Full Judgment Text & Judicial Ruling

2023 C L D 718 [Sindh] Before Aqeel Ahmed Abbasi and Arshad Hussain Khan, JJ KESC LABOUR UNION through Chairman and others---Petitioners Versus FEDERATION OF PAKISTAN through Cabinet Secretary and others---Respondents Constitutional Petitions Nos. D-1511 of 2005, D-3775, D-3776 of 2012, D-3767 and D-3818 of 2015, decided on 21st January, 2021. (a) Privatization Commission Ordinance (LII of 2000)--- ----S. 25---Privatization Commission (Modes and Procedures) Rule, 2001, R. 6---Constitution of Pakistan, Arts. 153 & 173---Karachi Electric Supply Company Limited---Process of privatization, challenge to---Petitioners sought a declaration that the privatization process of Karachi Electric Supply Company Limited (KESC) by the Privatization Commission, including the transfer of shares and management to the respondent consortium, was illegal, void, and without legal effect---Validity---Approval from the Council of Common Interests (CCI) was obtained in 1993, and post-facto approval was also received in 2006---CCI's formal approval was granted twice, fulfilling the requirements of Article 153 of the Constitution for KESC's privatization---Decision to privatize KESC was prompted by significant financial losses, reaching around PKR 16 billion annually, escalating to approximately PKR 80 billion in 2002---As a result, the Federal Government initiated the privatization process---First attempt to privatize KESC was made in March 2002 under S. 25 of the Privatization Commission Ordinance, 2000---Strategic investors were invited to express their interest in acquiring 51-73% of KESC's share capital---Only two parties submitted their expressions of interest, and when both were requested to submit a statement of qualification (SOQ), only one party complied by the closing date---Privatization Commission's pre-qualification committee reviewed the SOQ but the party withdrew during the due diligence phase---Subsequently, the Federal Government re-launched the privatization process in September 2003, inviting fresh expressions of interest from potential investors---Five parties submitted their EOIs, and four out of five parties submitted their SOQs---Financial Advisor assessed the SOQs and identified three parties as suitable to proceed to the next stage---However, one party later withdrew from the bidding process, leaving only two---Parties were allowed to belong to multiple consortia as long as the lead bidder in each consortium was different---Prior to the bidding, a reference price of PKR 1.30 per share was approved by the Cabinet Committee on Privatization, which remained confidential---Bidding began in 2005, and each party was required to deposit PKR 100 million as earnest money and subscribe to redeemable preference shares worth PKR 4.38 billion in KESC---Both parties submitted their bids, and the highest bid was accepted---Unfortunately, the highest bidder disappeared without making the balance payment, resulting in the forfeiture of the earnest money---Consequently, the second attempt to privatize KESC was unsuccessful---Under Rule 6 of the Privatization (Modes and Procedures) Rules, 2001, the Privatization Board opted for a negotiated sale---Unsuccessful bidder (original consortium) was given the opportunity to match the previously offered bid by the highest bidder---Unsuccessful bidder, after obtaining permission to form a new consortium, formed it accordingly and the same expressed its willingness to match the bid---Cabinet Committee on Privatization approved the transaction and forwarded it for Cabinet ratification---Eventually, the transaction was completed---Overall, the official respondents substantially complied with the relevant constitutional articles and legal provisions of the Privatization Commission Ordinance, 2000, and Privatization Commission (Modes and Procedures) Rule, 2001, during the privatization process of KESC---Petitioners, failed to provide evidence demonstrating that the Federal Government's privatization of KESC was unconstitutional, illegal, or violated the principles of natural justice---Constitutional petitions were dismissed, in circumstances. Wattan Party through President v. Federation of Pakistan through Cabinet Committee of Privatization, Islamabad and others PLD 2006 SC 697 and Dr. Akhtar Hassan Khan v. Federation of Pakistan and others 2012 SCMR 455 rel. (b) Constitution of Pakistan--- ----Arts. 173 & 9---Privatization Commission Ordinance (LII of 2000), S. 25---Power to acquire property and to make contracts---Right to electricity---Karachi Electric Supply Company Limited---Process of privatization, challenge to---Federal Government retaining regulatory control over privatized assets---Petitioners sought a declaration that the privatization process of Karachi Electric Supply Company Limited (KESC) by the Privatization Commission, including the transfer of shares and management to the respondent consortium, was illegal, void and without legal effect---Objection has been raised by petitioners to the effect that electricity being an essential service cannot be privatized as it is the responsibility of the State to provide all the essential services to the citizens and protect the fundamental right as guaranteed under the Constitution including the right to life---Validity---Certain percentage of shares of KESC had been sold/transferred to a private company, whereas, the Government was still the shareholder and had regulatory control over the affairs of the Company under Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997---NEPRA being the regulator maintained supervisory control over the functions of KESC---Constitutional petitions were dismissed, in circumstances. (c) Privatization Commission Ordinance (LII of 2000)--- ----Preamble---Constitution of Pakistan, Art. 173---Privatization of "National Asset"---Scope---Executive, duty of---Even if there is no specific embargo under the Constitution or the Privatization Commission Ordinance, 2000, along with the Privatization (Modes and Procedures) Rules, 2001, restricting the sale or transfer of a "National Asset" that holds a strategic position and relates to the exercise of sovereign rights by the State, the Executive must exercise extraordinary caution and due care---Executive should ensure that, in the guise of privatizing, a public asset supposedly in the public interest and citing financial exigency, it does not diminish or affect the sovereign rights of the State, its obligation to provide essential services and the safeguarding of fundamental rights of citizens---This caution is necessary to avoid losses to the public exchequer and to ensure the generation of profits. Atique Hussain and another v. Federation of Pakistan through Secretary, Ministry of Communication and 2 others 2005 CLC 1931 rel. Calicon (Pvt.) Ltd. v. Federal Government of Pakistan and others 1996 MLD 705 ref. (d) Privatization Commission Ordinance (LII of 2000)--- ----Preamble---Constitution of Pakistan, Art. 199---Karachi Electric Supply Company Limited---Process of privatization, challenge to---Judicial review---Scope---Petitioners sought a declaration to the effect that the process of privatization of Karachi Electric Supply Company Limited (KESC) adopted by the Privatization Commission and KESC, including the transfer of shares and management to the respondent consortium, was illegal, void and of no legal effect---Respondents attacked the maintainability of the petition---Validity---Privatization of KESC under the Privatization Commission Ordinance, 2000, was a matter of public interest and could be regarded as a simple transaction involving the transfer of shares from one company to another---On the contrary, considering the government's clear stance on privatization and the sale and transfer of shares to the respondents, it was evident that the matter held public importance---Therefore, the transaction, which entailed scrutiny of constitutional, legal and procedural aspects, could be subjected to judicial review by the High Court under Art. 199 of the Constitution. Wattan Party through President v. Federation of Pakistan through Cabinet Committee of Privatization, Islamabad and others PLD 2006 SC 697 rel. (e) Privatization Commission Ordinance (LII of 2000)--- ----Ss. 28A, 29 & 30---Constitution of Pakistan, Art. 199---Constitutional petition---Maintainability---Process of privatization, challenge to---Scope---Once the process of privatization of a public asset has been challenged by any citizen of Pakistan as pro bono in a public interest litigation, for being violative of the Constitutional mandate and contrary to the legal requirements as per Privatization Commission Ordinance, 2000, then the same cannot be entertained or decided by the High Court while exercising limited jurisdiction in terms of Ss. 28-A, 29 & 30 of the Privatization Commission Ordinance, 2000, read with Privatization (Modes and Procedures) Rules, 2001---Any citizen having locus standi to file a constitutional petition for seeking enforcement of fundamental rights, under Art. 199 of the Constitution can file a constitutional petition for the scrutiny of the process of privatization of a public asset---Objection raised by respondents as to maintainability was overruled. Wattan Party through President v. Federation of Pakistan through Cabinet Committee of Privatization, Islamabad and others PLD 2006 SC 697 rel. (f) Constitution of Pakistan--- ----Arts. 173, 142 & Fourth Sched. Pt. II, Entry No. 4---Legislation relating to electricity---Parliament, authority of---Scope---As per Art. 142(a) of the Constitution, the Parliament has exclusive power to make laws with respect to any matter in the Federal Legislative List, whereas, as per Entry No.4 of Part-II of Fourth Schedule to the Constitution electricity is the subject matter of Federal Legislative List, therefore, any legislation relating to electricity falls within the domain of the Legislative Authority of the Parliament---Article 173(1) of the Constitution, gives powers to the Federation and to the Provinces to exercise executive authority, subject to any Act of the appropriate legislature, to grant, sell, disposition or mortgage any property vested in and to purchase or acquisition of any property on behalf of the Federal Government or as the case may be the Provincial Government and also to make contract. Wattan Party through President v. Federation of Pakistan through Cabinet Committee of Privatization, Islamabad and others PLD 2006 SC 697 rel. (g) Constitution of Pakistan--- ----Art. 9---Security of person---Right to electricity---Scope---Right to electricity is a part of right to life, which includes right to quality of life, hence part of fundamental right of a citizen of Pakistan---To provide electricity to the citizen is the responsibility of a State, whereas, electricity service is part of essential services to be provided by the State to its citizens. (h) Constitution of Pakistan--- ----Art. 199---Constitutional jurisdiction---Public interest litigation---Bona fide of petitioner---Discretion of court---Scope---Any individual or small group of persons, in the garb of public interest litigation, cannot be allowed to invoke the constitutional jurisdiction of High Court under Art. 199 of the Constitution, on mere allegation of mala fide in respect of any decision of the executive authority, whereas, Courts are required to exercise restraint, and should ensure that unless there is a matter of public interest or enforcement of fundamental rights, only then its discretion under Art. 199 of the Constitution should be invoked and exercised by the Courts---In such type of cases, extra caution and care has to be exercised, and unless good faith on the part of petitioner is established and the matter is found to be of a public interest, and the respondent is not in a position to distinguish that the impugned transaction does not suffer from any jurisdictional defect or patent illegality, the Courts may not encourage frivolous litigation between the parties and cause miscarriage of justice. (i) Constitution of Pakistan--- ----Art. 199---Constitutional jurisdiction---Public interest litigation---Subsequent event, notice of---Scope---High Court while exercising jurisdiction, particularly in cases relating to public interest litigation, can take cognizance of subsequent events during pendency of lis before it, in order to do complete justice, however it is to be done without changing the complexion of proceedings. Salahuddin Ahmed along with Saifullah Abbasi for Petitioners. Petitioner in person (in Constitutional Petition No. D-3818 of 2015). Abdul Sattar Pirzada for Respondent/Privatization Commission along with Mamoon Chaudhry and Qazi Umair Ali. Sajid Zahid along with Taha Alizai, Zeeshan Khan and Jawad Raja for Respondent No. 10. Kashif Hanif for Respondent/NEPRA. Omer Soomor along with Danish Nayyer for Respondent. Aemal Kansi for Respondent along with Ms. Sehar Rana along with Syed Irfan Ali Shah, head of Legal Affairs, K. Electric. Malik Naeem Iqbal for Respondent. Hassan Ali for Respondent No. 6. Muhammad Aminullah Siddiqui, Assistant Attorney General. Saifullah, A.A.G. Date of hearing: 17th August, 2020. JUDGMENT AQEEL AHMED ABBASI, J.---Constitutional Petition No.D-1511 of 2005 was filed on 22.11.2005 by K.E.S.C. Labour Union (Petitioner No.1) along with Administration Officer employed by K.E.S.C. (Petitioner No.2), a shareholders in the K.E.S.C. (Petitioner No.3) and a local businessman, claiming to be spirited taxpayer (Petitioner No.4), seeking a declaration to the following effect:- i) Declare that the privatization process adopted by the respondents Nos.2 and 3 in respect of the sale of shares and management control in KESC was illegal, arbitrary, irrational and without any lawful authority; ii) Declare that the purported sale of the respondent No.1's shareholding and management control in KESC to the Hassan Associates consortium is void and of no legal effect having come about in an illegal and mala fide manner and being opposed to law and public policy; iii) Restrain the respondents Nos.1 and 2 from carrying through with the privatization of KESC without an independent and rational assessment of the merits and demerits of privatization at the current stage and disseminating the result of such assessment to the public at large; AND/OR iv) Restrain the respondents Nos.1 and 2 from carrying through with any transfer of the respondent No.1's shareholding and management control in KESC to the Hassan Associates consortium or any other party without initiating a fresh and transparent bidding process and considering each bid on its merits; v) Direct the respondents Nos.1 and 2 to make a full disclosure of all facts relating to the KESC privatization upto date and hereafter and of the terms and conditions of any proposed sale and the details of any parties to whom such a sale is proposed to be effected; vi) Grant costs of the proceedings; 2. On 18.05.2011, an application under Order I, Rule 10, C.P.C. was filed with the prayer to join Messrs Abraaj Investment Management Limited as a party in the instant petition by the petitioners on the ground that K.E.S.C. was transferred to Hasan Associates Consortium in terms of shareholding (with a power) in favour of Messrs Abraaj Investment Management Limited, therefore, transaction to be examined by the Court. Mr. Sajid Zahid, learned counsel representing Messrs Abraaj Investment Management Limited without prejudice and subject to all just exceptions extended no objection to implead Messrs Abraaj Investment Management Limited as a party in the aforesaid petition, whereafter, pursuant to Court order dated 18.05.2011 they were added as respondent No.10 and amended title to this effect was filed. Record shows that large number of hearing took place in the aforesaid petition, whereas, several Misc. Applications were filed on which orders were passed from time to time, however, before the hearing in the above petition could be concluded two (02) other C.Ps. Nos.D-3775 and 3776 of 2012 were also filed by the K.E.S.C. Labour Union, relating to somewhat similar controversy agitated through instant petition, which were taken up for hearing along with aforesaid petition at the joint request of the learned counsel for parties pursuant to order dated 03.02.2015. Record further reveals that two (02) other C.Ps. Nos.D-3767 and 3818 of 2015 were also filed relating to similar controversy, which were also clubbed along with aforesaid petitions, whereafter, all the above petitions have been heard together, therefore, the same are disposed through common judgment. It is pertinent to note that before this Bench Mr. Salahuddin Ahmed Advocate has made his submissions on behalf of the petitioners, whereas, no other counsel representing the petitioners in other Constitutional Petitions have shown their appearance on behalf of petitioners, nor submitted written synopsis inspite of repeated opportunities provided in this regard. Mr. Abdul Sattar Pirzada Advocate representing the Privatization Commission along with Qazi Umair Ali Advocate, whereas, Mr.Sajid Zahid Advocate along with Taha Alizai represented the respondent No.10 (Messrs Abraaj Investment Management Limited). Mr. Kashif Hanif Advocate represented the NEPRA. Mr. Aemal Kansi Advocate represented the K. Electric, Malik Naeem Iqbal Advocate, represented the respondent and Mr. Hassan Ali Advocate represented the respondent/Premier Mercantile (Pvt.) Ltd. Learned counsel for the parties in addition to their verbal arguments have filed written synopsis, which can be summarized in the following terms:- 3. Mr. Salahuddin Ahmed, learned counsel for the petitioners has argued that petition was filed on 22.11.2005 challenging the ongoing privatization of Respondent No.3 - KESC (now K-Electric). The privatization process was completed on 29.11.2015 and, resultantly, the controlling interest in KESC was transferred by the Respondent No.1 (the Government of Pakistan - 'GOP') to a consortium led by the Al-Jomaih Holding Company ['Al-Jomaih']. In 2008, Al-Jomaih transferred its controlling interest in KESC to Abraaj Investment Management Limited ['Abraaj']. As a result, the petition was amended to implead Abraaj and challenge the subsequent transfer as well. Presently, Abraaj has entered into an agreement to transfer the controlling interest in KESC to Shanghai Electric Power Company ['SEPCO'] albeit the transfer is yet to be finalized. The Petitioners have preferred applications to restrain this proposed transfer and to implead SEPCO. Notice was ordered thereon on 17.10.2016 but the applications have not been finally decided and are to be disposed off along with the main petition. 4. The following questions of law arise out of the petition and the counter affidavits filed as well as the arguments canvassed at the bar during hearing: i) Whether the Petitioners have locus standi to challenge KESC's privatization? ii) If so, whether relief is to be denied due to the Petitioners' unclean hands? iii) In any event, whether the petition is barred due to the alternate remedy provided under the Privatization Commission Ordinance, 2000 ['PCO 2000']? iv) Whether KESC (a vertically integrated electric utility solely responsible for generating, transmitting and distributing electricity to all of Karachi) could at all be transferred out of State ownership/control under the scheme of our Constitution? v) If so, whether such privatization (along with the subsequent transfer to Abraaj and the proposed transfer to SEPCO) lacked the mandatory approval of the Council of Common Interests ['CCI'] under Article 154 of the Constitution? vi) In any event, whether GOP's KESC shares were sold at a gross under-value? vii) Whether the bidding process was collusive and wrongly converted to a negotiated sale in favour of Al-Jomaih which was given further benefits and concessions that were not factored in whilst determining the value of KESC shares? viii) In any event, whether it would now be equitable or practicable to grant the full relief and revert KESC to the ownership/control of the GOP? If not, whether any (and what) alternate relief can be granted to do complete justice? Maintainability Locus standi 5. The Petitioner No.1 is KESC's registered trade union. The Petitioner No.2 is an administration officer in KESC and is not a union member. The Petitioner No.3 has been a shareholder in KESC since before the privatization. The Petitioner No.4 carries on business and resides in Karachi and is a tax-payer and a KESC consumer. 6. The right to electricity has been recognized by the Supreme Court as a fundamental right guaranteed by Article 9 of the Constitution. As such, questions relating to KESC's ownership and management and its transfer to private hands in violation of law and/or at an under-value have a material bearing on the provision of this fundamental right and are of vital interest to every citizen of Karachi. All citizens of Karachi can be termed, therefore, as "aggrieved persons" as per the definition of the term adopted by the Supreme Court. The Petitioners here, however, have a closer and substantial interest in the affairs of KESC than ordinary citizens of Karachi. Even otherwise, the specific locus standi of a trade union to challenge the privatization of an entity has been upheld by the Supreme Court in the Steel Mills privatization case. Equitable Relief and Unclean Hands 7. Abraaj and KESC claim that the instant petition is not brought in the genuine public interest but with ulterior motives on part of the KESC Labour Union which is using the same as a bargaining tool in its labour disputes with the KESC management. Abraaj filed a Memorandum of Settlement dated 3.4.2010 ['the Settlement'] with the KESC Labour Union and the Union's letter dated 26.6.2010 to claim that the Union had committed to withdrawing the instant petition. As such, allowing the Union to press this petition in violation of its commitment would be inequitable. Abraaj also submitted - during oral arguments - copies of the Memos in C.Ps. Nos.3775 and 3776 of 2012 filed by the Union to show that it had actually accepted the privatization and was - in these subsequent petitions - seeking relief (i.e. transfer of certain shares to workers) that was only available post-privatization. This amounted, according to Abraaj, to approbation and reprobation. The Union - having waived its right to challenge the privatization - could not, now, be heard in opposition to the privatization. 8. The simplest answer to this objection is that the petition is preferred by four independent petitioners. Petitioners Nos.2 to 4 are not members of the KESC Labour Union nor are they liable or bound by the actions of the latter. No mala fides or unclean hands have been shown on their part. They have not entered any settlement nor made any commitment to the KESC management. Nor are they party to any other petition. As such, even assuming - but not admitting - any inequitable conduct or waiver on part of the KESC Labour Union; the same could not be attributed to the other petitioners who remained fully entitled (as concerned residents of Karachi) to press the instant petition. 9. As far as the two subsequent petitions filed by the Union are concerned, they sought to enforce two separate and independent obligations on part of the GOP to transfer part of their shareholding in KESC to KESC workers. It is respectfully submitted that such petitions are without prejudice to the instant petition. Moreover, the instant petition has been pending for more than 12-years and the Union was entitled to seek - in the meanwhile - alternate remedies for the betterment of KESC workers without detracting from the force of the instant petition. As such, the Union has preferred the instant petition with clean hands and in all good faith. Alternate remedy under the Privatization Commission Ordinance, 2000 10. The Respondents argue that any challenge to KESC's privatization (which was carried out pursuant to the PCO 2000) must be made under section 28 thereof which confers exclusive jurisdiction upon the High Courts to adjudicate "all matters related to, arising from or under or in connection with this Ordinance." The Respondents argue that this alternate remedy ousts the writ jurisdiction of this Court. 11. In the first place, section 28 only covers cases where there is a challenge to the privatization process of an entity on the grounds that it violated the PCO Ordinance or the Rules or procedures prescribed thereunder. Whether KESC could have been privatized at all - in view of its quintessentially State functions pertaining to the provision of a Fundamental Right - under the scheme of our Constitution or whether such privatization could have been permitted without CCI approval under Article 154 of the Constitution are not matters falling within…

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