ISLAMABAD: The Supreme Court on Friday, while halting the process of privatisation of the Pakistan Steel Mills, declared the letter of acceptance issued to the Arif Habib Consortium by the Privatisation Commission on March 31 and the Share Purchase Agreement of April 24, as void and of no legal effect.
The court, by means of instant short order, also directed the federal government to constitute and activate the Council of Common Interest (CCI) expeditiously as far as possible but not later than six weeks on the issue.
“We hold that the establishment and working of the Council of Common Interest is a cornerstone of the federal structure providing for protection of the rights of the federating units,” the order said, adding this important institution (CCI) is not functioning presently.
A nine-member bench comprising Chief Justice Iftikhar Muhammad Chaudhry, Justice Rana Bhagwandas, Justice Javed Iqbal, Justice Abdul Hameed Dogar, Justice Muhammad Nawaz Abbasi, Justice Tassaduq Hussain Jillani, Justice Saiyed Saeed Ashhad, Justice Hamid Ali Mirza and Justice Karamat Nazir Bhandari was hearing the constitutional petition challenging the privatization of Pakistan Steel Mills, Karachi.
The Steel Mills was supposed to be handed over to the Arif Habib Consortium on May 29, for Rs 21.68 billion but the Supreme Court while halting the transfer of possession to the bidders stayed the process of privatisation first on May 24, till June 15 and then on June 14, till the final decision of the case.
The consortium comprises of the Twwairqi Steel Mills, the Magni Togorsk Iron & Steel and the Arif Habib Securities of Pakistan. Chairman Watan Party Barrister Zafarullah Khan was the main petitioner in the case for which the chief justice had constituted the larger bench.
The court, however, held that the Privatisation Commission Ordinance, 2000 was not ultra vires of the Constitution. It also held that the approval of privatisation of the Pakistan Steel Mills by the CCI on May 29, 1997 continues to hold field, “but it would be in order if the matter is referred to the CCI for consideration”.
The short order also holds that it is not the function of the court, ordinarily, to interfere in policy-making domain of the executive. “However, the process of privatisation of the PSMC stands vitiated by acts of omissions and commissions on the part of certain State functionaries reflecting violation of mandatory provisions of the law and rules framed there under which adversely affected the decisions qua pre-qualification of a member of the successful consortium (Arif Habib), valuation of the project and the final terms offered to the successful consortium which were not in accordance with the initial public offer given through advertisement,” the court held.
Barrister Zafarullah Khan of Watan Party, while talking to The News after the announcement of the decision, said the decision would inject more confidence in the public to believe in the judiciary. “It is a great victory of law and would give more room to democratic norms to prevail.”
The chief justice after conclusion of arguments of the counsel for respondents, Sharifuddin
Pirzada for Privatisation Commission, Abdul Hafeez Pirzada for the the federal government and Kazim Hassan, assistant to Khalid Anwar, counsel for the Arif Habib Consortium, said the decision would be announced at around 4pm but it took three additional hours for the court to announce the short order at around 6.45pm on Friday.
Giving reasons, the court noted that the Board of Privatisation Commission (BOPC) after having the final report on evaluation of the PSMC assets on March 30, 2006, recommended the same day that the shares of the PSMC be sold at Rs 17.43 per share. On the very next day, the Cabinet Committee on Privatisation determined the reference price of the share at Rs 16.18, less than that suggested by the PC, whereas the final bid was accepted at Rs 16.80 per share.
The court also noted that apart from price, the government of Pakistan and the PC extended a number of other benefits to the purchaser. Earlier Friday, Hafeez Pirzada while answering a query by the chief justice contended that the process of privatisation of the PSM was never dropped.
The chief justice asked if the idea was not dropped (in 1997-98) why huge money of Rs 7 billion was invested in it. Pirzada responded that the investment was to make the PSM functional to facilitate its privatization. He maintained that if the PSM is put on resale, can anyone be offering more than the present price following the involvement of the Court? The chief justice, however, stated that there existed a (better) standing offer for the PSM.
Kazim Hassan admitted before the court that there was an FIR against Arif Habib under sections 409, 506, 342 and 386 PPC. Before announcement of the decision, Justice Iftikhar Muhammad Chaudhry termed the case “undoubtedly, a lengthy one that took four weeks to decide”.
