UMAR ATA BANDIAL, J.---In this suit filed under sections 28 and 29 of the Privatization Commission Ordinance, 2000 (the "Ordinance"), the plaintiffs have made the following prayers:--
(i) Declare and direct the defendants to transfer 9,274,496 shares, inclusive of bonus shares as of right, along with total control, management and assets of Mustehkam Cement Limited as per financial status of the company as on 1989-1990 to the plaintiffs, after allowing necessary adjustments in line with Caliron bid documents and according to the principles of variance laid clown in "Policy Guidelines on Privatization and CCOP Case No.CCP-59/9/91 dated 6-8-1991" upon receipt of determined consideration, if any, from the plaintiffs as per mandate of judgment of the august Supreme Court of Pakistan.
(ii) Declare and direct that the actions of the defendants to start afresh the privatization of Mustehkam Cement Limited is bad in law and against the adjudged rights of the plaintiffs. The publication dated 17-6-2005, published by the defendant No.1 with regards the privatization of the said company is unlawful and of no legal effect. The same may kindly be struck down and the defendants be perpetually restrained from taking any action in violation to the rights of the plaintiff with regards Mustehkam Cement Limited.
(iii) Pass any'further appropriate order or direction ancillary or incidental thereto in order to ensure that the defendants take all requisite measures in compliance with the judgment of the august Supreme Court and do not violate the same by a de novo bidding process.
(iv) In the meantime, this honourable Court may also be pleased to pass an interim order thereby restraining further action by the defendants with regards the unlawful privatization of Mustelikam Cement Limited under the publication dated 17-6-2005.
(v) Any other relief deemed appropriate in the circumstances of the case may also be granted by this honourable Court." (underlining supplied)
2. The two learned counsel for the defendants have filed contesting written statement and replies to the stay application. The defendant No.1, Privatization Commission of Pakistan (hereinafter "Commission") has also filed an application for rejection of plaint on the grounds that the plaintiffs have no cause of action, that the suit is barred by the terms of an inter parties judgment of the Hon'ble Supreme Court of Pakistan, that the said august Court alone is the forum competent to vary the terms of sale of the shares of Mustehkam Cement Ltd. as prayed in the suit. The hearing of the application under Order VII. rule 11, C.P.C. has involved a review of the case in considerable detail. This has also facilitated consideration of the application for the interim relief filed by the plaintiffs which restates pars (iv) of the prayer made in the suit. Accordingly, both the aforesaid applications are being decided by the present order.
3. In the suit under adjudication, the plaintiffs assert the right granted to them by the Transfer of Managed Establishments Order. 1978 (President's Order No. 12 of 1978) (hereinafter "13.0.12") as amended from time to time. The P.O. 12 empowers the Federal Government to privatize "managed establishments" that were nationalized under the. Economic Reforms Order 1972 (President's Order No.1 of 1972) ("P.0.11. In this regard, P.0.12 includes the previous owners of such establishments among "specified persons" described in its Schedule and grants them a right to match the highest bid received by the Federal Government for the transfer of shares or proprietary interests of the managed establishment relevant to them. The defendant No.3, Mustehkam Cement Limited (hereinafter "Company") is the relevant managed establishment for present purposes. The plaintiffs are its previous owners and are therefore specified persons under P.0.12. In the year 1991 the shares of the Company were offered for sale by the Federal Government acting through the Commission which received a maximum bid of Rs.127 per share from M/s Calicon (Pvt.) Ltd (hereinafter "Calicon"). After upwards adjustment of that bid under some calculation, the Commission by its letter dated 18-12-1991 offered the 75.29% shares of the Company that were under sale, to the plaintiffs at a price of Rs.135 per share. The plaintiffs asked for copies of the highest bid received by the Commission in order to comprehend and match the same. Failure by the Commission to accede the request led to the filing of the constitutional petition (W.P.No.510 of 1992) by the plaintiffs who challenged the privatization process of the. Company and asserted their right under P.O. 12 to pre-empt the sale of its shares to Calicon. This writ petition was dismissed on 4-5-1994 by a learned Division Bench of this Court. The plaintiffs were, however, granted leave to appeal by the Hon'ble Supreme Court of Pakistan and their appeal was subsequently allowed vide judgment dated 11-12-2002. This judgment passed in Civil Appeals Nos.512 and 513 of 1994 titled Mian Farooq Ahmed Sheikh and others v. Federation of Pakistan and others (hereinafter "judgment") affirmed the right of the plaintiffs to pre-empt the sale of the offered shares of the Company at the highest bid price of Rs.127 per share in preference to a rival claimant, the Employees Management Group.
4: Following the judgment the Commission was quick to write on 8-1-2003 to the plaintiffs to match the highest bid of Calicon at Rs.127 per share within 15-days. The plaintiff No.1 on 15-1-2003 replied by expressing his willingness to mach the highest bid but subject to establishing:-- "the present value of that offer because the company has been under your and Government control and management for over latt 12 years. from bid date 17-10-1991."
"The real value today of that offer is very different and this you will find in the present balance- sheet and other related documents as on 2002-2003. Supreme Court order has to be read as being based on the assumption that the value of the company and its Assets today are roughly the same as it was in the balance-sheet in 1990 (as per clause 4(iv) of the bid documents) and if there is substantial and substantive changes and variations then the Privatization Commission will work out the correct corresponding figures as applicable to day and the figures of Rs.127 will continue to apply as a yardstick for determining the corresponding figures of date under lining supplied)
5. The foregoing response by the plaintiffs in actual terms sought a downward revision of the price to be paid by the plaintiffs under an assumption that they perceived to have been made in the judgment. In repeated correspondence the Commission offered the plaintiffs to pay the price of Rs.127 per share whilst the plaintiffs responded conditionally by variously expressing willingness to pay the highest price of Rs.127 per share "as provided by law." by asking for the Calicon bid document and its related record, then for the bidding documents followed by the format documents for execution and lastly by demanding agreement about bonus shares. The Commission kept setting new dead lines for the plaintiffs to pay the highest bid of Rs.127 per share.
Meetings were held; a notice dated 16-7-2003 by the Commission after re-counting extensively the past correspondence and dialogue demanded a sum of Rs.883.513 million from the plaintiffs as sale consideration at the matching price for the shares of the Company. This letter was termed as a final notice whereafter the Commission threatened to re-auction the project. Nevertheless, the plaintiffs failed to pay a penny but were successful in prolonging the dialogue by refining legal and factual pleas. Ultimately the last correspondence dated 20-5-2004 by the Commission and addressed to the plaintiffs is in the following terms:-- "Subject: Mustehkam Cement Limited-Judgment passed in Civil Appeals Nos.512 and 513 of 1994- Supreme Court of Pakistan.
Dear Sir.
Reference you Letter No.48 dated November 24, 2003.
(2) As per orders of the Supreme Court of Pakistan, the Privatization Commission again offers you to pay the price of the shares of Mustehkam Cement Limited at the rate of Rs.127 per share amounting to Rs.883.513 million (for 6,956,796 shares) i.e. at par with the offer made for these shares by M/s. Calicon (Pvt.) Limited.
(3) You have 30 days from the date of issue of this letter to pay the above mentioned amount to the Privatization Commission, failing which the PC will assume that you have not accepted the offer" and the matter will stand closed."
6. A reading of the foregoing correspondence reveals that the bedrock of each party's position is the afore referred judgment of the Hon'ble Supreme Court of Pakistan dated 11-12-2002. In this judgment the Hon'ble Supreme Cot. rt noted the critical events that triggered the plaintiffs' writ petition before this Court. The Judgment recalls that:-- "the case of the appellants in their Constitutional petition was that they had asked the Presiding Officer to supply them the copies of the bids/offers received from different parties but he declined and advised them to approach the Privatization Commission. Consequently, they asked the Privatization Commission through their letters dated 23rd, 27th and 31st October, 1991 for the copies of the bids and certain other documents. In reply thereto, the Privatization Commission through its letter dated 18-12-1991 offered the appellants/ex-owners to match the highest bid of Rs.135 per share allegedly offered by the highest bidder M/s. Calicon (Pvt Ltd within 15 days failing which the offer would stand cancelled."
7. The plaintiffs litigation challenged, inter aria, the foregoing action of the Commission. The case of the plaintiffs before the Hon'ble Supreme Court, however, did not revolve around the bid documents of Calicon or other bidding documents subsequently demanded from the Commission but upon the recognition and assertion of their right under P.0.12 to match the highest bid.
Accordingly, in concluding its discussion, the Judgment makes the following observations:-- "The appellants according to their assertions were always ready and willing to accept the highest bid of Rs.127 per share and even today their learned counsel has made a statement that his clients are ready to accept the highest bid of. Rs.127 per share as provided by law.
12. As far the offer of the Employees Management Group is concerned, they in the first instance had offered Rs.31 per share which was not highest bid, therefore, they could not be asked under the law to match the highest bid of Rs.127 or Rs.135 per share. They could only be offered sale of the unit in case they had offered the highest bid. Since their offer was not the highest, therefore, under the law they were not entitled to be asked to match the price offered by Calicon (Pvt.) Limited."(underlining supplied)
8. In the result the Hon'ble Supreme Court allowed the appeals and directed, inter alia, the Commission "to ask the appellants to match the highest bid of Rs.127 per share which was offered by M/s. Calicon Private Limited". Although it appears from the plaintiffs afore-referred letter written on 15-1-2003 shortly after the Judgment that the thought of seeking a downward revision of the matching price to be paid by them had received prolonged consideration, yet a careful reading of the judgment shows that the plaintiffs did not make any claim for such relief before the Hon'ble Supreme Court. Admittedly during 11 years of litigation following the Calicon bid, the financial strength of the Company dwindled from a position of net profit to net loss.. However, the plaintiffs did not bring this concern to the notice of the Hon'ble Supreme Court and chose to raise it subsequently in the correspondence with the Commission referred above. Learned counsel for the plaintiffs has justified the belated claim for revision of the price in the present suit on the ground that this matter was never part of the controversy under adjudication before the Hon'ble Supreme Court and arose only after the plaintiffs right of preemption was affirmed. This plea is considered later in this order. To substantiate the claim for the relief of revision in the price on the grounds of changes in the balance sheet of the Company, learned counsel for the plaintiffs has relied upon an attachment to a Working Paper of the Federal Government dated 5-8-1991 wherein the following General Rules for Estimating Break up Value of Industrial Projects (hereinafter "General Rules") is provided:-- "A. ALL PROJECTS Fixed assets to ' be valued at estimated present depreciated value.
Current assets and current liabilities to be taken at the values stated in the latest audited accounts. Such values to be revised and the sale price adjusted if the actual value determined at the date of the takeover varies by more than 4-5% of the values stated in the latest audited accounts."
9. Learned counsel for the plaintiffs submits that in similar cases the Commission has given rights to investors/buyers on the basis of the foregoing General Rules of valuation. Reference is made to the agreement dated 14-9-1992 for the sale of shares of M/s. Zeal Pak Cement Factory Limited (hereinafter "Zeal Pak"), clause No.14 whereof reads as follows:-- "The buyer and seller agree to accept the accounts prepared by Company as of 1-9-1992 in lieu of joint audit. The variation in the value of current assets and current liabilities in excess of + 5% in the accounts as of 1-9-1992 as compared with the Company accounts as of 31-12-1991, supplied to the bidder along with bid documents, will be adjusted in the bid price in favour of buyer or seller as the case may be."
10. Learned counsel asserts that the foregoing clause acknowledges the right of a buyer to adjustment in the highest bid. That the plaintiffs are also entitled to the same dispensation enabling adjustment in the price payable by the plaintiffs for the shares of the Company. The plea taken in the suit is, however, exaggerated because unlike the precedent, this claim is not confined to the comparison of the current assets and current liabilities of the Company but to all its assets and liabilities.
11. Learned counsel for the defendants denies the very existence of any right of the plaintiffs to claim revision of the highest bid. Firstly. it is objected that no such right is conferred on the plaintiffs by the Judgment and they cannot go outside its terms. Secondly, the Government document titled General Rules referred above is merely an internal document that did not form part of the privatization package of the shares of the Company In the year 1991. The plaintiffs' reliance upon terms outside the relevant privatization package represents an extraneous claim that is devoid of any cause of action. Thirdly, it is contended that the claim for variation, if at all. is tantamount to amending the terms of the judgment which can be done only by the Honble Supreme Court and not this Court and therefore the present suit for the relief sought is barred.
Learned counsel for the Commission finally added that pursuant to P.0.12 and the Judgment, the Commission has given the plaintiffs a right to match the highest bid received in the fresh sale being undertaken pursuant to the impugned advertisement dated 17-6-2005. The plaintiffs right to pre-empt the sale to the highest bidder is duly reflected in the bidding documents placed on record. The plaintiffs cannot therefore have a grievance or a cause of action. Resultantly, the plaint is liable to rejection.
12. An application for rejection of plaint is to be considered and decided on the assumption that whatever is stated in the plaint is true. Therefore the defects that may be made a ground of decision by this Court must float on the plaint or the plaintiffs case as presented to the Court. For dearth of his own record learned counsel for the plaintiffs has relied on the documents attached with the written statement filed by the Commission. In the foregoing context therefore the Court examined the plaint and documents filed therewith and also the documents attached with the written statement in order to comprehend the' case of the plaintiffs and also to assess the defects alleged therein.
13. Returning to the point about revision of matching price which forms the gravamen of the plaintiffs case. Undoubtedly there are also several weaknesses in this claim. For instance, the General Rules apply only to adjustment in the current account of assets and liabilities. On the other hand, it appears that the plaintiffs are seeking adjustment, rather revision. in the matching price for alleged changes in both the fixed/capital accounts and current accounts. The relief prayed is therefore in excess of the plaintiffs own case. Furthermore, by failing to press before the Honble Supreme Court their case for access to the bid documents of Calicon or for the adjustment presently sought, the plaintiffs can be deemed to have surrendered their right, if any, to claim such adjustment of the matching price payable by then. Indeed the statement of counsel for the plaintiffs, duly recorded in the Judgment and reproduced above, is unqualified in offering to pay the price of Rs.127 per share under sale of the Company. Most importantly as accepted by both the parties, their rights and liabilities in the matter arc governed by the Judgment. It is common ground that the Judgment does riot make any allowance for the revision or adjustment of the matching price to be paid by the plaintiffs on any ground whatsoever. It is, therefore, difficult to accept that the present claim. assuming that it is based on law, is consistent with the Judgment.
Therefore the plea that this question did not form part of the lis before the Hon'ble Supreme Court seems self-serving and afoul of constructive res judicata and Order II, rule 2, C.P.C. Be that as it may, whatever the price payable, the Judgment expects the same to be remitted within a reasonable time by the plaintiffs. Eighteen months have passed without the plaintiffs having paid a penny. Has the right given to the plaintiffs by the Judgment not lapsed? This fact of the matter is that none of the above points can be resolved summarily without deeper consideration of the record including the recording of evidence.
14. There are some other aspects that reinforce the foregoing view. During 18 months of correspondence and discussion following the Judgment the Commission has not once denied the availability or existence of the claimed right of adjustment of the matching price payable by the plaintiffs. From a reading of the General Rules of August, 1991 and the Zeal Pak sale agreement of September, 1991. it appears that the criterion for adjusting valuation of current assets and liabilities of projects under privatization was available to the Commission in the time frame contemporaneous to the bidding for I he shares under sale of the. Company. In fact it appears that the Calicon bid in the present case was announced on 17-10-1991, shortly after the statement of the aforesaid General Rules as also the signing of the sale agreement for Zeal Pak. Apparently, there is an element of acquiescence to the claim by the Commission. It is also plain from the record and accepted by the defendants that the balance-sheet of the Company and therefore the value of its shares have deteriorated considerably after the highest bid of Rs.127 per share of the Company was received by the Commission in 1991. In the foregoing circumstances, it is not possible to outrightly exclude a claim by the plaintiffs to even seek an adjudication of their claim to adjustment of the matching price payable by them for the shares of the Company offered for sale in 1991.
15. Now considering the legal right that the plaintiffs are asserting to maintain their suit, there is another angle to the case that must be kept in sight to resolve the controversy. The plaintiffs claim their right given under P.0.12 as affirmed in the Judgment to purchase the shares of the Company at a price of Rs.127 per share. The plaintiffs build and advance this right to claim adjustment/revision in the matching price on grounds of alleged diminution in value of the assets/shares of the Company. At a practical level of appreciation and resolution of this claim. the most obvious way to evaluate/assess the alleged diminution in the value of the assets and/or shares of the Company is to put them up for bidding by interested third parties. The bids will bring out the real value of such assets or shares and would vindicate or disprove the stand taken by the plaintiffs. The prayer made in the stay application and the suit however, shows that the plaintiffs are averse to such a course of action; and an injunction is sought against further action by the Commission on its advertisement of 17-6-2005 inviting expression of interest from the public about the sale of shares of the Company. Blocking the bidding for the said shares by any interested party shall have the effect of preventing market valuation of the shares and/or assets of the Company and further delaying sale of the shares until an undefined accounting exercise for valuation is agreed, initiated, undertaken and completed. If so allowed, the. pendency of the suit may have the effect of both depriving the Commission of new buyers for the shares or assets of the Company apart from compelling it to accede the demands of the plaintiffs.
16. Clearly if such a situation is allowed to be created it would constitute an abuse of the process of this Court. The plaintiffs are asserting a legal right to pre-empt the sale of the Company's shares.
That right cannot be exercised in a manner that blocks the sale without making a deposit of the price, inter alia, by. disputing the same on hitherto new and untested grounds. To maintain their pre-emptive claim based on the Judgment, the plaintiffs must demonstrate their seriousness to honour and the capacity to carry out the sale transaction. Learned counsel for the Commission has informed that the bidding documents for the proposed new sale of the shares of the Company require deposit of "earnest money" of Rs.75 million from participating bidders in the sale proceedings. This amount of earnest money represent about 9% of the total sale consideration payable by the plaintiffs at the matching price of Rs.127 per share of the Company given in the Judgment. To make a down payment of the said amount would be a minimal evidence of the plaintiffs bona fides and capacity to pursue its objections under the Judgment. Accordingly, the plaintiffs are directed to deposit the foregoing amount as their earnest money to pursue their alleged entitlement to the shares of the Company. This amount shall be deposited by the plaintiffs with the Deputy Registrar (Judicial) of this Court within two weeks of a certified copy of this order becoming available to the parties. This amount shall, in consultation with the learned counsel for the parties, be invested in an income yielding scheme till further orders.
17. This direction for deposit in. Court is given to the plaintiffs as an interim measure to secure the interests of the parties. As already observed this measure prima facie test the seriousness of the plaintiffs claim and also promotes the balance of convenience between the parties. The sale proceedings of the shares of the Company offered by the Commission pursuant to its public notice dated 17-6-2005 shall continue for the determination of the highest bid. Such bid shall be conveyed to this Court for bringing on record the market valuation of the shares of the Company.
In the meanwhile this Court expects the present suit to progress for the determination of the existence of the plaintiffs claimed right to adjustment of the matching price for the shares under sale of the Company and whether such right, if at all in existence, is lost by virtue of the Judgment or otherwise by any bar under law or by the efflux of time. These questions may not require an elaborate enquiry yet they do require determination which is not possible to be done summarily.
18. As the pleadings have already been filed, the parties are directed to propose preliminary issues , that arise for determination by this Court with respect to the existence or otherwise of the necessary conditions for the continuance of this suit.
19. Let the learned counsel for the parties propose as aforesaid such legal issues for consideration of this Court on 12-9-2005 when this Court shall also consider proposals from the learned counsel about the schedule for hearings of this case in order to obtain its expeditious determination. C.Ms. are disposed of.