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Petitioner: Pakistan Sugar Mills Association & others VS Respondent: Federation of Pakistan & others
Court Name: Sindh High Court Judge(s): Muhammad Shafi Siddiqui Title:Pakistan Sugar Mills Association & others vs Federation of Pakistan &
others Case No.: Suits No.2272, 2273, 2455 and 2474 of 2021 Date of Judgment:2022-06-13 Reported As: 2022 SHC 266 Result: Application Dismissed Judgment ORDER Muhammad Shafi Siddiqui, J. I have before me aforesaid four suits filed by different sugar mills and/or Sugar Mills Association wherein they have jointly and cumulatively challenged the chairp erson' s (defendant No.3' s) right to cast second vote, claiming it to be illegal, unlawful, without jurisdiction, void ab-initio. Further challenge is the exercise of powers by defendant No.3 being chairperson under section 24(1), (5) & (6) read with section 28(1) of the Competition Act, 2010 while passin g the impugned chairperson' s casting vote decision in a quasi-judicial proceedings, being completely illegal and unlawful. Plaintif fs lastly sought declar ation with reference to Section 24(5) of Competition Act, 2010 being ultra vires to the Constitution of Islamic Republic of Pakistan, 1973 and that the cumulative effect of the aforesaid observation would be that the entire impugned order be declared as illegal and unlawful. In the alternate plaintif fs sought 24(5) of ibid Act to be read down to save the statutory provision. 2. Along with the main suits, plaintif fs have also filed their respective injunction applications seeking interim injunction restraining defendants i.e. Federation of Pakistan and Competition Commission of Pakistan from implementing the aforesaid impugned order/decision till final decision of the suit on which ad-interim orders were passed by this Court followed by applications under order XXXIX Rule 4 CPC filed by the defendant No.2 for recalling the said interim orders. 3. During the proceedings Mr. Faisal Siddiqui, learned counsel appearing for defendant No.2 proposed for disposal of the suit and for continuance of interim order till disposal/decision of the appeals filed by the plaintif fs before the Competition Appellate Tribunal, with further statement that the aggrieved party , either plaintif fs or defendants, would be at liberty to avail the remedy/remedies available to them under the law. Said proposal was not accepted by all the counsel appearing for plaintif fs in the suits and thus I proposed to hear the injunction applications only as the
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defendants too have not agreed to the disposal of suits summarily after framing issues while at the stage of hearing of applications except as suggested by Mr . Siddiqui, above. 4. Dispute started when a letter was issued to Competition Commission of Pakistan by Special Advisor to Prime Minister on Accountability to conduct an inquiry against sugar cartel under the Competition Act, 2010. The report to that effect suggested that sugar cartel offended section 4(1), 4(2) and (4)(2)(c) of the Act, which was then followed by a show cause notice by defendant No.2 based on said inquiry , which was responded. Matter came before Commission consisting originally of four-members. Commission' s decisions tied the outcome and opinion of the Chairman/Chairperson was then again sought, who casted her vote (second vote), as being 5th member to set the naught at rest. She casted vote as chairman/chairperson despite her first opinion at the initial stage of four members' commission. The first opinion issued by two members of the commission held plaintif fs liable for penalties on a number of issues on 06.08.2021. Second opinion was issued by the other two members not holding plaintif fs liable for such penalties on 12.08.2021. The issues which were considered by the commission members with their opinions are as under:- Issues First Opinion Members No.1 and 4Second opinion Members No.2 and 3 Issue No.I:- Whether PSMA and the undertaking have shared sensitive commercial stock information amongst themselves with the object or effect of distorting competition in the relevant market in violation of Section 4(1) read with Section 4(2)(a) of the Act?Against Plaintif fs Denovo Inquiry ordered Issue No.II:- Whether the undertaking including PSMA, made a collective decision to determine export quantities, amounting to fixing or setting/controlling supply of white refined sugar in the relevant market in violation of Section 4(1) read with Section 4(2)(c) of the Act?Against Plaintif fs Finding aside of inquiry set Issue No.III:- Whether such collective determination of export quantities led to an increase in or maintenance of a desired price level in the relevant market in violation of Section 4(1) read with Section 4(2)(a) of the Act?Against Plaintif fs Finding aside of inquiry set Issue No.IV :- Whether PSMA made a decision/practice of creating zonal division in Punjab to coordinate sales, stock positions and production quota to monitor and controlAgainst Plaintif fs Denovo Inquiry ordered
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quantity to be sold in violation of Section 4(1) read with Section 4(2)(a) of the Act? Issue No.V :- Whether PSMA and its member undertakings who participated in the 2019 and 2010 USC tenders respectively took a collective decision/indulged in a collective bargaining practice to fix and divide the quantity of sale among themselves in violation of Section 4(1) read with Section 4(2)(c) of the Act?Against Plaintif fs Denovo Inquiry ordered Issue No.VI:- Whether PSMA decided to cease crushing of sugarcane, thus, as a result of such decision, 15 undertakings in the Punjab zone ceased crushing activity violation of Section 4(1) read with Section 4(2)(a) of the Act?Denovo inquiry ordered Denovo Inquiry ordered Chairperson' s opinion 13.08.2021 Impugned Casting V ote Order passed by Defendant No.3 holding: To break the deadlock created by the First and Second Opinions, the Defendant No.3 exercised casting vote right in favour of the First opinion using the alleged powers under Section 24(1), 5, and (6) read with Section 28 of the Act. 5. On Issues, I. IV and V, the First Opinio n goes against the Plaintif f while the Second Opinion leans for a de novo inquiry . On Issues II and III, the First Opinion is against the Plaintif f while the Second Opinion sets aside the inquiry . Issue No.VI is the only issue on which all four members are unanimous i.e. they ordered de novo inquiry . The First Opinion imposes penalties of Rs.44 Billion upon the Plaintif fs, whereas second opinion does not. Proceeding commenced before the Commission after the inquiry was conducted. 6. On these facts, not being disputed, the gist of the plaintif fs' arguments are: The impugned order in its original outfit before ?casting vote issue, is violative of Section 14(1) of Competition Act, 2010 as the Commission at the time of passing order comprised of only four members and thus it was not constituted in terms of Section 14(1). Plaintif fs further challenged the constitutionality of Section 24(5) of Competition Act, 2010 being violative of Article 4, 10A and 25 of the Constitution. In the alternative Mr. Makhdoom Ali Khan, learned counsel appearing for plaintif fs, argued that primary way forward, for Court is to save the provision from being declared as unconstitutional by reading it down to reconcile it with provisions of ibid Act, Regulations and Constitution itself and only then it may be declared as ultra vires, if above recourse is not conducive since casting vote should not be used in quasi-judicial proceedings, adjudication or contravention under Competition Act, 2010, like the one here ended up as an impugned order . The provisions of Section 24(5) of Competition Act, 2010 that concerns with the exercise of casting vote applies to administrative proceedings of the Commission and not adjudication.
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The Competition Appellate Tribunal, as constituted under section 43 of Competition Act, 2010, cannot examine the vires of Section 24(5) of Competition Act, 2010 and/or its reading down mechanics. Thus, on the strength of one of the grounds that embarked upon unconstitutionality of Section 24(5), it is argued that this Court can exercise jurisdiction notwithstanding that the rest of the queries and questions, as raised, may have been impugned before the Competition Appellate Tribunal. 7. On the basis of above propositions, I am only obligated to decide the listed stay application and application under order XXXIX rule 4 CPC on the basis of arguments raised on the aforesaid points notwithstanding the pendency of appeal before the Competit ion Appellate Tribunal. Thus, I have to keep in mind the three standard principles for deciding injunction applications i.e. prima facie case, balance of inconvenience and irreparable loss. 8. The argument that could advance the case of plaintif fs for any kind of jurisdiction that may vest with this Court in presence of statutory forum, is the unconstitutionality of Section 24(5) of Competition Act, 2010 and the answer to this question will make or break as far as the jurisdiction is concerned but those could only be tentative and not conclusive since parties have agreed to the disposal of injunction application only. If the plaintif fs are able to establish that Section 24(5) contravenes or offends Article 4, 10-A and 25 of the Constitution, they may well be able to make out a prima facie case, where balance of inconvenience would lie in their favour and they would suffer irreparable loss on account of label of penalty imposed. In case they don't then they may face its consequential effect. 9. The emphasis of Mr. Makhdoom Ali Khan in challenging the vires of Section 24(5) of Competition Act, 2010 is on the count of Article 4, 10A and 25 of the Constitution and the main thrust was that a second/casting vote right has been given to the chairperson who has already casted a vote and has a ?conc eived mind? in view of original decision (four-member decision) made by her. As obvious from the facts that the two members of the Commission decided in favour of plaintif fs and two against plaintif fs and chairman/chairperson is one of them who gave decision against the plaintif fs. 10. Defendant No.2 being a Commission under the Competition Act, 2010 is claimed to be coram non judice as not being constituted under section 14(1) of the Act, as it provides a minimum of five and maximum of seven members (odd member). In support of this contention plaintif fs' counsel relied upon the case of Chittaranjan Cotton Mills Ltd. and further relied upon the case of Muham mad Ashraf Tiwana which stretched upon the failure of the commission to fulfill statutory obligation in the composition of SECP and to ensure its proper constitution in accordance with law . 11. Learned counsel has further indicated that on 07.02.2022 this Court enquired about Commission' s composition under Competition Act, 2010 and the availability of complete quorum to which time was sought by learned counsel for defendants. However , instead of responding and providing reasons to the non-availability of complete quorum, the defendants relied on section 14(7) to validate the incomplete composition of the commission and the action of defendant No.2. For such a situation, learned counsel for the plaintif fs relied upon a judgment of Lahore High Court in the case of Institute of Architects, Pakistan . This judgment was challenged before the Hon'ble Supreme Court but nothing materially altered as far as the view formed on the subject issue (composition of commission) by the learned Lahore High Court, is concerned. 12. With regard to the provisions of sectio n 24(5), which empowers the Chairman, in the event of equality of votes to opt for a casting vote, learned counsel vehemently submitted that the same is not applicable to the quasi-judicial order in a quasi-judicial proceedings. He stressed upon 24(5)' s applicability by reading it down to administrative decision being taken by the Commission but not for quasi-judicial proceedings and order thereunder . Mr. Makhdoom Ali Khan, learned counsel submits that for all intent and purposes a statute must be saved and that could only be possible if the provision is read down in terms of the above understanding of law. He argued that Section 24(5) clearly offends Article 10-A of the Constitution of Islamic Republic of Pakistan, 1973 as the sanctity of entire quasi-judicial proceedings has been diluted by the commission when fifth vote by one of the members of the original commission was allowed to be casted. 13. Mr. Abdul Sattar Pirzada Advocate has also assisted on the basis of same analogy and primarily adopted the arguments of senior counsel Mr . Makhdoom Ali Khan.1 2 3
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14. Mr. Faisal Siddiqui, learned counsel appearing for the Commission/respond ents, vehemently opposed the arguments of the counsel for plaintif fs and submitted that the observations of the Hon'ble Supreme Court with reference to other statute having the pari materia provision of section 14(7) of the Compe tition Act, 2010, have been adjudged to be lawful. Learned counsel in this regard has relied upon the cases of Sardar Sher Bahadur Khan and Ibrahim & Sons . 15. He submitted that the objections regarding improper constitution of an authority can be decided by forums created under the statute i.e. Appellate Tribunal in the instant case. Mr. Siddiqui, however , argued that the objection regarding the constitution of the Commiss ion and casting 5th vote by one of the members of the Commission, was not taken before the Commission itself during the proceedings. Mr. Siddiqui has relied upon the Regulation 52(A) (6) of the Competition (General Enforc ement) Regulations, 2007 which requires that no proceedings of the Commission shall be invalid by reason of any defect or irregularity unless the presiding authority , on any objection taken by any party , is of the opinion that substantial injustice has been caused by such defect or irregularity . 16. Regarding Section 24(5) of the Competition Act, 2010 it is contended that not a single article has been pointed out which is being offended by the afore said provisions of the Act, 2010. Besides, such questions have already been raised before the Competition Appel late Tribunal and could well be addressed before statutory forum provided under the law . 17. Learned Assistant Attorney General adopted Mr . Siddiqui' s arguments. COURT'S ANAL YSIS 18. Chittaranjan' s case (Supra) discussed a Labour Court' s case which Court was constituted under East Pakistan Labour Disputes Act, 1965 and was challenged on the ground that two members of the Court have not been selected in accordance with the provisions of Section 9(4) of the aforesaid Act and the Hon'ble Supreme Court pronounced that "where the Court is not properly constituted at all the proceedings must be held to be coram non judice and, therefore, non-existent in the eye of law". It further says that there can also be no doubt that in such circumstances, "it could never be too late to admit and give ef fect to the plea that the order was a nullity" . 19. If this case is not an ideal reference to apply to the proceedings in hand, as it was selection of two members of "Court" not being selected under section 9(4) of the ibid Act of 1965, then the case of Muhammad Ashraf Tiwana (Supra), which discussed the composition of SECP Commission under the Act, squarely applies to understand the question raised here. Para-40 of the said judgment is appropriate to understand the depth of the arguments of Mr. Makhdoom Ali Khan which is reproduced below:- "40. Before parting with this aspect of the case, it is necessary to comment on the statutory requirement as to the composition of SECP and the failure of the Government to fulfill its statutory obligation and to ensure proper constitution of SECP in accordance with law. In section 5 of the Act it has been mandated that "the Commission shall consist of such number of Commissioners, including the Chairman, appointed by the Federal Government as may be fixed by the federal Government but such number shall not be less than five and more than seven". The minimum number of Commissioners by law could not be stated with greater clarity . Even this Court had clarified in its judgment in C.P No.447 of 2001 and 448 of 2001 that the SECP was not properly constituted because the minimum number of Commissioners had not been appointed. Learned counsel for the petitioner placed on record a table, reproduced below , which shows that barring a period of four years the constitution of the Commission was incomplete during the previous 15 years, as the minimum of five Commissioners had not been appointed . The respondents have not denied the verac ity of this table which reflects a patent illegality and a flippant attitude towards statutory requirements. In fact, in the Concise Statement filed on behalf of respondents Nos.2, 4, 5 and 6, it is admitted that "the number of Comm issioners in [SECP] has been less than five since 2003." A half-hearted attempt was also made to justify this on the ground that "there is no requirement of minimum quorum in the Act or Regulations." When these submissions are juxtaposed with section 5 of the SECP Act, we cannot help but notice the disregard for the law on the part of the respondents in the crucial matter of the very composition of SECP:-- 20. In the case of Institute of Architects, Pakistan (Supra) the Bench maintained as under:- "30. Respondents relied on section 8 of Act-II to argue that the existence of any vacancy or any defect in the constitution of the Authority does not render the acts, proceedings, decisions, orders of the Authority invalid.4 5 6
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Section 8 of Act-II presupposes that the Authority has been lawfully established and constituted. It is not a protection clause that covers for the failure of the Government to establish or constitute the Authority in the first place. Infact it is a functional clause which overcomes procedural and temporary defects of the constitution and saves the decisions or proceedings of the Authority against minor hiccups provided the Authority is otherwise substantially in existence and functional. In the present case, the Authority has not been established or validly constituted in the first place, so Section 8 has no application to this case. Relian ce is placed on Enayat Ali and others v . Province of W est Pakistan and others ( PLD 1968 Kar . 552 )." 21. The question raised in Architect case went up to Hon'ble Supreme Court and the leave was declined in C.P Nos.423-L to 559-L of 2017. 22. Considering the above conclusions, submissions of Mr. Faisal Siddiquii is not forceful that at some point of time, which was very limited, there were five or six members of the Commission appointed, as this aspect was discussed in Tiwana case (Supra-2). The fact remains that most of the time minimum quorum was never in existence and mostly when it matters. The situation could have been convincingly argued by Mr. Siddiqui, provided he could have shown that "most " of the time quorum was available, as required under section 14(1) of the Act or that efforts were made in this regard. This point was further attempted by Mr. Faisal Siddiqui that a larger Bench in the case of Sardar Sher Bahadur Khan (Supra) has already discussed in its Para 12, the present situation of less number of Members of Commission and also in the case of Ibrahim Et Sons (Supra). Ibrahim & Sons is a leave refusing order and does not discuss the points raised in detail whereas Sardar Sher Bahadur does, so I would consider the said case in support of Mr. Siddiqui' s arguments. The observation of the Bench in Sardar 's case is as under:- "....From the perusal of the above provision, it is clear that ECP is comprised five members but at nowhere it has been provided that any decision of ECP shall be taken by all of its five members. Contrary to it, in Section 8(2) of the Order , 2002 any order passed by ECP by lesser members of its total strength has been protected by specifically proving that no action taken or thing done by ECP shall be invalid or called in question only on the ground of the existence of a vacancy therein or of the absence of any member from any meeting thereof...." 23. The subject law under consideration in the case of Sardar Sher Bahadur was Election Act, 2017 which Act itself came in consideration before Hon'ble Supreme Court in the case of Aam Log Ittehad case which law was looked into from another perspective, however , conclusion perhaps is very material for controversy in hand. The question crucial for the purposes of deciding current issue in hand was decided therein to the effect that Election Commission of Pakistan under 2017 Act does not enjoy quasi-judicial status. Learned Bench of the Hon'ble Supreme Court in Aam Log case (Supra) framed a central question (Para 8) therei n which was raised before them and also decided in the judgment impugned before them i.e. the office of member of the commission being quasi- judicial in nature, as held in the impugned judgment before Hon'ble Supreme Court. The nature of the office of the member of the Commission was then discussed at length and answered in para-18 of the judgment. Paragraphs 8 and 18 of the judgment are reproduced as under:- "8. We have heard the learned petitioner and learned counsel and considered the relevant provisions and the record. We begin by setting out the conclusions arrived at by the learned High Court, which are conveniently summarized in para 22 of the judgment: "22. We would, therefore, sum up our findings on various constitutional and legal grounds agitated by the petitioners and the objections as to maintainability of instant petition raised by the respondents, in the following terms: (i) Petitioners have the locus standi to file instant constitutional petition in the nature of quo-warranto under Article 199(i)(b)(ii) of the Constitution of Islamic Republic of Pakistan, 1973 for the reason that any person, who may not be an aggrieved party , can invoke the constitutional jurisdiction of a High Court for issuance of a writ of quowarranto so that a High Court may examine the validity of an appointment to a public office, on constitutional and legal grounds. In view of our detailed finding as recorded in Paras. 9 to 12 hereinabove, the objections raised by the respondents with regard to maintainability of instant petition on various grounds, including: (i) locus standi of7
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petitioners to file instant petition; (ii) mala fide on the part of the petitioners; (iii) laches; and (iv) lack of territorial jurisdiction of this Court, are hereby declared to be without any substance, hence over -ruled. (ii) Office of Election Commission of Pakistan is a "quasi-judicial office", therefore, bar of expiration of two years in terms of Article 207(2) of the Constitution of Islamic Republic of Pakistan, 1973, would not be attracted in the case of appointment of retired judges of Supreme Court and High Court(s). Therefore, a writ of quo-warranto cannot be issued against respondents Nos. 2 to 4 being the retired Judges of different High Courts on the grounds that their appointments have been made before expiration of two years from the date when they ceased to hold office as Judges of High Courts. Accordingly , writ against respondents Nos.2 to 4 is misconceived and not maintainable. (iii) As regards issuance of writ of quo-warranto against respondent No.5, a retired bureaucrat, no substantial constitutional or legal ground has been agitated, nor any sufficient material or evidence has been produced in support of the allegations of corruption, therefore, we are not inclined to conduct any inquiry or to make a probe into the allegations levelled against respondent No.5 while exercising constitutiona l jurisdiction under Article 199 (i) (b) (ii) of the Constitution in the instant case. Accordingly , writ against respondent No.5 is not maintainable." We may note that the learned High Court has, in sub-para (ii), inadvertently referred to the "Office of Election Commission of Pakistan" being quasi-judicial. There is of course no such office (the Commission being a body), but the true meaning and intent is clear and we proceed accordingly . It will be seen that the preliminary objections taken before us were also raised before the learned High Court but were repelled. We are satisfied with the treatment of the same; therefore no further notice need be taken of them here. Furthermore, we are, with respect, also not inclined to take up the matter of the Respondent No. 5, both for the reasons that found favor with the learned High Court and that admittedly he stands retired. We turn therefore to the central question raised before us, and decided by the impugned judgment: is the office of a member of the Commission of a quasi-judicial nature? .... 18. In view of the above discussion and analysis, we conclude that the question posed…
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