Legal Principle & Question Decided

Ruling Summary: This decision was rendered by the Islamabad High Court on 2023-12-31, officially reported as 2024 CLD 1004. In this matter between Hyderabad Chamber of Commerce and Industry (HCCI) through duly JUDGMENT and the Respondent, the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.

Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.

Full Judgment Text & Judicial Ruling

Court Name: Islamabad High Court Judge(s): Miangul Hassan Aurangzeb Title:Hyderabad Chamber of Commerce and Industry (HCCI) through duly

JUDGMENT

Reported As: 2024 CLD 1004, PLD 2024 Islamabad 350, PLJ 2024 Islamabad 256 Result: Petition allowed Judgment

JUDGMENT MIANGUL HASSAN AURANGZEB, J. Through this judgment, I propose to decide Appeal No.56/2022 and Writ Petition No. 56/2023 since they entail certain common features. 2. Through Appeal No.56/2022 filed under Section 21(4) of the Trade Organizations Act, 2013 ("the TO Act, 2013") the appellant, Hyderabad Chamber of Commerce and Industry ("Old-HCCI"), impugns the order dated 01.04.2022 passed by the Committee of the Federal Cabinet whereby its appeal against the order dated 27.01.2020 passed by the Directorate General of Trade Organizations ("DGTO") was turned down. Through the said order dated 27.01.2020, the licence issued to the Old-HCCI was cancelled. 3. Through Writ Petition No.158/2023 the petitioner, Old-HCCI, questions the grant of licence dated 20.04.2022 by the Ministry of Commerce to the New-HCCI under Section 3 of the 2013 Act. 4. The record shows that on 16.03.1959, the Ministry of Commerce, Government of Pakistan granted a licence to Hyderabad Chamber of Commerce and Industry with the direction that it be registered as a company with limited liability. On 14.07.1960, the Old-HCCI was incorporated as a company under the provisions of the erstwhile Companies Act, 1913. On 07.05.2008, the Ministry of Commerce renewed the licence of the Old-HCCI as a trade organization under the provisions of Section 3 of the Trade Organizations Ordinance, 2007 ("the TO Ordinance, 2007"). This licence was valid for a period of three years and was due to expire on 06.05.2011.

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5. The TO Act, 2013 was enacted on 20.02.2013. Section 6(1) of the said Act requires a trade organization to renew its licence every five years, whereas Section 6(2) provides that an application for the renewal of licence shall be made to the DGTO ninety days prior to its expiry. In terms of the proviso to Section 6(2) the DGTO, on sufficient cause being shown, by an order in writing, may extend the said period but not for a period exceeding thirty days. Section 7(1)(a) of the TO Act, 2013 provides that the licence granted to a trade organization shall be cancelled by the Federal Government where a trade organization fails to apply for the renewal of the licence granted under Section 3 of the said Act within the prescribed or extended period allowed by the DGTO. 6. Apparently, through notice dated 12.12.2011, the DGTO had required the Old-HCCI to apply for the renewal of its licence. No response was given to the said notice by the On 21.06.2013, the DGTO issued a final notice to the Old-HCCI requiring it to file an appeal before the Secretary, Commerce Division under the provisions of Section 21(2) of the TO Act, 2013 before 30.06.2013, failing which the licence would be cancelled under Section 7 of the TO Act, 2013. 7. The Old-HCCI's case is that on 27.06.2013, it applied for the renewal of its licence in the format provided in Schedule B to the Trade Organization Rules, 2013 ("the TO Rules, 2013") and also deposited the requisite appeal fee. Through letter dated 31.07.2013, the DGTO pointed out nine deficiencies in the Old-HCCIs application for the renewal of its licence. After the Old-HCCI cleared some of the deficiencies the DGTO, vide letter dated 18.12.2013, required the following documents from the Old-HCCI to be furnished within a period of ten days so that the remaining deficiencies in its application for the renewal of its licence are cleared:- i. Performance review report as required under rule 23(2) of TORs, 2013. ii. Hyderabad Chamber of Commerce and Industry has been furnished only Acknowledgment of filling certain documents with Securities and Exchange Commission of Pakistan. Chamber may be required to furnish complete Corporate Compliance Certificate from SECP. iii. An updated hard copy of the memorandum and articles of association of the trade organization as approved by the Ministry of Commerce and SECP. iv. An updated soft copy of the memorandum and articles of association of the trade organization as approved by the Ministry of Commerce and SECP." 8. On 12.05:2014, the DGTO sent a reminder to the. Secretary General of the Old-HCCI with the warning that if the required documents are not furnished within seven days, it would render the Old-HCCI's licence liable to cancellation. After this wakeup call, the Old-HCCI, vide letter dated 19.05.2014, applied to the Securities and Exchange Commission of Pakistan ("SECP") for the issuance of a corporate compliance certificate. In terms of Rule 10(2)(b) of the TO Rules, 2013, the licence of a trade organization can be renewed for a further five years subject to inter alia the condition that it has been reporting corporate compliance to the SECP and the DGTO. Vide letter dated 27.05.2014, the SECP informed the Secretary of the Old-HCCI that the corporate compliance certificate could not be issued since the matter regarding the election of the directors of the Old- HCCI was pending before a Court. 9. On 06.01.2015, the DGTO issued a notice to the Secretary General of the Old-HCCI calling upon him to show cause as to why the application for the renewal of its licence should not be rejected due to its failure to fulfill the requirements specified in the DGTO's letters dated 31.07.2013, 18.12.2013 and 12.05.2014. Vide letter dated 18.02.2015, the DGTO gave a period of fifteen days to the Old-HCCI to clear the deficiencies in the application for the renewal of its licence. Perusal of the said letter shows that the only two documents that the Old-HCCI was required to submit was (i) a soft copy of its Memorandum and Articles of Association made in accordance with the requirements of the TO Act, 2013 and the TO Rules, 2013 and (ii) the corporate compliance certificate issued by the SECP.

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Vide letter dated 04.03.2015, the DGTO informed the Old-HCCI that the application for the renewal of its licence will be processed subject to the submission of a corporate compliance certificate. 10. It is necessary at this stage to detail the history of the litigation with respect to the elections of the Executive Committee of the Old-HCCI. Apparently, Suit No.1408/2012 was filed before the Hon'ble High Court of Sindh by members of the Old-HCCI voicing grievances pertaining to the election of the Executive Committee conducted in 2012. Vide order dated 20.09.2012, the Hon'ble High Court of Sindh issued an injunctive order which had the effect of the previously elected Executive Committee to continue working beyond its term. The Old-HCCI asserts that it was due to the said injunctive order that elections of the Executive Committee could not be held between 2012 and 2018. It also asserts that as its licence was not renewed due to the said injunctive order, the SECP was not issuing a corporate compliance certificate. The said suit was decreed vide judgment dated 05.08.2013 wherein it was held inter alia that the existing Executive Committee of the Old- HCCI would continue to hold their offices until the next elections. 11. On 25.09.2013, some members of the Old-HCCI filed Suit No.1204/2013 before the Hon'ble High Court of Sindh. Again vide order dated 25.09.2013, the process of the election of the Executive' Committee was stayed. On 11.06.2015, the said stay order was recalled and on 03.02.2020, the said suit was dismissed as withdrawn. 12. On 03.09.2015, Suit No.1648/2015 was filed by some members of the Old-HCCI before the Hon'ble High Court of Sindh and on 03.09.2015 a status quo order was issued, as a result of which elections of the Executive Committee of the Old-HCCI were not held. This injunctive order was vacated on 20.03.2018 and the said suit was dismissed for non-prosecution on 20.11.2019. 13. It was not until 27.05.2018 that elections of the Executive Committee of the Old-HCCI were held. Even by this stage, the Old- HCCI's application for the renewal of its licence was pending with the DGTO. 14. On 03 .06.2019, the Old-HCCI filed Writ Petition No.2275/2019 before this Court praying for a direction to the SECP to issue a corporate compliance certificate to the petitioner. Furthermore, the Old-HCCI had also sought a direction to be issued to the DGTO to renew its licence. Since the Old- HCCI's licence had expired on 06.05.2011 and had not been renewed at any material stage, another party forming itself as the Hyderabad Chamber of Commerce and Industry ("New-HCCI") had, on 26.04.2019, applied to respondent No.2 for the issuance of a licence. The New-HCCI had filed an application to be impleaded as a respondent in Writ Petition No.2275/2019. The stance of this party was that by operation of Section 4 of the TO Act 2013, the licence granted to the Old-HCCI prior to the enactment of the 2013 Act stood revoked. The New-HCCI's grievance was that its application for the grant of a licence was not processed by the DGTO due to the pendency of litigation before this Court. Vide order dated 16.10.2019, the said writ petition was disposed of with the direction to the DGTO to decide (i) the Old-HCCI's application for the renewal of its licence, and (ii) the New-HCCI's application for the grant of a licence strictly in accordance the law. 15. Vide order dated 10.01.2020, the DGTO turned down the Old- HCCI's application for the renewal of its licence. Furthermore, the DGTO issued a notice to the Old-HCCI to show cause as to why its licence should not be cancelled under Section 7 (f), (g) and (h) of the TO Act, 2013 and the TO Rules, 2013. It was also ordered that the New- HCCI's application for the grant of a licence shall be processed in accordance with the said Act and Rules. 16. On, 14.01.2020, a reply to the said show cause notice was submitted on behalf of the Old-HCCI seeking the withdrawal of the DGTO's order dated 10.01.2020. Vide order dated 27.01.2020, the DGTO cancelled the Old-HCCI's licence. Aggrieved by the said order, the Old-HCCI "referred an appeal before the Federal Government under Section 21(2) of the TO Act, 2013. Vide order dated 01.04.2022, the said appeal was dismissed. Appeal No.56/2022 against the said order dated 01.04.2022 has been filed by the Old-HCCI under Section 21(4) of the TO Act, 2013 before this Court.

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17. On 20.04.2022, licence No.307 was granted by the Federal Government to the New-HCCI under Section 3 of the TO Act, 2013. The grant of the said licence has been questioned by the Old-HCCI in Writ Petition No.158/2023, which was filed on 17.01.2023. 18. Respondent No.5 in Writ Petition No.158/2023 is Adeel Siddique, who is the sole proprietor of Premier Paint Industry, which is a Corporate Member of the New-HCCI. He had filed application (C.M.No.969/2022) to be impleaded as a respondent in Appeal No.56/2022. Perusal of the order dated 27.01.2020 passed by the DGTO and the order dated 01.04.2022 passed by the Committee of the Federal Cabinet shows that respondent No.5 was heard before the said orders were passed. Therefore, respondent No.5's application for impleadment as a respondent in Appeal No.56/2022 is allowed. 19. Learned counsel for the Old-HCCI, after narrating the facts leading to the filing of the instant petition, submitted that no opportunity of a hearing was afforded to the Old-HCCI by the DGTO before passing order dated 27.01.2020 whereby its licence was cancelled; that Section 7(2) of the TO Act, 2013 obligates the Federal Government to afford an opportunity of a hearing to a trade organization before the cancellation of its licence; that the DGTO's order dated 27.01.2020 does not specify the sub-clause in Section 7 of the TO Act, 2013 which Old- HCCI was alleged to have violated; that by granting a licence to the New-HCCI, the DGTO has denied the Old-HCCI's right for the grant of a de novo licence under Section 9 of the TO Act, 2013; that Section 2(f) of the TO Act, 2013 defines an "existing trade organization" to mean an organization licenced under the Trade Organizations Ordinance, 1961 ("the TO Ordinance, 1961"); that the "repealed ordinance" has been defined in Section 2(q) of the TO Act, 2013 to mean the TO Ordinance, 1961; that by virtue of Section 4(1) of the TO Act, 2013, the licence granted under Section 3 of the repealed Ordinance to an existing trade organization stands revoked with effect from 30.12.2006 and such trade organization is required to apply for the grant of a fresh licence under the 2013 Act; that the Old-HCCI was not an "existing trade organization" as it was granted a licence under the TO Ordinance, 2007 and therefore it did not have to apply for a fresh licence; that by virtue of Section 36 of the TO Act, 2013, anything done under the TO Ordinance, 2007 is saved and therefore the Old-HCCI's licence granted under the provisions of the said Ordinance is also saved; that the licence dated 07.05.2008 granted to the Old-HCCI stood validated and protected under Section 36 of the TO Act 2013; that the concurrent orders dated 27.01.2020 and 01.04.2022 passed by the DGTO and the Federal Government, respectively, are not supported by reasons inasmuch as they do not address the grounds taken by the Old-HCCI in its reply dated 14.01.2020 to the DGTO's letter/show cause notice dated 10.01.2020; that the DGTO and the Federal Government concurrently erred by not appreciating that the SECP eventually issued a corporate compliance certificate to the Old-HCCI on 17.01.2020, which is prior in time to the orders assailed in Appeal No.56/2022; and that the said certificate was issued after the Old-HCCI satisfied all the requirements of the SECP listed in its letter dated 05.11.2019. Learned counsel for the Old-HCCI prayed for the writ petition to be allowed and for the said orders dated 27.01.2020 and 01.04.2022 to be set-aside. 20. On the other hand, the learned counsel for respondent No.5 in Writ Petition No.158/2023 and intervener in appeal No.56/2022 submitted that the licence dated 07.05.2008 granted to the Old- HCCI was valid for a period of three years, i.e. up to 06.05.2011; that the TO Act, 2013 was enacted on 20.02.2013 but it was not until 02.07.2013 that the Old-HCCI applied for the renewal of its licence; that Rule 10(3) of the TO Rules, 2013 requires a trade organization to apply for the renewal of its licence to the DGTO on the format set out in Schedule-B to the said Rules; that along with the application for the renewal, the applicant is to provide documents listed in Rule 10(3); that Rule 22(c) requires a trade organization to annually submit by 31st December to the DGTO a list of its members as on 30th November; that Section 6(1) of the TO Act, 2013 provides that a licenced trade organization shall require renewal of its licence every five years whereas Section 6(2) requires the

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application for the renewal of its licence to be made to the DGTO ninety days prior to its expiry; that in terms of Section 4 of the TO Act, 2613, the licence granted to the Old-HCCI stood revoked with effect from 30.12.2006; that a trade organization whose licence stands revoked by operation of Section 4 is required to apply for the grant of a fresh licence; that after the enactment of the TO Act, 2013, the Old-HCCI had to apply for a fresh licence and not for the renewal of its existing licence; that the reason why a trade organization was required to apply for a fresh licence was because in terms of Section 12 of the TO Act, 2013, the Memorandum and Articles of Association of a trade organization had to be in accordance with the basic template approved by the Federal Government; that it is not the Old-HCCI's case that it had applied for a fresh licence; that there was no need for a formal order for the cancellation of the Old-HCCI's licence since it stood revoked by operation of law, i.e. Section 4 of the TO Act, 2013; that the Old-HCCI did not even apply for the renewal of its licence ninety days before its expiration; that since the Old-HCCI's licence expired more than ten years ago, the DGTO could not renew its licence; and that the concurrent orders dated 27.01.2020 and 01.04.2022 passed by the DGTO and the Federal Government, respectively, do not suffer from any jurisdictional infirmity so as to warrant interference in the Constitutional jurisdiction of this Court. Learned counsel for respondent No.5 prayed for the appeal as well as the writ petition to be dismissed. 21. The learned Deputy Attorney-General adopted the arguments of the learned counsel for respondent No.5. 22. By way of rejoinder, the learned counsel for the Old-HCCI submitted that the Old-HCCI does not come within the meaning of an existing trade organization as it was granted a licence under the provisions of the TO Ordinance, 2007 and not the TO Ordinance, 1961 and therefore there was no need for it to apply for a fresh licence; that the power to cancel the licence of a trade organization vests in the Federal Government and not the DGTO; that although under Section 22(1) of the TO Act, 2013, the Federal Government may, by notification in the official Gazette, direct that all or any of its powers under the said Act may be exercisable by the DGTO, the power to cancel licences of trade organizations has not been delegated by the Federal Government to the DGTO; that the order for the cancellation of the Old-HCCI's licence has been passed by the Deputy Director in the office of the DGTO and not by the Director General, Trade Organizations himself; and that the DGTO had violated the mandatory requirement of affording an opportunity of a hearing to the Old-HCCI under Section 7(2) of the TO Act, 2013 and therefore the order for the cancellation of its licence is not sustainable. 23. I have heard the contentions of the learned counsel for the contesting parties and have perused the record with their able assistance. The facts leading to the filing of the instant appeal and petition have been set out in sufficient detail in paragraphs 2 to 18 above and need not be recapitulated. 24. I propose first to decide whether it was obligatory on the Old-HCCI to have applied for a fresh licence under Section 4(1) of the TO Act, 2013 and whether its failure to do so would result in the revocation of its licence. Section 4(1) of the said Act reads thus:- "4. Revocation of licences of existing trade organisations.-- (1) Except as hereinafter provided and notwithstanding anything in any other law for the time being in force and memorandum and articles or association for any trade organisation, any licence granted under section 3 of the repealed ordinance to an existing trade organisation shall stand revoked with effect from the 30th December, 2006 and such trade organisation shall be required to apply for grant of licence under this Act by the date notified by the Federal Government." (Underlining is mine for emphasis) 25. Section 2(f) of the TO Act, 2013 defines an "existing trade organization" to mean an organization licenced under the TO Ordinance, 1961 whereas "repealed ordinance" has been defined in Section

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2(q) of the TO Act, 2013 to mean the TO Ordinance, 1961. 26. As mentioned above, the Old-HCCI was first granted a licence by the Ministry of Commerce on 16.03.1959. Subsequently on 14.07.1960, it was incorporated as a company under the provisions of the erstwhile Companies Act, 1913. The Old-HCC operated as a trade organization under the provisions of the TO Ordinance, 1961 until the promulgation of the TO Ordinance, 2007. By operation of Section 4(1) of the TO Ordinance, 2007, any licence granted to a trade organization under the provisions of the TO Ordinance, 1961 stood revoked with effect from 30.12.2006. Such trade organization was required to apply for the grant of a fresh licence under the provisions of the TO Ordinance, 2007. By virtue of Section 4(3) of the TO Ordinance, 2007, a trade organization to which a licence had been granted under the TO Ordinance, 1961 and had applied for the grant of a licence under the TO Ordinance, 2007, continued to function as a trade organization until the Federal Government decided the application for the grant of a licence, 27. In the case at hand, the Old-HCCI functioned as a trade organization for decades until the promulgation of the TO Ordinance, 2007. Since by virtue of Section 4(1) of the TO Ordinance, 2007, the Old-HCCI's licence stood revoked with effect from 30.12.2006, it applied for a fresh licence under the provisions of the TO Ordinance, 2007 and on 07.05.2008, a licence was granted to it by the Federal Government. 28. The TO Act, 2013 was enacted on 20.02.2013. Section 4(1) of the said Act is in pari materia to Section 4(1) of the TO Ordinance, 2007. Only the licences granted to trade organizations under the provisions of the TO Ordinance, 1961 stood revoked by operation of Section 4(1) of TO Act, 2013 and not those that were granted under the provisions of the TO Ordinance, 2007. Section 36 of the TO Act, 2013 provides that anything. done, actions taken, orders passed, instruments made, proceedings initiated, processes or communications issued, powers conferred, assumed, and exercised by the Federal Government or the DGTO on or after 04.10.2007 and before the commencement of the TO Act, 2013 shall be deemed to have been validly done, made, issued, taken, initiated, conferred, assumed and exercised and the provisions of the said Act shall have, and shall be deemed always to have had, effect accordingly. By dint of Section 36 ibid, the licence dated 07.05.2008 granted to the Old-HCCI under the provisions of the TO Ordinance, 2007 would be deemed to have been granted under the provisions of the TO Act, 2013. Therefore, the contention made by the learned counsel for respondent No.5 that by operation of Section 4(1) of the TO Act, 2013, the Old-HCCI's licence stood revoked or that it had to apply for a fresh licence is devoid of merit. 29. If the argument of the learned counsel for respondent No.5 that the Old-HCCI had not been granted a licence under the provisions of the TO Ordinance, 1961 is accepted, then the Old-HCCI would not come Within the meaning of an "existing trade organization" as defined in Section 2(f) of the TO Act, 2013 and consequently neither would its licence liable to be revoked under Section 4(1) nor would it be obligated to apply for a fresh licence. 30. This Court, vide unreported order dated 18.12.2023, passed in Writ Petition No.4239/2023 titled "Mirza Abdul Rehman and others v. Director General Trade Organization and others," spurned a' similar contention as the one raised by the learned counsel for respondent No.5 by holding as follows:- "3. Learned counsel for respondent No.3 contended that since the license that was issued to A.C.C.I. was not under the provisions of the Trade Organizations Act, 2013 ("the 2013 Act") but under the provisions of the Trade Organizations Ordinance, 2007, the said license cannot be renewed since by operation of Section 4 of the 2013 Act, the said license stands revoked. 4. Section 4(1) of the 2013 Act provides inter alia that any license granted under Section 3 of the repealed Ordinance to an existing trade organization shall stand revoked with effect from 30.12.2006 and such organization shall be required to apply for the grant of license under the 2013

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Act by the date notified by the Federal Government. Section 2(q) of the 2013 Act defines "repealed ordinance" as the Trade Organizations Ordinance, 1961. By virtue of Section 35(a) of the 2013 Act, the Trade Organizations Ordinance, 1961 stood repealed with effect from 30.12.2006. Section 36 of the 2013 Act saves the validity of licenses issued after 04.10.2007. Since the license issued to A.C.C.I. on 29.09.2008 was under the provisions of the Trade Organizations Ordinance, 2007 and not the Trade Organizations Ordinance, 1961, the same cannot be held to have been revoked by dint of Section 4 of the 2013 Act. Since the said license was issued on a date after 04.10.2007, it stands saved by virtue of Section 36 of the 2013 Act. This leads me to the conclusion that the D.G.T.O. did not commit any illegality by first renewing A.C.C.I.'s license up to 28.09.2016 and subsequently up to 28.09.2021." 31. Now, it needs to be determined whether the DGTO could have entertained the Old-HCCI's application for the renewal of its Hence which was filed way beyond the period prescribed in Section 6(2) of the TO Act, 2013. Unlike Section 3(7) of the TO Act, 2013, which makes a licence granted to a trade organization valid for a period of five years, under Section 3(7) of the TO Ordinance, 2007, the validity period of a licence is three years. Section 6(1) of the TO Ordinance, 2007 required a licenced trade organization to renew its licence every three years, and Section 6(2) of the said Ordinance required the…

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