1. ' WAJIHUDDIN AHMED, J.---Impugned in this appeal is the decision of the learned Single Judge in J.M. No,218 of 1996 whereby, in terms of section 284 read with section 287 of the Companies Ordinance, 1984, sanction for merger/amalgamation of the respondent No,3, Brooke Bond Pakistan Ltd., (BBPL), with the respondent No,2, Lever Brothers Pakistan Ltd., (LBPL), as a single company, to be known as Lever Brothers Pakistan Ltd.., was accorded. Upon the joint filing of the J.M. By B.B.P.L. And L.B.P.L. And in response to notices therein, the appellant, a senior member of the Bar and holder of one share of the face value of Rs,10 in B.B.P.L. Had preferred objections to the scheme of merger. The learned Judge in Chambers, disallowing the objections on 10-5-1997, correspondingly, allowed the J.M. Mr. Aslam Bin Ibrahim, the objector, has appealed.
2. ' In the background of the controversy was a letter dated 12-6-1995 from the Chairman, Lever Burghers Pakistan Ltd., to the Monopoly Control Authority (M.C.A.), carrying a proposal for the merger of Brooke Bond Pakistan Ltd., with such company. The letter, apparently, fell under section 10(d) of the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970.
3. However, before response was made by the M.C.A., the appellant, as President, Small Shareholders Association of B.B.P.L., along with 27 others, lodged a complaint under sections 3, 11 and 14(2) of the Monopolies Ordinance, challenging the proposed merger. Upon preliminary hearing held on 10-12- 1995, the M.C.A. Issued show-cause notices under section 11 of the Ordinance to B.B.P.L. And L.B.P.L.
4. For ex facie violating section 5(1)(b) and for action in contemplation of section 12(1)(d)(iv) of the same Ordinance. Replies were filed and hearing took place. The proposal for merger was allowed on 16-9-1996, upon imposition of certain conditions, which having been fully reproduced by the learned single Judge in the impugned order, need not be recast here. Against that order, the objector appealed per Miscellaneous Appeal No,46 of 1996 in this Court, where such appeal was dismissed in limine, the order of the M.C.A. Having been found to be non-appealable. The matter was then taken by the objector to the Supreme Court of Pakistan, through Constitutional Petition No,455-K of 1996 and leave was granted on 16-2-1997 but stay was declined, subject to hearing at an early date within three months. Correspondingly J.M. No,218 of 1996, having been preferred on the original side of this Court by B.B.P.L. And L.B.P.L. On 14-11-1996, resulted in the disposal, above referred, in turn, giving rise to the present appeal.
5. ' Before the learned single Judge, as also in this appeal, the appellant, who is also a senior counsel, has urged that the scheme of merger is not only against the public but also the national interest, besides being oppressive and prejudicial to the minority shareholders. That being so, it has been contended that the merger should have been disapproved, as being unfair and unreasonable in terms of the principles underlying sections 284 and 287 of the Companies Ordinance. Another and, perhaps more substantial argument is that the monopolies and Restrictive Trade Practices (Control and Prevention, Ordinance 1970, overrides all law tending to cut a cross the postulations of such Ordinance. On the factual plane, it has been urged that the chairman and two members of the M.C.A. In their unanimous order, currently in appeal before the Supreme Court, have already found the merger "to create a gigantic monopoly in tea trade in Pakistan capable of wiping out all competition in this commodity". The conditions imposed on the monopoly by the M.C.A. Are stated to be unsatisfactory and insufficient in the light of the express requirements of the monopolies Ordinance.
6. ' As to the basis of the merger, the learned Single Judge has heavily relied on the deliberations and outcome of the general body meetings of the two companies, directed on 10-12-1996 to be held by him and actually held on 8-1-1997. It has been found and apparently, correctly that a vast majority of shareholders, with negligible exceptions, has opted for the merger. As against this, Mr.Aslam Bin Ibrahim, the appellant, pointed out that the result is a takeover by a multinational company (LBPL) of a Pakistan run entity (BBPL) for no rhyme or reason, except to create a monopoly and to manipulate control of a trade in a very sensitive area. The Principles, which govern mergers and amalgamations of corporate bodies under the Companies Ordinance have been elaborately examined by the learned Single Judge on the touchstone of reported dicta from various jurisdictions, inclusive of our own. The case law cited is as below:---
(1) In re: Alabama New Orleans, Texas and Pacific Junction Railway Company, (1891) 1 Ch. 213;
(2) In re: Katni Cement and Industrial Co. Ltd., AIR 1937, Bombay 423;
(3) In re: Hindustan General Electic Corporation Ltd., AIR 1959 Calcutta 679;
(4) In re: Sussex Brick Co. Ltd., (1960) 2 W.L.R. 665;
(5) In re: Sidhpur Mills Co. Ltd., AIR 1962 Gujrat 305;
(6) In re: Grierson, Oldham, Adams Ltd., (1968) 1 Ch. 17;
(7) Navjivan Mills Co. Ltd., In re Kohinoor Mills Co. Ltd., (1972) 42 Comp. Cases 265;
(8) S.M. Ilyas & Sons v. Monopoly Control Authority, PLD 1976 Lah. 834;
(9) In re: Star Tiles Works Ltd., (P. Appunny v. Star Tiles Works Ltd.), (1980) 50 Comp. Cases 286;
(10) Rathan Maize Products Co. Ltd., v. Monopoly Control Authority and 9 others PLD 1986 Lah. 346;
(11) In re: Lipton (Pakistan) Ltd:, and another 1989 CLC 818;
(12) In re: Southern Gas Limited, 1989 CLC 1323;
(13) In re: Amin Fabrics Limited, 1989 MLD 1861;
(14) Atlas Autos Ltd. And another v. Registrar Joint Stock Companies, 1991 CLC 523;
(15) Mehmood Textile Mills Ltd. And others v. Registrar Joint Stock Companies, NLR 1993 UC (Civil) 49;
(16) Reckitt & Colman Pharmaceuticals (Pvt.) Ltd., JM No,204 of 1996 (Unreported).
7. While powers of the Court to approve or disapprove mergers are broad, they are neither unlimited nor arbitrary. Judicial pronouncements have highlighted some obvious constraints. At the outset, it is to be ascertained whether the necessary requirements of law have been satisfied. Thus, the Court has to see whether the resolution(s) have been passed by the requisite majority, taking into account the value as well as the number of the shareholding. Here it is to be ensured that the members participating in the meeting(s) and coming up with the resolution(s) were real representatives of the class to which they belonged. Equally important is the determination that the majority, which came to register itself, acted bona fide and in the interests of the general body of shareholders and that the minority was neither coerced nor victimised. As to victimisation, the Court is to cautiously address the question whether the merger is not calculated to neutralise and render toothless an effective minority, in contemplation of the various provisions of the Companies Ordinance, which expressly postulate a negative veto as also certain specific remedies, within the grasp of a minimum percentage of minority shareholders and not of others. Correspondingly, the Court should be satisfied that the scheme is not only fair but also reasonable from the point of view of a neutral observer. Everything apart, in all schemes and proposals of corporate mergers larger interests of the society, as secured by the Constitution and law have to be safeguarded.
8. The vast majority of the shareholders in the two entities having subscribed to the merger and all necessary legal requirements having been met, the amalgamation cannot be questioned on the ground of want of compliance of the legal formalities. The minority, which abstained, rather than opposed the amalgamation, has been shown to be negligible and did not qualify in any degree to be effective for the statutory purposes, aforementioned. Thus, it cannot be said that an otherwise potent minority was decimated. On the plane of reasonableness and rationality, the very fact that the appellant himself decries the creation of a monopoly, would imply greater profits and returns to shareholders than hither to before, something to which, normally, any shareholder worth the name would hardly object.
9. ' Here, relative to fair play, may be taken up the objection of the appellant that the swap ratio of 1 share of Rs,50 in L.B.P.L. Against every 4.3 shares of the mominal value of Rs,10 of B.B.P.L. Is unfair irrational and unreasonable and, instead, approximately, there should have been two such shares of B.B.P.L. For one share of L.B.P.L. We may, in context, note that the appellant objector did not lead any evidence on the subject and, as Mr. Vellani seems correctly to have pointed out, while on 25-3- 1997 the case had been argued and reserved for orders to be announced on 10-4-1997, Mr. Aslam Bin Ibrahim moved an application, dated 1-4-1997, to produce evidence on the issue. Notice on the application was ordered on 2-4-1997, and such was heard on 10-4-1997, ultimately, coming to be dismissed at the time of final disposal. Such, obviously, was far too belated an application in a case, which had been instituted on 14-11-1996 and which as per section 9 of the Companies Ordinance 1984, ought to have been decided within 90 days upon a day to day hearing, with minimum quantified adjournments. In this scenario if the said application came to be dismissed the appellant has to thank himself for a leisurely and slow approach to the Court. However, if these patent flaws were not in vocable, the order of dismissal of the applications, at the level of the learned Single Judge, should have called for interference because such is a bare order of dismissal without discussion let alone any reasons. In the emerging situation, the appellant has relied on a latter dated 22-1-1997, from Mirza U.Farooq, a small shareholder of BBPL, apparently, appearing in "The News" where criticising the daily for some probative articles on the merger in question, a swap ratio of 2:1 instead of 4.3:1 was advocated. Such letter, plainly, is no evidence and cannot be made the basis of displacement of values technically and elaborately worked out relevant to the merger.
10. ' This brings us to the cardinal question in this case namely, whether anything in the proposed merger cuts across a requirement of the Monopolies Ordinance. Related to it is also the question of the larger socio-economic interests, safeguarded by the Constitution. It is correct that the M.C.A., in its aforementioned order, has concluded that a merger would create a monopoly in the tea trade.
11. It is also correct that section 3 of the Monopolies Ordinance prohibits "all undue concentration of economic power, unreasonable monopoly power or unreasonably restrictive trade practices." It is equally indisputable that, in terms of section 11(1) of the same Ordinance the Monopoly Control Authority, if satisfied that there has been or is likely to be a contravention of the provisions of section 3 and that action is necessary in the public interest, can make one or more of the orders specified in section 12, as it may deem appropriate and an order thus made, pursuant to section 11(2), "shall have effect notwithstanding anything contained in any other law for the time being in force or in any contract or memorandum or articles of association". Such, manifestly, is an overriding power and, when the M.C.A. Takes recourse to the same and passes an order in terms of section 11(1), the jurisdiction of a company bench, acting in terms of sections 284 and 287 of the Companies Ordinance, gets curtailed and circumscribed to that extent. But the question is whether the M.C.A. Has passed such an order or for the matter of that such order emerged in the appellate hierarchy. Obviously not. Mr. Fateh W. Vellani has correctly pointed out that even though the M.C.A.
12. Found a monopoly to be emerging from the amalgamation, it came to the conclusion that the advantages from the merger, subject to the conditions super-added, would outweigh the detriments of the monopolistic device. The conditions imposed, with periodic monitoring by the M.C.A., pertain to the amalgamated company bringing an additional 300 hectares under plough for the tea cultivation in Pakistan, within the first 5 years from the date of the order of the High Court, allowing merger and a total 600 hectares within 7 years of such date. The land to be so tilled was identified to be in the Mansehra District. These targets, however, may seem to be somewhat modest, when considered in the context of a large monopolistic entity and besides the commencing date, referring to the date of the Court order, was, obviously, unrealistic. As to this last, Mr. Vellani, candidly, agreed that the commencing date for our purposes, henceforth, would be taken to be the date of the M.C.A. Order even though, for that purpose, the respondents shall have to reschedule their programme and hasten in discharging their obligation. Concerning the magnitude of acreage, about which we have considerable reservations and doubts, the matter is pending in the Supreme Court and it is best that such is left there to be determined because that pertains to the domain of the M.C.A. And the M.C.A. Order is not in appeal before us. Much the same should apply to objections that the amalgamated entity may dictate prices by effecting more expensive tea imports from Kenya, while lower rates are available elsewhere. However, some, though not wholly satisfactory safeguards, are visualised even in the existing order of the M.C.A.
13. Those shall no doubt be addressed by. The M.C.A. In all seriousness, more so when the object of attracting foreign enterprise is none other than public interest and public benefit and if such is not assured of what good is foreign capital invested here? We do not have to go very far to seek examples to emulate. It is common knowledge that in neighbouring India staggering schemes for 100% local production have ensured lower prices of products of multinational companies produced and marketed there, so much so that similar products being manufactured in Pakistan, at times, carry as much as ten times the price tag carried in India. For this the fault lies with our own agencies alone. It is high time that priorities change at the level of our officials.
14. Having said ' as much, we have to balance the postulates of the Companies Ordinance with the Constitutional requirements, not the least of which are visualised in the concepts of social justice and free competition. There are several sub-constitutional legislations on these subjects, one of which is the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970.
15. Such Ordinance, in its various implications, has already been dealt with above. On the other hand, as seen, the powers under sections 284 and 287 of the Companies Ordinance, 1984 for allowing amalgamations, are broad but subject to restrictions under law and the Constitution. All such powers and constraints are to be governed by the ground realities, subsisting in time and space.
16. International trade and commerce have, lately come to occupy a center stage. Economic realities have to be faced. Foreign capital is to be carefully nurtured. Capital always seeks safe havens and would be shy of unnecessary impediments. It is in this evolving perspective that we have to interpret and implement our laws. Having examined the dispute in depth, as above the inescapable conclusion is that there is no apparent transgression of any law. If there be some areas of concern such can and should be attended to in good time. We, therefore, have found nothing in scheme of amalgamation to conclude that the sanction thereof, accorded by the learned Single Judge was erroneous. His order accordingly is upheld and the appeal is dismissed.
17. ' These were the reasons for the short order of dismissal of this appeal, which we recorded on 24-6- 1997 subject to some temporary conditionalities, which were agreed upon between the parties.