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Petitioner: WORKERS UNION, UNITED INDUSTRIES LTD. FAISALABAD VS Respondent: FEDERATION OF PAKISTAN through Secretary, Ministry of Law and 4 others
Court Name: Supreme Court of Pakistan Judge(s): Nasim Hasan Shah, Muhammad Rafique Tarar, Rustam S. Sidhwa Title:WORKERS UNION, UNITED INDUSTRIES LTD. FAISALABAD vs FEDERATION OF
PAKISTAN through Secretary, Ministry of Law and 4 others Case No.: C.P.L.A.No,483-L of 1992 Date of Judgment:1992-07-09 Reported As: 1992 SCMR 2121 Result: Petition dismissed Judgment ORDER ' RUSTAM S. SIDH'WA, J.---This is a petition by the Workers' Union, United Industries Ltd. Petitioner, seeking leave to appeal against the judgment of a learned Division Bench of the Lahore High Court dated 23-5-1992 dismissing their writ petition W.P. No,3629/1992. 2. The brief facts of the case are that on 20-1-1991 the Privatisation Commission as a Wing of the Ministry of Finance, was set up by the President of Pakistan, for the purposes of implementing the Privatisation Policy of the Federal Government. 3. Three months later, on 27-4-1991, by Federal Ordinance No,XVII of 1991, the Federal Government added section 5-A to the Hydrogenated Vegetable Oil Industry (Control and Development) Act, LXV of 1973, enabling the Federal Government by public advertisement to invite bids for the transfer of the shares of any managed establishment that had been acquired by it earlier under section 5. The said new section entitled the Federal Government to offer the said shares to the previous management on the highest bid so received. If the said previous management did not accept the offer within a specified time, the Federal Government could transfer the shares to such persons and on such terms and conditions as it thought fit. 4. Pursuant to the above amendment, the Privatisation Commission by advertisements in various newspapers issued on 3-6-1991 invited interested individuals, groups, companies, corporations and firms in the private sector to submit bids for the purchase of 100 per cent. Share capital of United Industries Ltd., a unit of the Ghee Corporation of Pakistan and for transfer of the management of that company. The bids were to be submitted before 18-6-1991. The terms and conditions relative to the transfer were stated to be contained in "Bid Documents".
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5. On 9-6-1991 the Workers' Union, United Industries Ltd. (hereinafter to he referred to as "the petitioner union") filed writ petition W.P. No,4701 of 1991 in the Lahore High Court against the Federal Government, the Privatisation Commission, United Industries Ltd., and the Ghee Corporation of Pakistan for a declaration that Ordinance XVII of 1991 was void, that the Privatistation Commission had no lawful authority to carry out the impugned sale transaction by inviting bids, that the petitioner union had the right to be offered 51 per cent. Shares along with the management and control and that the respondent Federation be directed to disband the Privatisation Commission and be restrained from carrying out denationalisation of United Industries Ltd., and that in the event it was found that the transfer of shares was justified, the respondent Federation be directed to make a prior offer of 51 per cent. Shares with transfer of management and control to the petitioner union. 6. On 30-6-1991 the petitioner union requested the Privatisation Commission to extend the last date for the transfer of the shares of the United Industries Ltd. 7. On 19-6-1991 the Privatisation Commission, by advertisement in the press, extended the last date for the submission of bids for the United Industries Ltd. To 4-7-1991. 8. On 3-7-1991 the petitioner union filed writ petition W.P. No,4507 of 1991 against the Federation of Pakistan and the Privatisation Commission stating that the Bid Documents received by it were found inherently unworkable, that no proper sale could be effected on the basis of the same, that even the extended date for submission of bids did not provide sufficient time to the petitioner union to mobilise its financial resources in order to make a bid and that it be declared that the Bid Documents were devoid of lawful authority 'and that the petitioner union be given time to effectively mobilise its financial resources and that the Bid Documents be set aside, fresh Bid Documents be prepared and issued and that the respondents be directed to fix a last date for tender of bids which was reasonable and adequate in the circumstances of the case. However, on 9-7-1991 the said writ petition was dismissed in limine on the ground that the petitioner had earlier filed writ petition W.P.No,4701 of 1991 on the same subject and the fresh matters raised stood barred from consideration by virtue of Order II, rule 2, C.P.C. 9. In response to the bids called for by advertisements that had appeared in the newspapers on 3- 6-1991, the following 4 parties submitted their bids which were opened on 14-7-1991:-- (i) Mian M. Akbar Maggo & Associates. (ii) Mr. Akhtar Nazir Khan. (iii) Mr. Amir Bakht Azam. (iv) Workers' Union of United Industries. ' The first two bids were rejected being conditional and the remaining two admittedly stood rejected because neither bidder had deposited the earnest money or paid the processing fee. 10. On 27-7-1991 the petitioner union filed writ petition W.P. No,6998 of 1991 against the Federation of Pakistan and the Chairman, Commission for Islamisation of Economy for a declaration that the respondent Federation was bound by the Shariah Act, 1991, to submit the Hydrogenated Vegetable Oil Industry (Control and Development) (Amendment) Ordinance, XVII of 1991, for the examination of the Commission for Islamisation of Economy and for a direction to the respondent Federation to submit the said Ordinance to the said Commission for examination to refrain from acting on the Ordinance until it had been so examined and to direct the Commission for Islamisation of Economy to forthwith examine the impugned Ordinance in the light of the Shariah Act, 1991. 11. On 1-8-1991 the petitioner union filed writ petition W.P. No,6997 of 1991 against the Federation of Pakistan, the Privatisation Commission, the United Industries Ltd., and the Trustees of the United Industries Ltd., Employees Provident Fund, for a declaration that the members of the petitioner union were entitled to receive the amounts due to them out of their provident and gratuity funds on demand for the purpose of purchasing the share capital of the United Industries Ltd., that the said
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funds were under an obligation to permit the employees to use the same towards payment of the bid price and that the Privatisation Commission was under an obligation to receive the said bid money from the provident and gratuity funds of the employees and for a direction that the respondents be directed to make necessary adjustment/book entries whereby the amounts standing to the credit of the members in the provident and gratuity funds could be adjusted against the petitioner union's highest bid for the purchase of the United Industries Ltd., that the respondents be restrained from treating the petitioner union as being in default in respect of the payment of its highest bid made on 14-7-1991 and that the Privatisation Commission be restrained from rejecting the highest bid so submitted. 12. On 12-8-1991 the Privatisation Commission by letter informed the petitioner union that the Bid Documents submitted by it did not conform to the requirements laid down in the matter and the request of the petitioner union to permit utilization of the provident and gratuity funds of its employees for payment of the bid could not be accepted. However, the Privatisation Commission offered to sell 10 per cent. Of the share capital of the United Industries Ltd., to the petitioner union if they desired to accept the same. 13. On 13-8-1991 the petitioner union addressed a letter to the Prime Minister pressing its claim for the purchase of 100 per cent. Shares of the United Industries Ltd., at the price of Rs,60 per share offered by it on 14-7-1991. 14. On 25-8-1991 the Transfer of Managed Establishment (Second Amendment) Ordinance, XXXIII of 1991, was gazetted which substituted section 4 in the Transfer of Managed Establishments Order P.O. No,12 of 1978. Under the amended section the Federal Government could invite bids through public advertisements for transfer of shares held in respect of any managed establishment. First right to buy the managed establishment at the highest bid was given to the previous management unless the said highest bid was made by the employees of the managed establishment However, this Ordinance did not cover the ghee units. 15. On 2-9-1991 the. Privatisation Commission again, through advertisements given in various newspapers, invited interested individuals, groups, companies, corporations and firms in the private sector to submit bids for the purchase of shares alongwith the transfer of management of a large number of managed establishments, including the United Industries Ltd. Faisalabad. The last date for the submission of bids was 10-9-1991. The previous management was granted the right of first refusal at the highest bid received, provided the previous management took, part in the bidding, except in cases where the employees had made the highest bid. Detailed terms and conditions were stated to be contained in the "Bid Documents": 16. On 2-9-1991 the High Court disposed of the three writ petitions earlier, filed by the petitioner union. In writ petition W.P.No 4701 of 1991, the learned counsel for the petitioner union stated at the bar that Ordinance XVII of ]991 which embodied section 5-A had since lapsed, that a new Ordinance had been promulgated which recognised the preferential right of workers to purchase the assets of the company, that an advertisement had also appeared in the press inviting bids for the United Industries Ltd., by 10-9-1991 and that according to him this indicated that the Federal Government was also treating the previous bids to be no longer valid. Hi view of this statement, the learned Judges of the High Court observed that the petitioner's grievance to the extent of its preferential right to purchase assets had borne fruit and they disposed of the petition accordingly. In respect of writ petition W.P. No,6997 of 1991, the High Court observed that there was no scope for adjustment of the provident and gratuity funds towards the purchase of the shares of United Industries Ltd., and, finding no merit in the petition, dismissed the same in limine. With regard to writ petition W.P.No,6998 of 1991, the learned counsel for the petitioner union submitted that Ordinance XVII of 1991 had since lapsed and a fresh Ordinance had been promulgated and that he therefore
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prayed for withdrawal of the petition, with permission to file a fresh one, which request was accordingly granted. 17. On 3-9-1991 the Hydrogenated Vegetable Oil Industry (Control and Development) (Amendment) Ordinance, XXXV of 1991, was gazetted, substituting section 5-A in the Act LXV of 1973. Under the amended section the Federal Government could invite bids through public advertisement for transfer of the shares held by any managed establishment. The first right to buy at the highest bid was of the previous management, unless the said highest bid was made by the management group of the employees of such establishment. 18. On 10-10-1991 Mian M. Akbar Maggo, respondent No,5, and one other party submitted their bids for the purchase of shares of the United Industries Ltd. 19. On 6-9-1991, 13-9-1991, 7-10-1991 and 14-10 1991, the Privatisation Commission, through advertisements given in various newspapers, invited interested individuals, groups, companies, corporations and firms in the private sector to submit bids for the purchase of shares along with the transfer of management of a large number of managed establishments, including the United Industries Ltd., Faisalabad. The last date for the submission of bids was first declared as 10-10-1991, but later extended to 1710-1991. The previous management was granted the right of first refusal of the highest bid received, provided the previous management took part in the bidding, except in cases where the employees had made the highest bid. tDetailed terms and conditions were stated to be contained in the "Bid Documents". 20. On 15-10-1991 a Memo. Of Agreement was signed between the Federal Ministers for Labour, Interior, and Industires, on the one hand, and the President, the Senior Vice-President and the Rabita Secretary of the All Pakistan State Enterprize Workers Action Committee, on the other, whereby certain terms of agreement relating to the protection of the rights of the labour in the managed establishment to be disposed of, the rights of the employees opting to retire from such units and the facilities provided to the management group of the employees wanting to purchase managed establishments were set out. The rights of the labour were set out in Package 'A', the rights of the employees wanting to leave the units were set out in Package 'B' and the rights of the management group of the employees wanting to purchase the managed establishments were set out in Package 'C'. The conditions included in Package `C' called upon the employees to participate in the bidding, which was expected to be competitive so that they could be declared successful bidders. 21. On 17-10-1991 only two bids were received in respect of the United Industries Ltd., Faisalabad, which were filed by:-- (i) Mian M. Akbar Maggo & Associates and (ii) Mian Samiuddin. ' The bid of Mian M. Akbar Maggo and Associates being the highest, he deposited 14 per cent. Of the transfer price, according to the conditions specified. 22. On 28-11-1991 the Hydrogenated Vegetable Oil Industry (Control and Development) (Amendment) Act, XX of 1991, was assented to by the President and published on 2-12-1991, wherein the provision which had been introduced for the first time by Ordinance XXXV of 1991 to facilitate transfer in favour of the employees, was omitted. Thus, after 28-11-1991 there did not exist any provision of law under which the Federal Government could exercise its discretion in favour of the employees. Such a provision was however reintroduced, much later i.e, on 27-4-1992 by Ordinance VII of 1992. 23. The higher of the two bids, namely, that of Mian M. Akbar Maggo and Associaties was, under the direction of the Cabinet, considered and accepted. The Letter of Acceptance was issued to this highest bidder on 31-3-1992. Afterwards, Mian M. Akbar Maggo and Associates deposited the requisite 26 per cent. Of the purchase price and furnished Bank Guaranteesifor the balance 60 per cent. Of the purchase price according to the conditions specified.
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24. On 22-4-1992 the petitioner union filed a writ petition W.P. No, 3629 of 1992 in the Lahore High Court seeking a declaration that the Privatisation Commission had no statutory basis, that the respondent Federation had abdicated its functions in favour of the Privatisation Commission, which itself had no legal authority, that the petitioner union was entitled to buy out the United Industries Ltd., at the rate of Rs,60 per share as previously offered by it, that the respondent Federation had not acted in accordance with the Package Agreement dated 12-10-1991 and that the auction proceedings conducted in favour of Mian M. Akbar and Associates was a nullity in law and it called upon the High Court to restrain the respondent Federation from abdicating its functions in favour of the. Privatisation Commission, to direct the respondent Federation to act in accordance with the Package Agreement dated 15-10-1991 and to restrain the respondent Federation from effecting the transfer of assets in favour of Mian M. Akbar Maggo and Associates, respondent No,5, on the basis of auction proceedings, pursuant to public notice dated 2-9-1991 and the opening of tender on 17- 10-1991. 25. On 21-5-1992 the Sale Agreement was executed by the Government in favour of Mian M. Akbar Maggo and Associates transferring the United Industries Ltd, to them. 26. On 23-5-1992 writ petition W.P.No,3629 of 1992 was dismissed, as it was found lacking in merit. 27. On 24-5-1992 the management of the United Industries Ltd. Was handed over to the new owners. 28. In recognition of the transfer of the Unit--both title and management--the Workers' Union C.BA. United Industries Ltd., entered into an agreement with the new management on 26-5-1992 and secured number of concessions from them. 29. The petitioner union now seeks leave to appeal against the judgment of a learned Division Bench of the Lahore High Court dismissing its writ petition W.P. No, 3629 of 1992. 30. On behalf of the petitioner union a number of submissions have been made. First, that the Privatisation Commission had no statutory foundation nor lawful authority to exercise discretion vested in the Federal Government nor any lawful authority to take substantive decisions and that decisions taken by it in calling for bids and accepting the same through advertisements were without lawful authority. Second that by virtue of the Hydrogenated Oil and Industry (Control and Development) (Amendment) Ordinance, XXXV of 1991, gazetted on 3-9-1991, the petitioner union was vested with the right to purchase the shares of the United Industries Ltd., at a price and on terms and conditions, which were to be settled between the Federal Government and the petitioner union. It is further contended that the buy out negotiations contemplated by section 5-A(4) of the said Ordinance, are independent of the procedure for calling bids through public advertisement as stated in subsections (1), (2) and (3) of the said section, and this is obvious considering that subsection (4) is prefaced by a non-substantive clause which has the effect of excluding anything contained in subsections (1),(2) and (3) of the said section. Third, that as the Federal Government issued the public advertisement on 2-9-1991 before waiting for the promulgation and enforcement of Ordinance XXXV of 1991, the petitioner union did not care to participate in the bid proceedings initiated thereunder as the negotiation procedure under subsection (4) was independent of the bidding procedure prescribed by subsections (1), (2) and (3). Fourth, that the bids which were to be opened on 10-10-1991 were clandestinely opened later on 17-10-1991 and that the bid of Mian M. Akbar Maggo and Associates, which was much less than the offer of Rs,60 per share given by the petitioner union, was illegally accepted. Fifth and last, it is urged that Ordinance XXXV of 1991 read with Memo. Of Agreement dated 15-10-1991 entered into between the Federal Government, on the one hand, and the Pakistan State Enterprise Workers Action Committee, on the other, gave to the petitioner union the twin right of securing the shares of United Industries Ltd. Under both the bidding procedure and the negotiation procedure and the latter right which was open to the petitioner union and on which it banked for redress and pressed its claims, was clandestinely not
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allowed to operate in its favour, thus depriving the petitioner union of a valuable right which was available to it under law. 31. We have given our anxious consideration to the arguments addressed by the learned counsel for the petitioner union and have also perused the record. Before dealing with the arguments it is necessary to set out section 5-A of Ordinance XXXV of 1991 and paras. 1 to 11 of Package 'C' of the Memo. Of Agreement, which are as follows:- "5-A. Transfer of shares and proprietary interests etc.--- (1) If the Federal Government considers it necessary in the public interest to transfer the shares or proprietary interest in respect of a managed establishment acquired by it under section 5, the Federal Government may, through a public advertisement, invite bids for the transfer of the shares or proprietary interests. (2) On receipt of bids in pursuance of an invitation under subsection (1), the Federal Government shall offer the transfer of the shares or proprietary interests to the previous management of such establishment, on the highest bid so received and on such terms and conditions as it may deem fit: ' Provided that it shall not be necessary to make such an offer to the previous management in case the highest bid has been made by the management group of the employees of such establishment. Explanation.---In this subsection and in subsection (4) 'management group of the employees' means such management group of the employees as has, in the opinion of the Federal Government, been formally constituted as such. (3) If the said previous management does not accept the offer made under subsection (2) within a specified time, the Federal Government may transfer the shares or proprietary interests to such persons, and on such terms and conditions as it may deem fit. (4) Notwithstanding anything contained in subsections (1), (2) and (3), the Federal Government may, in its discretion, if it considers it necessary in the public interest so to do, transfer the shares or proprietary interests in respect of any such establishment to the management group of the employees of such establishment at a price, and on terms and conditions, settled between the Federal Government and such management group. (5) In case of transfer of shares or proprietary interests in respect of a managed establishment under subsection (2), (3) or (4), the provisions of this Act shall cease to apply to such establishment." MEMORANDUM OF AGREEMENT ' Package 'C' (1) In case of employees' buy-out negotiations will be facilitated in consultation with the Supreme Council of All Pakistan State Enterprises Workers' Action Committee. (2) Employees will be provided all opportunities to purchase a unit if they make a bid. They will also have right of negotiations on the highest bid. (3) All bids made by the employees will have to be competitive and in accordance with the bid documents. (4) Employees will be given concessions through negotiations if they are declared successful bidders. (5) Wherever gratuity fund is maintained as a trust, the funds may be used for investment as per rules. (6) The savings in the Provident Funds may be utilised for bidding purposes subject to Government Rules and Regulations. (7) A management plan (which should include a fmancial plan) will be submitted by the employees for any bid they make for a unit. (8) Any unit owned by the Federal Government in FATA will avail the same facilities as available to remaining units of SOEs.
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(9) The facility of group insurance for workers who opt for golden hand shake will be available for continuation provided he subscribes to the same from his own resources. (10) Any legal requirements for the implementation of this agreement will be fulfilled by the Government. (11) Differences, if any, will be resolved by mutual understanding between the Inter-Ministerial Committee and APSEWAC. (12) It cannot be doubted that the Privatisation Commission is a wing of the Ministry of Finance set up by the President of Pakistan for the purposes of implementing the Privatisation Policy of the Federal Government. The said Commission is directly under the Ministry of Finance. As intimated by Mr. K.M.A. Samdani, Advocate for. The Privatisation. Commission, the final bid of the United Industries Ltd. Was put up before the Cabinet for approval, which approval was given by it. In these circumstances, the objection raised as regards the Commission having no authority in various matters before the final bid was accepted by the Federal Government falls to the ground and has no merit. (13) With regard to the next submission that the petitioner union was vested with the legal right under section 5-A(4) enacted by Ordinance XXXV of 1991 to secure the transfer through buy-out negotiations, as opposed to the bid procedure provided by subsections (1), (2) and (3) of section 5-A, we can only emphasise that the new law strictly vested a discretion in favour of the Federal Government to consider in the public interest whether to transfer the shares or proprietary interest in respect of a managed establishment on the basis of the bid procedure, through public advertisement, or on terms and conditions to be settled between the Federal Government and the management group of the employees of such establishment. Where bids are invited through public advertisement, the petitioner union can be treated as being eligible or having a right to make a bid, but where the Federal Government does not desire to transfer a managed establishment through either of the two procedures stated in subsections (1) and (4) of section 5- A, the petitioner union cannot compel the Federal Government to transfer the shares to it just because it wants to make a bid or wants to have the transfer effected on negotiation on terms and conditions to be settled between the parties.…
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