federal Government and three by Pakistan 
Telecommunication Company Limited (the Company), for a period of three 
years, unless earlier removed by the appointing authority. Section 45(1) 
of the Act provides:- 
 
45. Pension Fund.- (1) The Federal Government shall, by 
notification in the official Gazette, order that from the 
effective date, all assets of the Pakistan Telecommunication 
Corporation Employees Pension Fund as created by a Trust 
Deed dated the 2nd April 1994, hereinafter referred to as the 
"Pension Fund", and such liabilities as are specified in the 
notification, shall vest in and shall become the assets and 
liabilities of the Trust:  
 
Provided that……………………………………………… 
 
Sub-section (3) thereof lists the amounts and contributions that the 
Fund is to consist of:- 
 
(3) The Pension Fund shall consist of-  
(a) 
amounts 
received 
from 
the 
Pakistan 
Telecommunication Corporation Employees Pension 
Fund referred to in sub-section (1);  
(b) 
contribution to be paid by the Company under sub-
section (2);  
(c) 
annual contribution to be paid by the Company at the 
commencement of each financial year;  
(d) 
investments and the profits, gains and other returns 
accrued on such investments; and  
(e) 
donations and other contributions by individuals or 
any aid-giving agencies.  
CIVIL APPEAL NO. 1352 OF 2013 
 
-: 7 :-
Section 46 of the Act goes onto stipulate the functions and powers of the 
Trust which read as under:- 
 
46. Functions and powers of the Trust.- (1) For carrying 
out the purposes of the Trust, the Board of Trustees shall- 
(a) 
take over and assume the liability of the Pension 
Fund, including contributions of the Company to the 
Pension Fund;  
(b) 
obtain payment from the Company of the amount 
determined by Actuary as representing the unfunded 
proportion of the accrued pension liabilities to be 
discharged by the Company;  
(c) 
determine, at the commencement of each financial 
year, the amount to be contributed to the Pension 
Fund by the Company; and  
(d) 
make provision for the payment of pension to 
telecommunication employees to the extent of their 
entitlement.  
 
(2) In performance of its functions, the Board of Trustees 
shall-  
(a) 
have the exclusive right to determine the amounts, if 
any, payable in respect of pension benefits to the 
telecommunication employees;  
(b) 
administer and operate the Pension Fund; 
(c) 
specify and certify the requirements to be fulfilled for 
payments of the pensions to be made from the 
Pension Fund;  
(d) 
appoint, promote, remove and exercise discipline and 
control over its employees; (e) enter into contracts;  
(f) 
acquire, lease, encumber, dispose of, exchange, 
invest or otherwise deal with any moveable or 
immovable property or any interest therein; and  
(g) 
exercise all such powers as may be necessary or 
incidental to the performance of any of its functions 
or the exercise of any of its powers.  
 
CIVIL APPEAL NO. 1352 OF 2013 
 
-: 8 :-
(3) The Manager of the Board of Trustees shall be 
responsible for administrative control of the employees of 
the Trust and day to day working of the Trust as may be 
assigned to him by the Board of Trustees.  
 
A cumulative reading of above provisions makes clear that the appellant 
is an independent and autonomous body which is not wholly owned, 
directly or indirectly, by the Federal Government. Mere creation by a 
notification issued by the Federal Government under Section 44 of the 
Act does not, to our mind, mean that the Trust is wholly owned by the 
Federal Government. It can acquire and hold property, both moveable 
and immoveable, and can sue and be sued in its own name. The Trust is 
managed by the Board which is free to take decisions by simple majority, 
and just because half of the members of the Board are appointed by the 
Federal Government, one cannot conclude that the Trust is owned by the 
Federal Government. For all its actions, it is neither required to obtain 
prior permission nor is bound to get the same validated from the Federal 
Government, apart from the framing of rules for the management and 
conduct of business of the Trust in accordance with Section 44(9) of the 
Act. We find that this single factor is not sufficient to establish whole 
ownership of the Federal Government. Furthermore, as is clear from 
Section 45(1) of the Act, a Pension Fund was created, albeit by the 
Federal Government through a notification in the official Gazette, and all 
the assets of Pakistan Telecommunication Corporation (PTC) Employees 
Pension Fund created by a trust deed dated 2.4.1994, and such 
liabilities as were specified in the notification, vested in and became the 
assets and liabilities of the appellant. As is manifest from Section 45(2) 
of the Act, the Federal Government makes no contributions whatsoever 
to the Pension Fund. A bare reading of Section 46 of the Act makes clear 
that the Board is free and independent to exercise its powers and carry 
CIVIL APPEAL NO. 1352 OF 2013 
 
-: 9 :-
out its functions in accordance with law with no interference whatsoever 
from the Federal Government. Moreover, Section 53(2) of the Act lends 
support to the proposition that the Pension Fund is owned by the Trust 
and not the Federal Government, as “The balance of the Pension Fund shall, on 
the winding up of the Trust, be paid to the Federal Government…” suggesting that 
till winding up of the Trust, the Pension Fund is not owned by the 
Federal Government but the Trust itself. Hence it is safe to say that the 
appellant is not owned, directly or indirectly, by the Federal Government 
and is therefore not excluded from the definition of sahib-e-nisab under 
Section 2(xxiii)(b) of the Ordinance. Additionally, the appellant is no 
doubt a body of individuals, albeit not incorporated, the beneficial 
ownership of which is held, by Muslim citizens, as it is not the case of 
the appellant that the majority of the employees/pensioners are non-
Muslims; thus, the Ordinance is applicable to the appellant in terms of 
territorial, subject matter and parties’ jurisdiction contained in Section 
1(2) thereof. 
 
As regards the National Insurance Corporation’s case (supra) 
relied upon by the learned counsel for the appellant, suffice it to say that 
in the said judgment this Court declared the Corporation to be exempt 
from the deduction of zakat as it was wholly owned by the Federal 
Government. The said case is distinguishable from the instant case and 
cannot be relied upon, as we have held above, the appellant is not wholly 
owned, directly or indirectly, by the Federal Government.  
5. 
 
Learned counsel for the appellant also argued that the 
Ordinance does not apply to the appellant as it is not a sahib-e-nisab in 
terms of Section 2(xxiii)(i) of the Ordinance being a charitable trust 
meant for the social welfare of the employees of the Company. In this 
regard, it is to be noted that as reproduced above, an institution, fund, 
trust, endowment or society is exempt from deduction of zakat in terms 
CIVIL APPEAL NO. 1352 OF 2013 
 
-: 10 :-
of Section 2(xxiii)(i) ibid only if it meets two criteria: (a) it is registered as 
a charitable organization under the Societies Registration Act, 1860, or 
as a company under Section 26 of the Companies Act, 1913, or 
registered or approved as a charitable or social welfare organization 
under any other law for the time being in force; and (b) it is approved by 
the Central Board of Revenue for the purposes of Section 47 of the 
Income Tax Ordinance, 1979. When the learned counsel for the appellant 
was confronted with this provision, he candidly conceded that the 
appellant is not registered as a charitable or social welfare organization 
under any relevant law. Yet, he argued that the trust has been created 
for a public purpose, namely to pay pension to the government 
employees of the Pakistan Telephone and Telegraph Department (the 
Department) which later became the employees of the Company, therefore, 
it should be exempted from the deduction of zakat. We do not find that 
the appellant is involved in any social welfare or charitable activity, 
rather it only provides pension to the retiring employees of the erstwhile 
Department. In this regard, this Court has held in various judgments 
that pension is not bounty, but is a right acquired in consideration of 
past service. The right to pension is a well-earned right subject to 
fulfillment of the conditions provided in the law. Learned counsel also 
submitted that the provision ibid should be construed in a wide manner 
to encompass all types of trusts, including the appellant, and not be 
restricted to those who fulfill part (a) and (b) of Section 2(xxiii)(i) supra. 
We are of the view that the law is clear, in that the appellant, albeit a 
trust (note:- certain provisions of the Trusts Act, 1882 are applicable to the appellant 
according to Section 52 of the Ordinance), must fulfill the conditions contained in 
part (a) and (b) of Section 2(xxiii)(i) ibid which admittedly the appellant 
does not. We are not willing to read in ‘any type of trust’ into Section 
2(xxiii)(i) ibid as that would render part (a) and (b) thereof to be entirely 
CIVIL APPEAL NO. 1352 OF 2013 
 
-: 11 :-
redundant, and redundancy cannot be attributed to the legislature. 
Therefore, the appellant is not a trust that falls within the provisions of 
Section 2(xxiii)(i) of the Ordinance and is thus not excluded from the 
definition of sahib-e-nisab. 
6. 
 
Learned counsel for the appellant also argued that the 
Pension Fund is not an asset of the appellant, rather it (the appellant) is 
only a conduit and merely holds the Pension Fund on trust for the 
employees/pensioners of the Company as amanat, thus the appellant is 
exempt from payment of zakat. According to the learned counsel, vesting 
in management cannot be equated with vesting in ownership. In this 
behalf, he relied on the case of Board of Foreign Missions of the 
Presbyterian Church in the United States of America through Lahore 
Church Counsel Vs. the Government of the Punjab through 
Secretary Education, Civil Secretariat, Lahore and another (1987 
SCMR 1197). As mentioned above, under Section 45 of the Act, all 
assets of the PTC Employees Pension Fund and such liabilities as were 
specified in the notification, stood vested in the appellant and became 
its assets and liabilities. Under Section 46 of the Act, the Board is to 
take over and assume the liability of the Pension Fund, including 
contributions of the Company to the Pension Fund [clause (a)]. 
Furthermore, the Board is authorized to, inter alia, administer and 
operate the Pension Fund [Section 46(2)(b)] and acquire, lease, encumber, 
dispose of, exchange, invest or otherwise deal with any moveable or 
immoveable property or any interest therein [Section 46(2)(f)]. Thus, the 
appellant clearly holds and possesses the assets, i.e. the Pension Fund. 
It is pertinent to mention here that in the definition of sahib-e-nisab 
under Section 2(xxiii) of the Ordinance, the phrase used is “a person who 
owns or possesses assets”. Likewise, the requirement of Section 3 ibid is also 
that “who owns or possesses such assets on the Valuation Date”. The word ‘or’ 
CIVIL APPEAL NO. 1352 OF 2013 
 
-: 12 :-
signifies that to ‘own’ and ‘possess’ are separate and disjunctive. To 
qualify as a sahib-e-nisab and to fall within the ambit of the charging 
section (Section 3 of the Ordinance), a person may not necessarily be the owner 
of an asset rather need only possess the same. Therefore though in the 
above discussion we have found that for all intents and purposes it is the 
Trust that owns or has the legal title to the assets, even if it is accepted 
that the real ownership is the beneficial ownership which vests in the 
employees/pensioners who are the beneficiaries of the Pension Fund, the 
Trust being in possession of such Fund would still qualify as a sahib-e-
nisab under Section 2(xxiii) of the Ordinance and would fall within the 
ambit of Section 3 thereof and be liable to payment of zakat.  
As regards the case of Board of Foreign Missions of the 
Presbyterian Church in the United States of America relied upon by 
the learned counsel for the appellant, though it was observed by this 
Court that the word ‘vest’ is a word of variable import, not having a fixed 
connotation and does not necessarily mean to ‘vest in title’, yet the facts 
of the said case are entirely distinguishable from the instant case. The 
issue involved therein was that whether after taking over of the 
management of the privately managed schools by the Federal 
Government, the property owned by them vested in the Government or 
not. The Court finally held that the intention of Martial Law Regulation 
No.118 manifestly was only to take over the management of the 
institutions and not to confiscate the property in which the privately 
managed schools were being run. Thus, the ratio of the said case is not 
attracted to the instant case.  
7. 
 
We now advert to the argument of the learned counsel for 
the appellant that zakat is payable on assets and not liabilities, and that 
the Pension Fund is entirely a liability. Accepting this contention would 
mean that all banks and financial institutions, etc. which hold non-
CIVIL APPEAL NO. 1352 OF 2013 
 
-: 13 :-
charitable funds and endowments, etc. would also be exempt from zakat 
for the mere reason that such funds and endowments, etc. are liabilities 
held for the depositor, account holder or beneficiary. This would be 
ludicrous. Therefore, we do not find any force in this argument which is 
hereby repelled. In fact, the balance sheet of the appellant reflects that 
upon investment of the amounts in the Pension Fund, the appellant has 
earned a certain amount of income. This negates the argument that the 
Pension Fund is a liability.   
8. 
 
Finally, the learned counsel for the appellant submitted that 
deducting zakat from the appellant would amount to double taxation as 
zakat would subsequently be deducted from the person who eventually 
receives the pension (if he is a sahib-e-nisab). To our mind, this prospect is 
misconceived. Zakat under the Ordinance is collected only once a year. If 
in one year, zakat was deducted from the appellant, and subsequently an 
employee/pensioner was determined to be entitled to pension and was 
made such payment from the Pension Fund, for the next year when such 
pensioner holds and possesses his pension amount, if he fulfills the 
conditions of Section 3 of the Ordinance and is a sahib-e-nisab, it is only 
he who would be liable to pay zakat upon the amount held by him, and 
not the appellant which has ceased to hold and possess such amount. 
Therefore, there is no possibility of double taxation and this argument 
too, is rejected. 
9. 
 
As we have found above that the appellant is a sahib-e-nisab 
and the Pension Fund is an asset owned and possessed by the appellant, 
therefore, it (the appellant) is liable to compulsory payment of zakat under 
Section 3 of the Ordinance, thus the question as to whether the Pension 
Fund does not fall within the meaning of annuities as defined in the 
Ordinance does not need any deliberation. During the course of 
arguments, the learned counsel for the appellant gave up the argument 
CIVIL APPEAL NO. 1352 OF 2013 
 
-: 14 :-
regarding 
the 
Pension 
Fund 
being 
a 
joint 
account 
for 
the 
beneficiaries/pensioners. 
10. 
 
In the light of the above, we do not find any reason to 
interfere in the impugned judgment. Resultantly, this appeal is 
dismissed. 
 
 
CHIEF JUSTICE 
 
 
 
 
JUDGE 
 
 
 
 
JUDGE 
Announced in open Court 
on 4.8.2017 at Islamabad 
Approved for reporting 
Mudassar/  
