JUDGMENT MUHAMMAD HALEEM, C.J.-1. This judgment will dispose of Civil Appeals Nos. 43-K of 1984 and 141-K of 1983, which arise from the judgments of the High Court of Sind dated 2nd June, 1983 and 16th August, 1983, and in both the appeals leave was granted to consider the following common questions of law: "(1) Whether the expression 'value of assets' in section 2(1 )(o) of the Monopolies Restrictive Irade Practices (Control and Prevention) Ordinance, 1970, connotes assets which are not assets or it relates to gross assets? (2) Whether in computing the 'value of assets' the liabilities have to be taken into account or not?" In Civil Appeal No. 43-K of 1984, the appellant is a private limited company carrying on its business of manufacture and sale of yarn. Taking its value of assets as on 31st of March, 1976, to be rupees one crore it sought information, by way of abundant caution, from the Authority constituted under section 8 of the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 (hereinafter referred to as "the Ordinance"), whether it was liable to registration under section 16 of the Ordinance.
2. The Authority thereupon issued a notice, dated 2nd of March, 1977, to show cause as to why action should not be taken under section 11 read with section 12(1 )(a)(i) of the Ordinance as the value of its assets was "not less than one crore of rupees", which, according to the Authority, constituted undue concentration of economic power within the meaning of section 4(a)(i) of the Ordinance which amounted to a violation of section 3 of the Ordinance.- 3. In its reply dated 12th of March, 1977, the appellant denied that the total value of its assets were "not less than rupees one crore", but far less than rupees one crore, that is, Rs. 30,62,521.04 having regard to the meaning of the expression "value of assets" in section 2(1)(o) of the Ordinance. Accordingly, the appellant asserted that there was no undue concentration of economic power as comprehended in section 4(a)(i) of the Ordinance. However, this explanation did not find favour with the Authority as would appear from the order, dated 3rd November, 1977, the relevant portion of which runs as under: "Keeping in view these facts, we direct the undertaking, under section 12(1 )(a)(i) read with section 11 of the Ordinance, to take immediate steps to convert itself into a public limited company as envisaged in the Companies Act, 1913 (VII of 1913), and also to file with the Registrar Joint Stock Companies a prospectus or a statement in lieu thereof containing the particulars out in the form marked II in the Second Schedule to the said Act as required by section 154 thereof. All this should be done by 5th February, 1977 failing which action under section 19(2) of the Ordinance may be taken." The Authority held that all assets, whether fixed or current, were covered by the definition and had to be taken into account for the purpose of determining the total value of the assets.
4. Aggrieved by this order of the Authority, the appellant filed an appeal in the High Court under section 19 of the Ordinance. It was again contended that the expression "value of assets", section 2(1)(o), "includes only such assets on which depreciation is calculated for assessing the income tax", and, that this definition does not include any liquid or current assets in any form. This contention was further supplemented in terms that in calculating the value of assets the liabilities should be deducted.
Another submission urged was that during the pendency of the appeal rupees fifty (50) millions was substituted in section 4(a), of the Ordinance after the words "not less than" by the Monopolies and Restrictive Trade Practices (Control and Prevention) (Amendment) Ordinance, 1982 (XIV of 1982), therefore, no action could be taken as the value of the assets did not exceed this figure.
5. In Civil Appeal No. 141-K of 1983, the appellant is a private limited company engaged in the business of manufacture and sale of cigarettes. The appellant received a notice, dated 2nd March, 1977, to show cause as to why action should not be taken against it under section 11 read with section 12(1 )
(a)(i) of the Ordinance as the total value of its assets was not less than one crore of rupees which constituted an undue concentration of economic power within the meaning of section 4(a)(i) of the Ordinance.
6. In its reply dated 29th March, 1977, the appellant denied that the value of the assets was not less than rupees one crore, as it was contended that, according to the meaning of the expression "value of assets", it did not include current assets, and, therefore, it was less than rupees one crore, that is, Rs. 50,37,467.69. It was asserted that the liabilities had to be deducted in calculating the value of the assets; and that taking this factor into consideration, the net value of the assets was far below rupees one crore; and, therefore, there was no violation of section 4(a)(i) of the Ordinance. However, this explanation was not accepted by the Authority, which, by order, dated 3rd January, 1978, gave the same directions as stated earlier.
7. Aggrieved by this order, the appellant filed an appeal under section 19 of the Ordinance which was dismissed on the authority of the judgment passed earlier by the High Court of Sind in Miscellaneous Appeal No. 39 of 1973, which judgment is also under consideration. The same contentions were raised in the High Court, which were repelled for the reasons given in Appeal No. 43-K of 1984.
8. The High Court upon a detailed consideration of the definition of the expression "value of assets" held as under: "Taking into consideration the object of the Ordinance, and viewing in the light of economic, industrial, business audit and accountancy practice and principle it seems that the words 'value of assets' do not mean 'gross value of assets' or 'net value of assets' but value of assets at cost, after making provision for depreciation on such assets on which depreciation at the normal rate is allowed while assessing income tax. Reference to income tax has been made for calculating the depreciation as provided in the Income Tax Laws and not for identifying the assets. The emphasis seems to be on the 'value of assets of the undertaking' which is neither controlled nor qualified by any word which may indicate whether it should be fixed asset or current asset. The word used is 'assets'. The absence of classification leads to the conclusion that all assets, fixed, current, liquid, tangible or intangible will be treated as assets. In order to make value of assets more realistic, proper and exact it has been provided that depreciation shall be deducted. Such deduction will be only in respect of such assets on which depreciation is allowed and calculated at the normal rate as provided by the Income Tax Laws. It will not be out of place to mention that significantly enough section 2(o) provides that depreciation is to be calculated at the normal rate. Under the Income Tax Laws various types of depreciations are permissible but for purposes of calculating value of assets only depreciation calculated at normal rate is to be excluded from the cost of such assets.
This clearly indicates that the provisions of Income Tax Laws can be pressed in service for the limited purpose of calculating the depreciation and not for classifying the nature and type of assets."
9. As regards the contention of the appellant that the concept of assets was co-related with liabilities and hence while calculating the value of the assets, the liabilities should be excluded, the High Court held that such deduction is not apparent from the definition of the expression "value of assets", and, therefore, on no principle of interpretation can anything be added or subtracted from the enacted definition. The High Court also took benefit from the words "total value of assets" occurring in section 16(i)(b) and (d) in support of its conclusion that while assessing the total value of assets liabilities are not to be taken into consideration.
10. The High Court further took notice of the amendment in the Ordinance and its effect on the pending appeals and held as under: "Therefore, in such cases, as the order of the Authority has not attained finality but made it still open, it would be proper to allow such appellants to avail of such benefits which have accrued to them by virtue of legislative amendments introduced during the pendency of the case or appeal."
And in the result, the impugned orders were set aside, and the appeals were remanded to the Authority "to determine the value of assets in the light of the observations made herein above and decide, whether in view of the amended provision any action can be taken against the appellants, under sections 11, 12 and 16(1)(b) and (d) of the Ordinance".
11. Having regard to the contentions raised, it would be necessary to produce sections 2(1 to), 3, 4(a)(i) and clauses (b) and (d) of section 16(1) of the Ordinance: "Section 2(1) (Xo). -In this Ordinance, unless there is anything repugnant in the subject or context,~ 'value of assets'.-ln relation to an undertaking, means the value of assets of the undertaking at cost less depreciation at the normal rates at which depreciation is calculated for purpose of assessment of income tax." "Section 3-Undue concentration of economic power, etc., prohibited.-There shall be no undue concentration of economic power, unreasonable monopoly power or unreasonably restrictive trade practices."
"Section 4(a) (i)--Circumstances constituting undue concentration of economic power.-Undue concentration of economic power shall be deemed to have been brought about, maintained c: continued if- (a) there is established, run or continued an undertaking the total value of whose assets is not less than one crore of rupees, or such other amount as the Authority may b> rule prescribe, and which is- (i) not owner by a public company, or" "Section 16(1) (b) and (d): (b)
Associated undertakings engaged in the same line of business, which during the next preceding calendar year produced, distributed, sold or provided not less than twenty per cent, of the total production or supply of any goods or services in any Province. (d) An undertaking which is not owned by a public company and the total value of the assets of which is not less than one crore of rupees."
12. This legislation is the first of its kind in Pakistan and was intended to provide measures against undue concentration of economic power, growth of unreasonable monopoly powers and unreasonably restrictive trade practices to secure national interest of Pakistan in relation to its economic and financial stability. It was enacted before the Constitution, but is now referable to Article 38(a) of the Constitution of the Islamic Republic of Pakistan, in Chapter 2, relating to Principles of Policy. This Article reads: "The State shall-- (a) secure the well-being of the people, irrespective of sex, caste, creed or race, by raising their standard of living, by preventing the concentration of wealth and means of production and distribution in the hands of a few to the detriment of general interest and by ensuring equitable adjustment of rights between employers and employees, and landlords and tenants;"
13. In the international field, it was the United States of America, which was the first country to experiment with the control of monopoly and restrictive business practices through a special legislation namely, the famous Sherman Act, 1890. The background and the purpose of this legislation is stated at page 668, volume 54, American Jurisprudence 2d, as under:- "From this country's beginning there has been an abiding and widespread fear of the evils which flow from monopoly--that is, the concentration of economic power in the hands of a few. By 1890, there was a vast accumulation of wealth in the hands of corporations and individuals, and an enormous development of corporate organization with the facility for combining into 'trusts'. Units of traders and producers had snowballed by combining into trusts* and there was a widespread impression that the trusts had used and would use their power to oppress individuals land injure the public. Competition was threatened: price control was feared; and individual initiative was dampened. On the basis of these fears, Congress passed the Sherman Antitrust Act in July, 1890, in an attempt to prevent further concentration and to preserve competition among a large number of sellers. Its purpose is to prevent or suppress devices or practices which create monopolies or restrain trade' or commerce by suppressing or restricting competition and obstructing the course of trade." Thereafter, such legislations became an important aspect of economic policies of almost all the western countries.
14. Economic power belonging to the genus monopoly was common place with the economy but the enacting sections of our Ordinance regulating the undertakings' undue concentration of power has no analogous in the world, and should, therefore, be regarded exceptional in the context of monopoly or antitrust legislations in the various countries of the world. India, however, is an exception where a parallel legislation namely the Monopolies and Restrictive Trade Practices Act, 1969, exists. Undue concentration of the economic power has not been defined in the Ordinance, but about the size, which is the criterion in the Ordinance, John Kenneth Galbraith, in his book, entitled American Capitalism, at page 26, has commented as under:-- "1 he reason is not that the business community pays single-minded obeisance to corporate size and therewith to the men who head the largest concerns. Rather it is that the size of the corporation which the individual heads is again a rough index of the power the individual exercises. With size goes the ultimate responsibility for the decisions affecting the largest number of employees, over prices that affect the largest number of customers, over investment policies which work the greatest change in the income, livelihood or landscape of the community. While the individual must disavow his interest in making such decisions, his colleagues in the respect they accord him show as clearly as do Congressmen and public servants in their respective fields the direction of their own ambitions..................... Power obviously presents awkward problems for a community which abhors its existence, disavows its possession, but values its exercise."
15. The size has nexus to the general domination of the business by large undertakings. On the subject as to the size being the criterion for concentration of power, it will be interesting to refer to the report of the Monopolies Inquiry Commission constituted in India:- "Big business by its very bigness sometimes succeeds in keeping out competitor. It can do so as by reason of its financial strength; it can afford to sell for sometime at an unremunerative price with the definite object of eliminating existing competition or discouraging potential competition and because of its fighting strength by large scale efficient advertising. We think also that the very presence of big business in a industry is likely to have a deterrent effect on the entry of smaller units, even in industries without any special scope for economies of scale. For it would be wrong to underrate the small man's fear that the big business in the industry will be able to crush him." D.J.
Ganatra, 1971 Ed. While commenting under the head "Consequences of Concentration of Economic Power", said:- "The bright picture of what concentrated economic power has achieved in the past and is fairly certain evil to achieve in the future must not, however, make us blind to certain evil effects of such power on the country's economy. The most serious of these is the risk of emergence of monopoly with its attendant evils-high prices for the consumer, deterioration in quality, and, last but not the least, keeping out the small industrialists. The very presence of 'big business' in an industry is likely to have a deterrent effect on the entry of small units, even in industries without any scope for economics of scale. The elimination of the small man in industry is an economic evil in itself, quite apart from the consequences of monopoly. Elimination of small men in business increases the imbalance in the distribution of national wealth and income." (This has reference to the respect of the Monopoly Inquiry Commission). Judge Hand in U.S. Vs. Aluminium Co. Of America 14S Fed. 2nd 416 (1945) at pp 427-428, says:- "That possession of unchallenged economic power deadens initiative, discourages thrift and depresses energy; that immunity from competition is a narcotic, and rivalry a stimulant to industrial progress, that the spur of constant stress is necessary to counteract an inevitable disposition to let well enough alone." Sullivan, in his Book No. III on Anti- trust laws (American Casebook Series) at page 90, gives his views about the size as under:- "Regardless of whether it alone dominates any single market, a firm which is large in absolute terms may influence political processes to an undesirable degree, may have excessive impacts on the setting of national or regional economic goals, and may through an elaborate bureaucracy attain a degree of influence on the lives of numerous individuals which is inappropriate for a non- Governmental agency whose policies are not subject to direct political constraint." In United States vs. United States Steel Corporation 251 USSC 417, Justice McKenna said:- "Predominant opinion in U.S.A, today is that an undertaking should be allowed to grow to whatever size it endeavours to attain, provided the size is fully justified on grounds of technological efficiency, and it does not tend to become monopolistic or indulge in any monopolistic or restrictive trade practice. And any firm whose size is of such magnitude as to pose a substantial threat to competition should be subjected to scrutiny whether or not it is or tends to become monopolistic." Generally the industrial concentration of economic power amongst other is to be judged in terms of its size, that is, assets, employment and output, and this concept is notably apparent from the above consideration. 16.
However, in the Ordinance the size is reflected alone by the value of assets of the undertaking which significantly Denotes embodiment of economic power and when it obtains the optimum of the statutory limit then by legal fiction, undue concentration of economic power is brought about, maintained or continued and it then becomes objectionable because of the anticipated evil consequences of such concentration. The size has, therefore, direct nexus with the concentration of economic power irrespective of its. Obligations for if that was to be taken into consideration then the undertaking, though it may be possessed of tremendous economic power holding a top monopoly position, would not yet come within the scope of the enacted provision as to its size. This would be against the purpose of the Ordinance itself and the concept of size as an embodiment of the concentration of economic power qua its assets, employment and output.
17. Now section 3 of the Ordinance prohibits undue concentration of economic power while section 4(i)(a) lays down the criterion namely that the undue concentration of economic power shall be deemed to have been brought about, maintained or continued if the total value of assets of an undertaking is not less than rupees one crore or fifty million of rupees after the substitution of this limit. The term "value of assets" is defined in section 2(1 )(o). The definition of this term in the Indian legislation is, however, differently worded as after the word "assets" the words "as shown in its books of account after making provision for depreciation or for renewals, or diminution in value", follow. From the language of the definition clause in the Ordinance, the inferential conclusion drawn by the counsel for the appellant was that it was only referable to fixed assets as they were only capable of depreciation and not the current assets. The further reason that was given was that since the word "means" has been used, therefore, it had to be rigidly construed as the consequences were of confiscatory nature. Stocks for sale, whose value fluctuated for one reason or the other or cash which was not liable to depreciation or could not be judged at cost, were canvassed as not to be included. Alternatively, it was also contended that the word "assets" means net assets, that is, gross assets less liabilities. It may be noted here that it was stated before the High Court that the meaning assigned to this technical term as understood in the Companies Act, Income Tax laws as well as in the trade and business should be adopted. This was because the word "assets" was not defined in the Ordinance itself.
18. In this background I will dwell on the meaning of the term "value of assets" appearing in the definition clause. The word "means" has no other significance but that, that the word "assets" has to be given its ordinary meaning, and not to be understood as having any extended meaning which the word "includes" conveys. The word "asset" is generally used in collective plural, and in commercial law it denotes the aggregate of available property, stock in trade, cash etc., belonging to a merchant or mercantile company. (Black's Law Dictionary, Revised Fourth Edition, page 151). It is also used to signify the means which a person or a bank or a corporation has as compared with his/its liabilities, that is, its identity is separate and is not inclusive of debts or liabilities but is only comparable to them. It is in this sense that the word "assets" has been used to denote a "complete whole" of the property. Any other meaning given to it will be against the verbal expression of the legislature, and would defeat the very purpose of the legislation.
19. If this be the criterion then the totality of assets cannot be whittled down in the absence of any words of limitation as to the scope of the word "assets" used in the definition clause. The words "at cost" or "market price" are used in valuation of stock in trade. Similarly the Third Schedule of the Companies Act, 1913, now repealed and re-enacted, gives the pro forma of the balance-sheet and therein the mode of valuation of the stock in trade is "at cost" or "market value". The Supreme Court of India in Investment Limited vs. Commissioner of Income Tax, Calcutta, (1970) 77 ITR 533, held "that the valuation of stock at cost is one of the recognized methods of accounting". Therefore, the words "at cost" merely indicate the method of calculation of the assets of an undertaking whose value has to be reckoned.
20. Again looking at the definition clause of the Ordinance and to the natural meaning of the word "assets" as signifying a "complete whole", the words "less depreciation at the normal rates at which depreciation is calculated for the purpose of assessm ent of Income Tax", in my view, appear to have been used to indicate only such of the assets which are liable to depreciation for which benefit is given under the Income Tax Ordinance, and, accordingly, cannot be read as giving any fixity to the assets.
21. Land, which is a fixed asset, is required to be shown in the balance sheet under the Fourth Schedule to the Companies Ordinance, 1984, but it is not liable to depreciation under the Third Schedule to the Income Tax Ordinance, 1979, relating to the rules for the computation of depreciation, allowance. (See section 23 of the Income Tax Ordinance, 1979). In the repealed Income Tax Act, 1922, section 10(2)(iv) only allowed depreciation in respect of building, machinery, plant or furniture and not the land standing alone.
The machinery parts stand in the same category as depreciation in their case is also not allowed.
Necessarily, therefore, land of high value would have to be eliminated if the definition is merely confined to those assets which are subject to depreciation and this could not be the intent of the legislature while defining the value of assets.
22. Again the word "total" occurring in section 4(a)(i) of the Ordinance is pre-fixed before the term "value of whose assets" which in the ordinary English language means; whole; complete; including all; co-ordinating everything towards one end (Chambers Twentieth Century Dictionary, page 1424). This also reflects the entirety of the assets whose value has to be reckoned in order to determine the size of the undertaking as whether it qualifies for the statutory fiction. This being so, it is difficult to accept that the term "value of assets" should be given a limited meaning.
23. As regards cash at cost, it has no other significance but that it is referable to its face value. And as to the value of the stock in trade, even though it fluctuates, it has to be computed on a fixed date at cost according to the rules framed under the Ordinance or, in any case, even under the recognized method of accounting the value has to be determined at cost or market price on a fixed date to ascertain profit and loss. This interpretation is wholly consistent with the size referable in terms of the value of assets and equally satisfies the test.
24. As for the alternative argument, again assets cannot refer to net assets, that is, gross assets less liabilities as that is not discernible from the language of the definition clause. Moreover, this method of calculation is adopted in determining profit and loss, which is not the case here as it is only the value of assets which has to be taken into consideration.
25. The definition of the term "value of assets" in the Indian law is substantially the same. In this connection I would refer to the comments by Sengupta in his book on "The Monopolies and Restrictive Trade Practices Act, at page 41, as under:-- "It should be noted that all the entries which occur in the assets side in the books of accounts of the company should be taken into account in determining its assets. Liabilities of an undertaking should not be taken into account while determining the value of assets for the purposes of the Act. The object is to prevent situations where a large company with assets of over Rs. 20 Crores and with liabilities equal to the assets may escape the regulatory provisions of the Act even though it may be in possession of considerable economic power." Taking the entries into consideration on the assets side, is in no way different from singly valuing the assets of the undertaking according to the definition clause of the Ordinance. The purport is in both cases to indicate the assets of the undertaking.
26. In the result and for the reasons stated above, the High Court was correct in holding, as it did, that the definition clause included not only fixed assets but also current assets as the assets in their entirety have to be taken into account which is the sole criterion for determining the economic power of the undertaking, and, therefore, no exception can be taken to the notices issued by the Authority.
27. Accordingly, both the appeals fail, and are hereby dismissed with costs.