1. This is third round of litigation in Constitutional jurisdiction of this Court by the petitioners pertaining to acquisition of compensation etc. In respect of Respondent No. 1. The first round of litigation brought before this Court by the petitioners was through C.P. No. 624/74, 525/74 and 1290/98. They had challenged the taking over the respondent No. 1, formerly known as General Iron & Steel Works Ltd., under the provisions of Economic Reforms Orders, 1972. The petition was dismissed by Full Bench of this Court by order dated 7.8.1983 confirmed by the apex Court in C.P. No. 409-K/83 by order dated 15.1.1985. The second round of litigation was through C.P. No. 365/86, which was dismissed by order dated 25.9.1997. The petition for leave to appeal against the said order was also dismissed by order dated 26.4.1997.
2. Through the present petition, the petitioners, whose shares in the respondent No. 1 was acquired in terms of Section 7-B of the Economic Reforms (Amendment) Act, 1973, have filed the petition seeking different reliefs but ultimately confined to compensation only.
3. The respondent No. 3, in the meantime, intended to dispose of the assets of the respondent No. 1.
4. The petitioners moved a Misc, application before the Supreme Court in Civil Appeal No. 131/87, which was disposed of with the observation that "it will be open to the petitioners to approach an appropriate forum under the law, if it is legally permissible, and to agitate the controversy therein, It will also be open to the respondents to agitate whatever factual and legal pleas are available to them." Lastly it was observed on the statement of the petitioner's counsel that "the petitioners should not be prevented from filing a Constitution Petition as according to him the matter, can be disposed of without even going into the factual controversies", It was further observed that "in our view, it is for the forum concerned to decide this aspect."
5. The Respondents in their parawise comments have admitted that the petitioners approached for release of the Certificates of Entitlement to Compensation (CECs) during 1987-1988 but the same were not issued to the members/family members of the Ex management because their associated companies of which they were directors had availed advances to the tune of Rs. 1.384 million from the Company. The release of CECs to the Share-holders (petitioners) which came under the purview of receivables/payables was withheld on the following instructions of the then Ministry of Production who had consulted the law Ministry in this regard.
(a) Delivery of bonds/compensation can be legally withheld till settlement of the receivable amount (Letter No. 44/74-OP) dated 6.1.1974 from the Ministry of Production and Presidential affairs.
(b) So long the cases filed by the ex-owners of the nationalized units challenging the transfer of their ownership rights is not concluded, they may not be paid the amount of compensation bonds/CECs. In these circumstances, compensation bonds/CECs can be withheld (Ministry of Production letter No. 44/23/74-SO (PIDC) dated 14.3.1978.
6. Para 7 is also relevant, which is reproduced as follows:-
7. The amount of compensation is payable by the Government of Pakistan (Respondent No. 3) and does not form in any way, the liability of the Company i.e. Quality Steel Works Limited. As stated earlier, the compensation was withheld on the instructions of the Government, because the associated companies of Ex management whose shares were acquitted and were not compensated had drawn advances to the tune of Rs. 1.384 million from the Company. These compensation is still withheld by the Government."
7. We have heard the learned counsel for the petitioners and the Respondent No. 1 to 3.
8. The petitioners are entitled for the compensation under the provisions of Article 7-C of Economic Reforms (Amendment) Act, 1973, which provides acquisition of share, where under Article 7-B, the Federal Government acquires the whole or a portion of the shares of the shareholders of any company or of the proprietary interests of a company or other person in an establishment, the Federal Government shall, within a period of ninety days, pay such compensation as may be determined by it on by the basis of the principles set out in the Second Schedule.
9. The contention of the learned counsel for the petitioners was that the petitioners' compensation has been withheld on two reasons, firstly that they have challenged the acquisition and secondly the associated company was indebted. His further contention was that the petition filed by the petitioners against the taking over has been disposed of and the liability of the associated company cannot be shifted to the principal of holding company. He further maintained that the facts are not disputed. The liability is reflected in 37th Annual Report and Accounts 1991 of the Respondent No. 1 and referred clause 13(13.2) thereof, wherein a statement is 2009 recorded that the company had withheld issuance of compensation bond amounting to Rs.
10. 1.341 Million due to ex-owners under the directive of the Federal Government, pending settlement.
11. Mr. Nadeem Azhar, learned Dy. Attorney General, representing Respondent No. 3 contended that the ex-management of the Associated Company of the respondent No. 1 was indebted. Therefore, the compensation bond was withheld and he also referred to the definition of associated company, undertaking in explanation to the proviso 2 of Article 7-B(b) as defined in Monopolies and Restrictive Trade Practice (Control and Prevention) Ordinance, 1970. The definition of associated undertaking is not different as defined in associated undertaking in the Companies Ordinance. The liability of Associated Company cannot be transferred to members of the holding company. Associated and holding company are independent entities under the law. The compensation bond or amount thereof has not been paid to the admitted in the 37th Annual Report and Accounts 1991 subject to determination by the Federal Government. Therefore, we allow the petition to the extent of compensation to the petitioners, to the paid within 30 days from the receipt of the order.