' UMAR ATA BANDIAL, J.---On 26-8-2005 this Court announced its order ("Preliminary Order") passed n C.M. No,1-05 and C.M. No,438-L-2005 that were respectively filed by the plaintiff seeking interim relief and by the defendant No,1, Commission, praying for rejection of the plaint. The prayer for interim relief was declined but about the prayer for rejection of the plaint, the Preliminary Order noted a number of matters that bear upon the question of maintainability of the suit and deferred for their consideration. These matters are deliberated presently in this order to decide the question of maintainability of the suit.
2. The controversy in the suit and in particular the objections to its maintainability raised, inter alia, by the Commission, are set out extensively in the Preliminary Order, the contents whereof, for the sake of brevity, may be read as a part of this order. This is necessary for the purpose of appreciating the context, scope and nature of the inquiry undertaken by and the terminology employed in this order. The Preliminary Order charts the course of the present inquiry as follows:-- "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 WI 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." (para. No,17) (Underlining supplied)
3. The Court refrained from pronouncing upon maintainability of the suit in the Preliminary Order because the position taken by one or the other party on the several matters of relevance noted therein, required clarity or substantiation. These points of relevance as referred variously in the Preliminary Order are:-
(i) Whether failure by the Commission to deny, in its post-judgment communications with the plaintiffs, the existence or applicability of the General Rules and consequently the claimed right of adjustment of price constitutes an admission of the plaintiffs' claim and maintainability of the suit?
(para. No,14)
(ii) Is the privatization process of the Company distinguishable from the contemporaneous privatization case of M/s Zeal Pak Cement Factory Ltd., where the General Rules were admittedly made applicable to the sale transaction? (para. No, 14)
(iii) Do the General Rules claimed by the plaintiffs have any legal status? If these are applicable to the present case, does the prayer in the suit claim rights in excess thereof? (paras. Nos. 11, 13).
(iv) Is the plaintiffs' failure to raise the claim for adjustment of price under the General Rules before the Hon'ble Supreme Court fatal to the suit? (para. No, 13).
(v) Is the plaintiffs' claim for adjustment in price consistent with the judgment of the Hon'ble Supreme Court and therefore maintainable? (para. No, 13)
(vi) Is the plaintiffs' right under the judgment extinguished by the delay of thirty months consumed for the filing of the suit after the judgment was delivered? (para. No,13).
4. Before embarking on an examination of the foregoing aspects of maintainability of the plaintiffs suit, a number of developments that took place in sequel to the Preliminary Order A also deserve mention. Firstly, the bidding for the 85.29% shares of the Company was held by the Commission on 15-9-2005 in which the highest bid of Rs,3,204.919 million at Rs,305 per share was offered by M/s Bestway Cement Limited. This bid was conveyed by the Commission's letter dated 17-9-2005 to the plaintiffs for exercising their option under P.0.12 to preempt the sale. The plaintiffs' letter dated 23-9- 2005 failed to accept, and therefore refused, the offer whilst irrelevantly asserting a right to match the received bid of Rs,185 per share rather than the highest bid of Rs,305 per share arrived in the auction. Secondly, the highest bidder in the sale of the Company's shares, M/s. Bestway Cement Limited ("highest bidder") applied for and was allowed to become a party in the suit as defendant No,5. Thirdly, the plaintiffs made a deposit in Court of a sum of Rs,75.0 million vide pay order dated 27-9-2005 to satisfy a condition laid down in the Preliminary Order for showing the seriousness of their claim and their capacity and willingness to perform their projected financial obligations.
Finally, following a preliminary look at the foregoing aspects of maintainability and the receipt of the market valuation of the shares under sale by the highest bidder, the Court framed queries that were answered through better statements filed by the parties. These queries are reflected in orders of the Court dated 14-9-2005 and 28-9-2005, the relevant excerpts whereof read:-- "The case of the plaintiff hinges on the General Rules providing for adjustment in case of marginal differential in the current account of a unit under sale. In the present case statement provided by the Commission shows that the current assets have diminished from Rs,30.27 million in 1991 to Rs,20.48 million in 2005. Apart from the substantial 33% dimunition there, the Company has during the interregnum accumulated losses amounting to Rs,964 million. With such a huge change in the financial position of the Company, what type and degree of adjustment in the price of Rs,883 million is required? Does the claimed right to the Company's shares survive the changes that have occurred? The parties are directed to assist on the foregoing core questions through their better statement in order to facilitate the framing of issues in the case." (Order of 14-9-2005)
(ii) "Learned counsel for the parties have (been] apprised of the queries raised in the order dated 14-9-2005 requiring a clarification of their positions on their factual pleas. Furthermore, in the light of the highest bid for the project in the amount of Rs,3.2 billion or so at Rs,305 per share, the Court would invite the plaintiffs justification for reference price of Rs,127 per share, let alone a reduction thereof. How would public interest and the exchequer be served by accepting the plaintiffs claim?
Let the better statements address these points as well. Learned counsel for the defendant seeks 10 days time to place on record further documents about the fresh bid proceedings and to state by application further grounds for seeking dismissal in limine of the present suit. Both parties shall do the needful within 10 days." (Order of 28-9-2005)
5. The contestants in the dispute namely, the plaintiffs, the Commission and the highest bidder filed their better statements that elaborate the financial aspect of their pleas on the nature of the suit and the quantum of relief prayed. By the end of the procedural hearings on 14-10-2005 the focus of the proceedings stood clearly defined and no need was felt by the Court for framing issues. With the advantage of the better statements the Court got an opportunity by analyses the numerous points of reference already noted and thereby to assess the case of the plaintiffs. Undisputed documents like Instructions to Bidders and the correspondence between the parties attached to the Commission's written statement were read in conjunction to understand the factual matrix of the dispute. Over a stretch of 4 dates of hearing and with the able assistance of the worthy counsel for the parties the Court was able to carefully examine the question of maintainability of the suit.
6. The Commission took the stand that the General Rules relied by the plaintiffs have no independent legal status because these lack the sanction of a competent rule making authority in the Commission or the Federal Government. Moreover, these are neither gazetted nor otherwise circulated to have general applicability. The accounting principle contained in these rules has, however, received contractual force in cases where it was made applicable by agreement to a sale transaction between a buyer and the Commission. In the sale agreement dated 14-9-1992 of M/s Zeal Pak Cement Factory Ltd. The formula for price adjustment was made part of that agreement by mutual consent of the parties, thereby receiving effect by contract and not by operation of law. Significantly, the Zeal Pak sale agreement did not make reference to or place reliance upon the General Rules but merely incorporated the formula of price adjustment. To substantiate the point, the Commission filed Instructions to the Bidders of the first sale of the Company's shares held in 1991 ("first sale"). These documents were already with the plaintiff prior to the instant suit. It is noted from the said Instructions that neither the General Rules nor the principle of price adjustment claimed by the plaintiffs, formed part of the contractual terms of the first sale.
7. Notwithstanding specific queries made by the Court, the plaintiffs failed to bring on record or highlight material on record showing that the General Rules possess any legal status. As it is the plaintiffs that claimed and relied upon the existence and applicability of the General Rules to the present case, it was for them to demonstrate the legal status of such rules. The inability, inaction and silence of the plaintiffs in this respect has exposed their stand about the alleged General Rules to be utterly conjectural.
8. The Preliminary Order notes the failure by the Commission to reject the plaintiffs' claim for price adjustment, in its post-judgment negotiations with the plaintiffs, to be a point of relevance to determine maintainability of the suit. However, a perusal of the admitted correspondence between the parties shows that this objection is inconsequential. The Commission's failure neither amounts to an admission nor constitutes an estoppel. Throughout its post-judgment correspondence with the plaintiffs, the Commission consistently and unequivocally demanded payment of price calculated at the rate of Rs,127.0 per share under sale of the Company. At no point of time did the Commission concede the alleged right of the plaintiffs to any adjustment of the price of the shares under sale. The insistence by the Commission to enforce the strict terms of the judgment amounts to a rejection of the plaintiffs' assumed stand about the General Rules. The position taken by the Commission is also consistent with its allegation that the General Rules lack legal force.
9. A closer look at the merits of the plaintiffs' plea based on adjustment under the General Rules exposes another defect that required clarification from the plaintiffs. Paragraph 13 of the Preliminary Order notes the point as follows:- "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 account and current account. The relief prayed is therefore in excess of the plaintiffs own case."
' Learned counsel for the plaintiffs did not address at all the foregoing anomaly in his case.
Assuming that the General Rules do exist and apply, these limit the plaintiffs' claim of price adjustment to merely the current account whereas the plaint seeks an open-ended adjustment.
The plaintiffs' reticence in matter, however, stands explained by their better statement filed pursuant to the order of the Court. This set of pleadings by the plaintiffs provides a direct answer to the anomaly noted above. It reveals the astonishing claim by the plaintiffs to adjust and off-set an amount of Rs,979.84 million against the total price of Rs,906.702 million admittedly payable by the plaintiffs under the first sale price of Rs,127.0 per share directed in the judgment. This price adjustment or to put it bluntly, write off, amounting to Rs,979.84 million is claimed by the plaintiff for the accounting diminution in the net assets of the Company due to negative changes in both the capital account and also the current account in its balance sheet. In the first place, the alleged General Rules forming the foundation of the plaintiffs' claim apply to differentials occurring only in the current assets and current liabilities of the Company. On the other hand, the price adjustment claim of Rs,979.84 million in the plaintiffs' pleadings goes beyond the admitted limit of alleged entitlement and cause of action under the said rules. Quite plainly, the relief prayed in the suit transgresses the right on which the suit is founded which reflects adversely on the suit as framed.
10. The second and for present purposes a rather dramatic revelation made in the plaintiffs' better statement is the bold claim that value of net assets of the Company has diminished massively when in fact their market price established in auction has shown a manifold increase in value. At this point it is useful to consider the salient features of the plaintiffs' better statement. The plaintiffs admit that under the judgment the total bid amount payable by them for 75.29% of the Company's shares plus a further 10% bonus shares thereof is Rs,906.702 million (para. No,15). Against this obligation the plaintiffs wish to adjust that is, strike out, Rs,979.84 million representing an accounting erosion in the net assets of the Company (para No,4.a). As the amount of erosion in value of net assets exceeds the total price payable by the plaintiffs, therefore the better statement seeks adjustment to the extent of the price payable by the plaintiffs, that is Rs,906.702 million (para. No,21). In consequence of the claimed adjustment the plaintiffs assert the complete discharge of their obligation to pay any cash price to the Commission. The only solace that the better statement offers is the plaintiffs' willingness to repay the accumulated liabilities in the amount of Rs,1.258 billion owed by the Company to its holding company, State Cement Corporation of Pakistan ("SCCP") on the terms of loan that the plaintiffs presume to exist between the SCCP and the Company (para. No, 16).
11. In nutshell the plaintiffs expect the Court firstly, to order the transfer of the shares of the Company against payment of nil price to the Commission and secondly, to order the defendant No,3, SCCP, to enter a loan agreement with the plaintiffs, who have no previous dealings with the SCCP on terms, if at all any, that apply to its wholly owned subsidiary. The loan agreement is lightly presumed to come into existence automatically or probably with the help of the Court. The plaintiffs' expectation of the foregoing relief from this Court is utterly fanciful. The plaintiffs expect a complete write off of their payment obligations of close to a billion rupees and also assume a loan agreement of over a billion rupees to be created by judicial order on the strength of no legal criteria except an accounting formula contained in a set of alleged General Rules that do not even conceive the foregoing matters and relief. The illusory relief that is actually being sought by the plaintiffs reflects dubiously on the object, scope and seriousness of their suit.
12. A pragmatic ground for disbelieving the claim of the plaintiffs is their demand from the Court to ignore the fact by the highest bidder of the considerable price of Rs,3,204.919 million offered for the shares under sale. But for the ardent invocation of rights under the doctrine of legitimate expectations, the plaintiffs give no reason for the Court to override that value by a suspect accounting formula that not only deprives the Commission of valuable funds but also inflicts a false and notional negative value to the shares that m en less than their price fixed by the judgment. The true market value of the shares under sale of the Company is a fact duly established on record by the better statements of the parties. The Court cannot ignore this relevant fact unless required by law to do so. This is not the case here; even if the General Rules are aassumed to exist, the Court cannot disregard a relevant fact on the basis of a notional accounting treatment that confers on the plaintiffs an undeserved advantage without corresponding consideration being received by the Commission. The reality of the matter is that the circumstances on ground have changed so drastically that the alleged accounting adjustment, assuming such entitlement to exist, has become redundant in the facts of the case so that its application leads to an absurd result. Indeed, the plaintiffs suit claims a right and seeks relief that cannot in the admitted fact of the highest bid, receive any judicial indulgence.
13. On another level also the plaintiffs' suit is seriously defective. The purport by the plaintiffs to set up the General Rules is built upon their adjudicated right to match the highest bid of Rs,127.0 per share of the Company conferred by the Judgment of the Hon'ble Supreme Court. The judgment does not, however, make any allowance for the claimed revision or adjustment of the aforesaid price. Nor does the judgment prescribe a limit of time for the plaintiffs to pay the matching price to the Commission. After the judgment was delivered on 11-12-2002, the plaintiffs and the Commission carried on negotiations for nearly 18 months until 20-5-2004 when the Commission served its last notice giving 30 days to the plaintiffs to make payment of the price directed in the judgment. This was followed by another period of 12 months during which the plaintiffs did nothing to enforce their right under the judgment until finally when the present suit was filed on 25-6-2005. Thirty (30) months is a long time for the mode, manner and details of payment of the price of shares to be worked out between the parties. Delay by a highest bidder, through its demands and counter offers made in negotiations with the Commission to settle matters related to the payment of price, has already been considered by the superior Courts in other cases. The highest bidder in the privatization case of Javedan Cement Mehnat Kash Union and another v. The Federation of Pakistan and others (1998 SCMR 2182) held prolonged negotiations to settle matters of price with the Commission. The Hon'ble Supreme Court disapproved the ensuing delay in these words:-- "Even so, the concluding part of the High Court order dated 24-8-1994 in Constitutional Petition No,D-948 of 1993 could not be so wide as to grant any indefinite period of time to negotiate either to the Company or the Commission. The State of Pakistan must in no case suffer either on account of the fast eroding value of Pak currency or on any other score. The best price for the unit in the evolved circumstances should be ensured. The matter, if not concluded already, needs to be concluded forthwith and if not the Commission would be free to act according to law and in the best interests of the country. With these observations, the present petition is dismissed but with no order as to costs"
14. The Hon'able Supreme Court has treated diligent and faithful performance of payment obligations by the highest bidder to be an over-riding concern in privatization [natters. Prolonged negotiations, undue objections or procrastination by the successful bidder has been looked with disdain by the apex Court. In another privatization case titled Calicon (Pvt.) Ltd. Through Chief Executive v. The Federal Government of Pakistan through Secretary, Ministry of Finance, Islamabad (1994 SCMR 1758) a situation of delay at the hands of a pedantic and bellicose successful bidder, received the following treatment:- "As pointed out by the High Court that the letter of intent was issued to the petitioner whereunder he was required to deposit 26% of his offer within 30 days of the communication of letter of intent.
Instead of complying with the terms of acceptance of offer, he started raising all sorts of questions with respect to the terms of agreement which had not even been signed. In these circumstances the Federal Government rejected his offer and directed the Commission to start negotiations with the second highest tender by offering him the sale of the concern if he was prepared to purchase it on the price offered by the petitioner. This course was strictly in accordance with the commercial practice and the approved procedure. Accordingly we do not agree that the petitioner has been dealt with either with unfairness or with arbitrariness. The view of the High Court that the petitioner had no right which could be enforced through constitutional jurisdiction, in the circumstances of the case, is correct and requires no interference."
15. In the present case, following 18 months of abortive negotiations the Commission issued a final notice on 20-5-2004 to the plaintiffs giving them 30 days to pay the total price of the shares under sale. The plaintiffs failed to assert any right and allege any wrongdoing by the Commission until the instant suit filed on 25-6-2005. Irrespective of the merit of the plaintiffs claim before the Court or during negotiations with the Commission, there is no explanation by the plaintiffs' inaction during the extended delay of more than 13 months after issuance of the said final notice by the Commission. It is quite evident that in the absence of having made any deposit or investment at all, the plaintiffs had no stake to expedite the matter and no real interest to purchase the shares of the Company on other than their own terms. The impugned notice of the expression of interest dated 17-6-2005 by the Commission has somehow revived the plaintiffs' interest in the matter but in the light of the facts and the view expressed by the Hon'ble Supreme Court, it is now too late to revive their case.
16. Be that as it may, the judgment also provides no room for the relief prayed in the suit as particularized in the plaintiffs' better statement. The complete write off in the price payable by the plaintiffs is neither expressly allowed in the judgment nor may be stated to be contemplated by or be consistent with its terms. Indeed, the acknowledgement made in the plaintiff s letter dated 15-1- 2003 addressed to the Commission (noted in the Preliminary Order) shows that the claimed right for the adjustment of price of the shares under sale was fully known to the plaintiffs during the proceedings before the Hon'ble Supreme Court. To avoid potential objections under constructive res judicata as noted in the Preliminary Order, the reason for not asserting such a right before the Hon'ble Supreme Court was explained by the learned counsel to be the legitimate expectation of the plaintiffs that adjustment under the General Rules shall be readily granted by the Commission in post-judgment negotiations between the parties. This is a simplistic and facile justification for the plaintiffs' forbearance. The doctrine of legitimate expectations exists in public law to safeguard vested rights conferred by law. In the present case, however, the plaintiff has been unable to show any statutory or legal instrument conferring the claimed legal right. The present suit is, therefore, not a case where the aforesaid doctrine may be said to apply. Moreover, the plaintiffs' claim for adjustment is so huge that it wipes out the total price payable by the plaintiffs under the judgment, leaving nothing for its enforcement. A claim that totally eclipses the direction in the judgment and renders it nugatory cannot be consistent therewith. Indeed upon this realization the learned counsel for the plaintiffs offered to accept any level of price adjustment that is ordered by the Court. This plea is, however, futile. If the right of adjustment claimed by the plaintiffs derogates the judgment then it is void and the suit is baseless. Surrendering the right of adjustment now means that the stand taken by the plaintiffs after the judgment in its negotiations and in the present suit has been abandoned. This change destroys the claim rather than attract any relief.
17. In the context of the privatization law, the tentative and conjectural right asserted by the plaintiffs, showing defiance of the direction given in the judgment, the extraordinary length of time consumed in negotiation that helped to circumvent payment of the price to the Commission and a suit seeking to exclude the real value of the shares under sale in preference to their notional value are all grounds that condemn the suit as a speculative venture aimed to prevent market based privatization of the shares under sale of the Company and thereby to extract favourable terms from the Commission. The concession made by learned counsel for the plaintiff during the hearing for the Court to grant such adjustment as it pleases, including no adjustment whatsoever, in the light in a comparison with the offer by the highest bidder, admits the futility of the suit as framed and also demonstrates its utterly speculative object. The impossibility to grant relief in a suit leads a Court towards either the rejection of the plaint or the dismissal of the suit. It is settled law that whilst scrutinizing the plaint in a suit, the Court may also consider the admitted documents on record and even the pleadings of the other side. Reference may be made to the case of Nazeer Ahmed and others v. Ghulam Mehdi and others (1988 SCMR 824). A series of derivative prece dents on the foregoing point is contained in Muhammad Zaman v. Tariq Mahmood and 28 others (1994 MLD 207), Rashid Ahmad v. Federation of Pakistan and others (1997 CLC 578) and S.M. Shafi Ahmad Zaidi through Legal Heirs v. Malik Hassan All Khan (MOIN) through Legal Heirs (2002 SCMR 338). It is also well-established that the power of rejection of plaint may be exercised at any stage of the proceedings on grounds for which Order VII, rule 11, C.P.C. Is not exhaustive as laid down by the Hon'able Supreme Court in the case of Muhammad Akhtar and others v. Abdul Hadi and others (1981 SCMR 878), which view has been followed consistently as in Asghar Ali v. P.K. Shahni and 2 others (1992 CLC 2282) and Mst. Mazhar Khanum v. Sheikh Saleem Ali (2004 CLC 799). Finally the power under Order VII, rule 11, C.P.C. Is to be exercised to put an incompetent suit or a meritless claim at rest at the earliest possible opportunity under a rule of long standing enunciated in Burmah Eastern Ltd. v. Burmah Eastern Employees Union and others (PLD 1967 Dacca 19C) and quoted with approval in case of Diamond Rubber Mills v. Pakistan Television Corporation Ltd. And 2 others (1989 CLC 1989) and Bore Muhammad v. Mst. Aziza Begum and others (PLD 2003 Karachi 466). By the application of the foregoing principles of law and in the light of the analysis of the case made above, the plaint in the suit is hereby rejected.
18. In the instant suit it was the sanctity of a right recognized, affirmed and conferred by the Hon'ble Supreme Court that led the Court to take pains to search and discover the legal requisites for sustaining the competence, validity and merits of the plaintiffs' claim. The analysis of pleadings of the plaintiffs including their better statement and admitted documents, however, discloses that the plaintiffs were aware of the legal and factual defects in the suit about before filing the same. By these defects and given also object of the suit a s already noted, the claim for the relief prayed is rendered futile and false. These infirmities reflect upon the seriousness of the present proceedings.
The Privatization Ordinance, 2000 provides for the sale by the Commission of public property in the hands of the Government in order to generate public revenue for economic and social goals of the State namely, debt retirement and poverty alleviation. To ensure the transparency, fairness and propriety of the privatization process the Ordinance, however, confers a right upon an aggrieved person to challenge the proceedings of privatization. The salutary object of the Commission's work however, makes it imperative that the privatization process is not interrupted by speculative, futile or false litigation. In the administration of the remedy provided, this Court in its original statutory jurisdiction therefore ensures that competent, substantive and well-founded claims are entertained for adjudication. The 'suit in hand lacks one or more of the said attributes. Although no interim G injunction was granted to the plaintiffs, however, the effect of the doctrine of lis pendens on the scale of the highest bid in the auction of the shares of the Company under sale held on 15- 9-2005 cannot be estimated. Be that as it may, the process of privatization of the shares of the Company was nevertheless delayed and hindered by the proceedings in the suit. The Court has accordingly decided to award costs to the defendant Commission. Under section 29 of the Ordinance the Court has discretion in the matter of choosing its procedure and is not strictly bound by the provisions of the Civil Procedure Code, 1908. In order to assess costs, the Court accordingly adopts a procedure that meets the ends of justice and also promotes the object of the law. Before fixing the amount of costs, the Court will hear the parties to ascertain in the above circumstances of the case, the relevant events and consequences of the suit that bear upon the amount of costs to be awarded. The outcome of such hearing on costs shall reflect on the amount awarded in the case.
19. Consequent to the rejection of the plaint, the total amount of Rs,75.0 million deposited by the plaintiffs along with profit thereon, less Rs,2,00,000, shall be refunded to the plaintiffs. The office shall fix hearing on the matter of costs in the case in the month of January, 2006. The D.R (J) shall keep in investment deposit the withheld amount of Rs,2,00,000 until decision of the Court in the costs matter.
20. In view of the foregoing order and directions, C.M. No,652 of 2005 by the plaintiff and Cr.
0. No,28 of 2005 by the Commission both raising allegation of contempt of Court are rendered infructuous and are dismissed as such. At close the Court expresses appreciation for the valuable assistance provided by all learned counsel in the case.