' The ground on which this appeal was admitted to regular hearing has been elaborately set out in the admitting order, dated 30-4-2002. For completeness the said order is reproduced as under:- "This appeal impugns an order, dated 20-3-2002 passed by the Monopoly Control Authority (respondent herein). Learned counsel contends the aforesaid order has been passed in purported exercise of powers vested in the respondent Authority under section 12(1)(a)(iii) read with sections 3, 4 and 11 of the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970.
2. According to learned counsel, the facts of the case are undisputed. The appellant Company had dealings in the normal course, with an associated company namely, Rachna Textile Mills Ltd. Which was subsequently renamed as Kohinoor (Gujar Khan) Mills Ltd. ("KGM").
3. During the course of such dealings, KGM came to owe a sum of Rs, 40 millions approximately as trade credit which was due and payable to the appellant company. Furthermore, KGM was also a debtor of PICIC to the tune of Rs,40 millions approximately.
4. In 1987 PICIC entered into a restructuring agreement with KGM in order to facilitate repayment of amounts owed by KGM to PICIC. Part of the restructuring required that the amounts owed by KGM to the appellant-Company should remain frozen and should only be paid after the debt due to PICIC had been fully paid.
5. The shareholders of the appellant Company in general meeting held on 30-3-1988 unanimously resolved to subordinate the debt owed to the appellant-Company. PICIC, in any event, is stated to be a secured creditor having a charge over the assets of KGM.
6.
6.Learned counsel contends that in the above circumstances, it was in the best interest of the appellant-Company to subordinate its debt to that of the amount owed by KGM to PICIC. It is only on account of the appellant-Company's agreement to do so that PICIC had, in fact, agreed to the restructuring package. The sanction advice issued by PICIC to KGM, dated 30-12-1987 also required as a positive covenant, KGM to ensure that it will not pay the amount owed by it to the appellant- Company until the restructured debt had been paid to PICIC. Learned counsel also states that in 1987 when the debt of KGM was restructured by PICIC, KGM was on the verge of insolvency and there was no way in which KGM could have survived the threat to its existence without the subordination of its debt owed to the appellant-Company. Furthermore, the appellant-Company would have lost its entire amount of Rs,40 millions because the said amount was an unsecured debt which would have ranked after the amounts owed by KGM to its secured creditors.
7.Learned counsel contends that by means of the impugned order the Monopoly Control Authority has directed the appellant-Company to recover the entire amount, which would have accrued as interest on the aforesaid sum of Rs,40 millions. According to him, the said amount would come to approximately Rs,20,00,00,000. Apart from the fact that the order does not take into account the objective realities as existing in 1987, if the impugned order is enforced, KGM will, once again, become insolvent.
8.In the above circumstances he contends the impugned order is not legally sustainable.
9.The contentions of learned counsel required consideration. Admit. Notice for 18-6-2002."
2. Today learned counsel for the respondent Monopoly Control Authority has supported the impugned order, dated 20-3-2002. According to him the Monopoly Control Authority has rightly concluded that there was undue concentration of economic power as defined in section 4(b) of the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 (the "Ordinance"). In order to appreciate the submission made on behalf of the respondent-Authority it is necessary to examine section 4(b), which reads as under:--- "4. Circumstances constituting undue concentration of economic power.---Undue concentration of economic power shall be deemed to have been brought about, maintained or continued if---
(a) there are any dealings between associated undertakings which have or are likely to have the effect of unfairly benefiting the owners or shareholders of one such undertaking to the prejudice of the owners or shareholders of any other of its associated undertakings."
3. The basis advanced by learned counsel for the respondent-authority for supporting the impugned order is that the appellant and its shareholders have been prejudiced on account of the failure of the appellant to recover mark-up on the trade credit of Rs,40 millions, which was payable to it by KGM.
4. Considering the facts noted in the admitting order, I do not see how this argument can be made.
In 1987 KGM was technically, commercially and financially insolvent. It was only as a result of a revival package offered by PICIC that KGM survived. A condition of the package required the appellant to ensure that the amount of Rs,40 millions due to it from KGM would be subordinated to PICIC's debt and that no interest will be accrued thereon. In view of the fact that the appellant had an equity stake in KGM and was also an unsecured creditor, the revival of KGM and its continued existence as a viable unit was in the best interest of the appellant and its shareholders. It was in this context that the appellant chose to accept the conditions imposed by PICIC. This was done through a valid resolution passed by the shareholders of the appellant at the annual general meeting of the appellant held on 30-3-1988.
5. Learned counsel for the appellant has pointed out that as a result of the timely decision taken by the appellant in 1988, KGM was able to survive. The appellant, as a consequence was not only able to save its equity investment in KGM but was also able to recover the stuck up trade credit of Rs,40 millions which otherwise would have had to be written off. Based on the facts noted above, I am not in any doubt that if the aforesaid decision had not been taken, the appellant would have lost both, its investment in KGM and the trade receivables of Rs,40 million.
6. The circumstances noted above are not disputed by learned counsel for the respondent- Authority. What this Court needs to see is whether there was any prejudice caused to the appellant-Company or its shareholders by the decision taken by it in 1988 to subordinate its debt to the secured debt of PICIC. In view of the undisputed facts adverted to in the preceding paragraphs, I am not in any doubt that prejudice was not caused to the appellant or its shareholders. In fact, the aforesaid decision of the appellant-Company saved it and its shareholders from much graver prejudice, which would have been caused, had KGM been liquidated as an insolvent company.
7. The implicit basis of the impugned order appears to be that if the above-noted decision had not been taken, the appellant could have recovered its entire outstanding amount from KGM with interest. Considering the circumstances prevailing in 1987 as noted above, I find no justification for such basis. The respondent-Authority while passing the impugned order appears to have ignored the material fact that PICIC, which was a secured creditor of KGM, had itself written off the interest payable to it by KGM from 1-1-1982 till 30-6-1988. If a secured creditor such as PICIC having a first charge over the assets of KGM could consider its best interest to be served by waiving accrued interest and by deferring payment of its debt by KGM, it is clear to me that the appellant being an unsecured creditor had even more justification for doing the same in furtherance of its business interests. The action of the appellant cannot, in the circumstances, be seen as causing prejudice to the shareholders of the appellant.
8. I, therefore, find that no undue concentration of economic power (as defined in section 4 of the Ordinance) was brought about by the decision of the appellant to waive interest on the trade debt payable by KGM or by deferring repayment of such debt. The impugned order, dated 20-3-2002 as a consequence, is set aside.
THE END