However, Chief Justice Asif Saeed Khosa rejected the withdrawal bid and took up the petition as a public interest litigation under Article 184.
During the hearing, the chief justice said the notification issued on the matter on August 19 mentioned an 'extension' while the notification issued by the Prime Minister's Office says the army chief has been reappointed'.
"As per rules, there is no authority of extending army chief's tenure or his reappointment. The government can only suspend his retirement and the army chief has not retired yet, Khosa said.
Khosa after suspending the government's notification adjourned the hearing until Wednesday.
Prime Minister Khan had approved an extension to the tenure of General Bajwa for another three years, citing "regional security environment".
Ties between India and Pakistan worsened following India's decision on August 5 to revoke Jammu and Kashmir's special status under Article 370.
Khan also took into account the ongoing Afghan peace talks between the US and the Taliban militants, facilitated by Islamabad, for extending Bajwa's tenure.
"General Qamar Javed Bajwa is appointed Chief of Army Staff for another term of three years from the date of completion of current tenure," according to the notification.
Khosa during the hearing said that only the president of Pakistan can extend the tenure of the Army chief.
He also observed that when the matter was discussed in the Cabinet, only 11 out 25 members approved the extension.
Attorney General Anwar Mansoor contested the observations by the chief justice, saying that the extension was announced after approval of the president.
However, the chief justice suspended the extension notification and fixed the next hearing for further proceedings.
It is for the first time that the top court has suspended a notification by the government to extend service of the powerful army chief.
The Army so far has not commented on the development.
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