Full Judgment Text & Judicial Ruling

2006 C L D 646

2006 C L D 646

[Supreme Court of Pakistan]

Present: Rana Bhagwandas, Saiyed Saeed Ashhad and Hamid Ali Mirza, JJ

ENGLISH BISCUIT MANUFACTURES (PVT.) LIMITED and another---Petitioners

Versus

MONOPOLY CONTROL AUTHORITY and others---Respondents

C.P.L.A. No.1191 of 2004, decided on 16th December, 2005.

(On appeal from judgment of Sindh High Court, Karachi dated 30-3-2004 passed in M.A.No.7 of 2003).

(a) Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)---

----Ss. 3, 11 & 14---Special inquiry, non-holding of---Condition precedent---Withdrawal of show-cause notices---Grievance of complainant was that Monopoly Control Authority had withdrawn the show-cause notices and dropped the proceedings against accused---Validity---Monopoly Control Authority had been given discretion under S.14 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, not to hold special inquiry, if application/complaint was found to be frivolous or vexatious or based on insufficient facts---Wrong issuance of notices to accused party would not bring the proceedings conducted by Monopoly Control Authority within the ambit of S.11 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970---From the facts contained in complaint, the Authority found that there was no contravention of S.3 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, and complaint was frivolous and vexatious---Monopoly Control Authority acted within the authority conferred upon it by S.14 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, in withdrawing the show-cause notices issued to the parties and dropping the proceedings---Order of the Authority could not be considered to be an order under S.11 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, so as to be appealable under S.20 of the Ordinance.

(b) Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)---

----Ss. 3, 11, 12 & 14---Passing of order by Monopoly Control Authority---Principles---Provisions of S.12 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, would not have come into play or could not be resorted to until the Authority, in pursuance of special inquiry, had come to the conclusion that there was prima facie contravention of S.3 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 and it was necessary to initiate proceedings in public interest---Initiation of proceedings by Monopoly Control Authority has been made dependent upon the finding of special inquiry conducted under S.14 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, rendering or establishing contravention of S.3 of the Ordinance, whereupon it would order initiation of statutory proceedings under S.11 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970---Once statutory proceedings under S.11 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, are commenced, Monopoly Control Authority would have the power or authority to make an order under S.11 (2) of the Ordinance, recommending/ordering one or more remedial/corrective measures enumerated and specified in S.12 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, to be adopted for arresting the contravention of S.3 of the Ordinance.

(c) Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)---

----Ss.3, 11 & 12-Cognizance by Monopoly Control Authority---Principles---Provision of S.3 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, is a remedial section to be read and acted upon in conjunction with S.11 of the Ordinance enabling the Authority to adopt or order anyone or more of the remedies enumerated in S.12 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, for redress of the grievance on account of violation of S.3 of the Ordinance.

(d) Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)-

----Ss. 11 & 12---Orders of Monopoly Control Authority---Scope---While making one or more orders specified in S.12 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, the order is to be deemed to be an order under S.11 of the Ordinance and not under S.12 of Monopolies and Restrictive Trade. Practices (Control and Prevention) Ordinance, 1970.

(e) Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)---

---Ss. 3, 11, 12, 14, 19 & 20---Constitution of Pakistan (1973), Art.185(3)-Appeal to High Court---Maintainability---Special inquiry, non-holding of---Withdrawal of show-cause notices---Filing of complaint by less than 25 persons---Complaint of petitioner was dismissed by Monopoly Control Authority on the ground that the petitioner was not an aggrieved person---Show ?cause notices issued to respondents were withdrawn by Monopoly Control Authority and proceedings were dropped---Appeal filed by the petitioner was also dismissed by High Court, being not maintainable---Validity---Person aggrieved by an order under Ss. 11 or 19 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, had a right to file appeal under S.20 of the Ordinance---Order passed by Monopoly Control Authority was not an order under S.11 or 19 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 but was an order under S.14 of the Ordinance, against which no appeal could be entertained in view of the provisions of S.20 of the Ordinance---Neither the order of the Authority, nor judgment of High Court suffered from any illegality, impropriety or grave irregularity nor it suffered from misconstruction or misinterpretation of any provisions/ sections of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970---High Court was justified in holding that complaint filed by petitioner was not maintainable as it was not filed or presented by the requisite number of 25 persons as required by S.14(2) of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 and that the order of the Authority was not an order under S.11 of the Ordinance---High Court was also right in holding that Monopoly Control Authority was not legally bound to adopt or pass an order recommending anyone or more of the directives, prohibitions or limitations enumerated in S.12 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970---Supreme Court declined to interfere with the order passed by High Court---Leave to appeal was refused.

Shaiq Usmani, Senior Advocate Supreme Court, Syed Sharifuddin Pirzada, Senior Advocate Supreme Court, Aziz A. Munshi, Senior Advocate Supreme Court, Salman Aslam Butt, Advocate Supreme Court and Mehr Khan Malik, Advocate-on-Record for Petitioners.

M. Bilal, Senior Advocate Supreme Court and Ejaz Muhammad Khan, Advocate-on-Record for Respondent No.1.

Fakhruddin G. Ehrahim, Senior Advocate Supreme Court and M.A. Khattak, Advocate-on-Record for Respondents Nos. 2 and 3.

Munir A. Malik, Advocate Supreme Court and M.A. Zaidi, Advocate-on-Record for Respondent No.4.

Date of hearing: 16th December, 2005.

JUDGMENT

SAIYED SAEED ASHHAD, J.---This petition for leave to appeal has been filed by petitioners assailing the order of Sindh High Court dated 30-3-2003 in M.A. No.7 of 2003 dismissing the appeal filed by the petitioners.

2. Brief facts leading to the above petition for leave to appeal are that petitioner No.1 M/s. English Biscuit Manufactures (Pvt.) Limited (hereinafter referred to as the "EBM") filed an application dated 4-1-1999 before the Corporate Law Authority (hereinafter referred to as "CLA"), a copy of which was endorsed to Monopoly 'Control Authority (hereinafter referred to as "MCA") established under Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 (hereinafter referred to as the "Ordinance"). The facts disclosed by EBM in the complaint were as under:--

"That it was incorporated in 1965 as a joint venture company in the name and style of Peak Freans (Pakistan) Limited. The Sponsors Peak Freans & Co. UK (PF) had an equity of 25.25% and local sponsors House of Manji (Investments Limited and M. Manji) 74.75% in the company. The name of the company was changed from Peak Freans (Pakistan) Limited to English Biscuits Manufactures (Pvt.) Limited (EBM) in 1996 and similarly the name of Peak Freans and Company - UK was changed to Associated Biscuits International Limited - UK (ABIL). ABIL - UK had 38.0% equity in Britannia Industries Limited India (BIL) and 25.25% equity (increased to 40% in 1986) in EBM Pakistan respectively. ABIL was a 100% subsidiary of Huntley and Palmers Group UK which was later acquired by PJR Nabisco of USA in 1982.

ABIL UK and NABISCO US as its parent, owned, recognized and accepted EBM as a Joint Venture Partner in Pakistan and Jointly structured EBM to be a leader and No.1 company of the Biscuit Industry of Pakistan. All agreements/understandings between EBM and ABIL were expressly followed to pursue the objects of the company by both partners in its letter and spirit. ABIL through NABISCO shared with EBM the technical know-how and R&D and supported the business development of EBM through its global expertise in financial and marketing management right through 1988.

In July, 1989, however, NABISCO (as a sequel to infamous LBO by a well street company called KKR) sold ABIL to the then president of NABISCO based in London, through a company incorporated by him in the name and style of Britannia Industries (private) Ltd. in Singapore (BIPL). Six months later (i.e. early 1990), BSN Group of France (now re-named as Danone Group) acquired 50.0% equity in ABIL thus becoming a shareholder in EBM through the back door against the wishes and knowledge of 60% local shareholders.

Before acquiring shares in EBM. Danone was already present with 49% equity in Continental Biscuits Limited (CBL), Danone's entry in EBM thus created "a conflict of interest" situation for both EBM and CBL - the principal competitor of EBM since its incorporation in 1985.

Ever since Danone's entry as indirect/beneficial shareholder in EBM in early 1990, EBM has not received any assistance - technological or otherwise, from ABIL. On the contrary, ABIL/Danone are out to destroy EBM through frivolous, malicious and mala fide litigation on the one hand, and on the other, providing global management expertise and support to CBL to the total exclusion of EBM. This is because ABIL/Danone's prime mala fide motive is to strangulate EBM, take its control and establish a monopolistic hold on Pakistan Biscuit Market through its global muscle."

3. After receiving copy of above complaint, MCA vide its letter dated 2-2-1999 called upon M/s. EBM to supply documentary evidence to substantiate allegations levelled by them and also asked M/s. Coronet Foods (Pvt.) Limited (hereinafter referred to as "CFL") and Continental Biscuits Limited (hereinafter referred to as the "CBL") to provide the information called by it.

4. MCA also called upon M/s. EBM to supply names and addresses of nominee directors who were representing foreign beneficial shareholders in the Board of M/s. EBM. It asked M/s. CBL to supply actual production of packed biscuits during the year 1997-98 as well as its nominee directors representing foreign beneficial shareholders. CBL supplied the requisite information vide their letter dated 30-6-1999.

5. After receipt of the material and the information called for from the above parties, show-cause notices were issued to petitioners and respondents Nos. 2, 3 and 4 under section 11 of the Ordinance to show-cause why penal action be taken against them under section 11 read with section 12(1)(b)(i) & (vii) of the Ordinance for maintenance and continuation of such relationship between the associated undertakings which was injurious to the economic well-being, growth and development of the country.

6. Thereafter MCA called upon the parties for personal hearing and notices for 16-11-2002 were issued to the petitioners and respondents 2, 3 and 4. On 16-11-2002 M/s. EBM and CFL were represented by Mr. Iqbal Ali Muhammad, advisor as well as their Advocate, Mr. Salman A. Butt, Advocate. Mr. Fakhurddin G. Ebrahim appeared on behalf of M/s. Danone and Associated Biscuits International Ltd. (hereinafter referred to as the "ABIL") and requested for adjournment, whereupon hearing of the complaint was adjourned to 30-11-2002. On 30-11-2002 Mr. Fakhruddin G. Ebrahim, Advocate appeared on behalf of M/s. Danone and ABIL whereas Syed Ahmed Hassan Shah, Advocate and Mian Safiullah, appeared on behalf of M/s. CBL. None appeared on behalf of M/s. EBM and CFL though they had knowledge of the fixation of the case for 30-11-2002 as this date was given on 16-1-2002 when their advisor Mr. Iqbal Ali Muhammad representative and Mr. Salman A. Butt Advocate were present.

7. MCA after hearing the arguments of learned counsel/advisors for M/s. Danone, BIL and M/s. CBL and taking into consideration the facts stated in the complaint filed by M/s. EBM as well as the provisions of the Ordinance come to the following conclusion:--

'That it is evident from the record placed before the learned authority, including that placed by EBM itself, that CBL is not and cannot be deemed to be an associated undertaking of EBM or CFL within the scope of the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1979 (the "Ordinance").

That it is evident that EBM has moved the learned Authority to apply its time and resources to a baseless claim premised upon a private grievance between itself and its foreign shareholders, which is manifest from EBM's own submissions made during the course of these proceedings pending before the Hon'able High Court of Sindh. Whereas the Authority was constituted in the public interest, EBM has moved the learned Authority for the purpose of private gain.

That in the process EBM and CFL, have not only wasted the precious time of the learned authority, but also put CBL through considerable inconvenience and hardship, which inter alia, resulted in CBL incurring considerable costs and expenses.

It is therefore respectfully prayed that in dismissing these proceedings, the Authority may proceed against EBM and CFL under section 19(b) of the Ordinance, and also in exercise of its powers vested under section 10(1) of the Ordinance, and moreover in the interests of substantial justice and fairplay, award all costs, including Attorney's fees to CBL in an amount of Rs.1,000,000 (Rupees one Million only).

MCA has arrived at the conclusion that the undertakings are not associated undertakings as prescribed in the Ordinance, hence the matter does not attract the provisions of section 5 of the Ordinance. The Show-Cause Notices No.10 of 2000-2001 dated February 10, 2001 and Nos. 19 and 20 of 2001-2002 dated October 11, 2001 served on CBL, Danone and ABIL respectively are therefore hereby withdrawn. Show-Cause Notices Nos. 9 and 11 of 2000-2001 served on M/s. English Biscuits Manufacturers (Pvt.) Limited and M/s. Coronet Foods (Pvt.) Limited respectively are also hereby withdrawn."

8. Feeling aggrieved and dissatisfied with the above order/finding of MCA, petitioners M/s. EBM and CFL assailed the same by way of-appeal under section 20 of the Ordinance before the Sindh High Court who after taking into consideration the arguments of learned counsel for the parties; minutely examining the provisions of sections 11, 12, 14 and 20 of the Ordinance dismissed the appeal. It will be useful to reproduce the relevant portion from the judgment of the High Court dealing with the issues/disputes involved in the case, which are as under:

"The Authority is empowered to pass the orders in nature referred to above and such orders are appealable in terms of section 20 on the point of law. In the instant case, the enquiry initiated on the complaint of the appellants was dropped. The Authority, as appears from the perusal of the impugned order, has not noticed the difference between the 'statutory proceedings' under section 11(1) and the 'special enquiry' contemplated under section 14(2) on complaint by not less than twenty-five members. In consequence thereof, the order passed by the Authority on complaint of the appellants under section 14(3) has been branded as an order under section 11.

The appellants, short of required number, are not even competent to file a complaint. Such complaint should be filed by not less than twenty five persons. The 'proceedings' or the 'inquiry' contemplated in sections 11 and 14 respectively are not meant for the redressal of individual grievances but in 'public interest'. The appealable orders are those orders which are enumerated in section 12 that may be passed on conclusion of the proceedings. The order, dropping the proceedings and recall of show-cause notices, is not an appealable order. The appellants are not even 'aggrieved person' not competent to file complaint. The expression 'aggrieved person' means a person who has got a legal grievance, i.e. a person is deprived of anything to which he is legally entitled and not merely a person, who suffered some sort of disappointment.

Complaint by the appellants, even if taken by the Authority as an information laid before it for initiation of the proceedings that will not brand such informer as 'aggrieved person'. Therefore, the impugned order is not in nature of the orders enumerated in section 12, therefore, not an appealable order. Consequently, the appeal being not maintainable. Resultantly, the same is dismissed in limine with no order as to costs."

9. We have heard the arguments of Mr. Shaiq Usmani, Senior Advocate Supreme Court appearing on behalf of petitioners; Mr. Fakhruddin G. Ebrahim, Senior Advocate Supreme Court appearing for respondents Nos.2 and 3, Mr. M. Bilal, Senior Advocate Supreme Court on behalf of respondent No.1 and Mr. Munir A. Malik, Advocate Supreme Court on behalf of respondent No.4.

10. Mr. Shaiq Usmani, learned Senior Advocate Supreme Court appearing on behalf of the petitioners advanced the following arguments in support of the petition:

(i) that the order of MCA dated 10-12-2002 was passed without affording opportunity of hearing to the petitioner and the same being in violation of principles of natural justice was void ab initio and could be assailed under section 20 of the Ordinance;

(ii) that the High Court of Sindh erred in holding that order dated 10-12-2002 passed by MCA was neither an order under sections 11/12 nor under section 19 of the Ordinance so as to be appealable under section 20 of the Ordinance;

(iii) that the High Court also erred in holding that the petitioners were not even competent to file a complaint which was not in accordance with the provision of section 14 of the Ordinance requiring it to be filed by not less than 25 members as it could be treated as information laid before it as envisaged by section 14(2) of the Ordinance; and

(iv) that the High Court erred in holding that the complaint filed by the petitioners disclosed individual grievances of the petitioners and respondents Nos.2 to 4 which neither had any nexus with contravention of section 3 of the Ordinance nor related to public interest.

11. Mr. Fakhruddin G. Ebrahim, learned Senior Advocate Supreme Court appearing on behalf of respondents Nos.2 and 3 fully supported the judgment of the High Court and submitted that the same did not suffer from any illegality or impropriety and further that the same was based on proper appreciation of the provisions of sections 11, 12, 14, 19 and 20 of the Ordinance. With regard to the first contention of Mr. Shaiq Usmani he vehemently controverted the same and submitted that it was not consistent with the material on record. He vehemently assailed the arguments of Mr. Shaiq Usmani that the petitioners had not filed the complaint and reiterated that the petitioner had filed the complaint which was evident from paragraph 17 of the memorandum of appeal filed in the High Court and paragraph 2 under the heading "Brief facts" in the memorandum of petition for leave to appeal filed in this Court wherein the petitioners expressly stated that petitioner No.1 had filed a complaint under section 11 of the Ordinance before the MCA. He submitted that neither the order of MCA nor the judgment of the High Court required any interference as they did not suffer from any illegality and had been passed strictly in accordance with law.

12. Mr. Munir. A. Malik, learned Advocate Supreme Court appearing on behalf of respondent No.4 CBL adopted the arguments of Mr. Fakhruddin G. Ebrahim. He further submitted that under the provisions of the Ordinance no complaint could have been filed under section 11- of the Ordinance and cognizance by MCA for contravention of section 3 of the Ordinance could only be taken under section 14 of the Ordinance. He further submitted that notwithstanding the fact that complaint purported to have been filed under section 11 of the Ordinance it would be deemed to have been filed under section 14 of the Ordinance thought it did not meet the requirements of the said section.

13. Mr. M. Bilal, Senior Advocate Supreme Court also adopted the arguments of Mr. Fakhruddin G. Ebrahim and submitted that neither MCA committed any illegality or irregularity in withdrawing the show-cause notices nor High Court had fallen in error in dismissing the appeal filed by petitioners.

14. We have considered the respective arguments of learned counsel for the parties, perused the material on record and the provisions of the Ordinance as well as impugned orders of MCA and the High Court.

15. With regard to the contention that petitioners were deprived of an opportunity of hearing by MCA in putting their case, suffice it to say that it was absolutely a baseless submission in view of the material on record. It is an admitted position that in pursuance of the notices issued by MCA for appearance of the above parties on 16-11-2002 the petitioners were represented by Advisor Iqbal Ali Muhammad and Advocate Mr. Salman A. Butt. The matter was adjourned on the written request of Mr. Fakhruddin G. Ebrahim on behalf of respondents Nos.2 and 3 to 30-11-2002 in the presence of the representative and Advocate of the petitioners, the Advocate of respondent No.4 and the representative of respondents Nos.2 and 3. Notices were issued only to respondents Nos.2 and 3 for the next date of hearing because their Advocate had requested for adjournment. Issuance of fresh notices to the petitioners and respondent No.4 were not necessary as they were duly represented and the fresh date i.e. 30-11-2002 was fixed in their presence. Non-appearance of the counsel for the petitioner on 30-11-2002 in the circumstances cannot be said to be on account of lack of knowledge of the date of hearing but they had intentionally chosen to remain absent and would have to suffer the consequences therefor.

16. The contention that the petitioners had never filed any complaint before CMA also stands falsified from paragraph 17 of the memorandum of appeal filed in the High Court and paragraph 2 under the heading "Brief Facts" of memorandum of petition for leave to appeal tiled in this Court wherein petitioner No.1 specifically, unambiguously and in clear terms stated that it filed a complaint before MCA vide their application dated 4-1-1999. Denial of filling of complaint was explained by Mr. Shaiq Usmani that the complaint was filed under section 11 of the Ordinance before the Corporate Law Authority and a copy thereof was endorsed to MCA on which they started proceedings under section 11. This explanation does not at all support the contention of non-filing of the complaint by EBM before the MCA which was filed under section 11 of the Ordinance. Section 11 of the Ordinance does not provide or authorize any person to file an application or complaint before the MCA and from perusal of subsection (3) of section 14 of the Ordinance this observation is further strengthend. For this reason the complaint filed by EBM though purporting to be under section 1 I would be deemed or treated as an application under section 14 of the Ordinance which empowers MCA to hold special enquiry in the matter relevant for the purposes of the Ordinance either on its own motion or on a reference made to it by the Central Government or receiving a complaint in writing from not less than 25 persons of such facts which constitute contravention of provisions…

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