HABIB BANK LTD. Versus MONOPOLY CONTROL AUTHORITY

ABDUL HAYEE KURESHI, C: .J.‑‑ Miscellaneous Appeal No: 60 of 1972 has been filed by Messrs Habib Bank (Overseas) Ltd.: and Miscellaneous Appeal No. 61 of 1972 has been filed b} Messrs Habits Insurance Co. These appeals have been filed under section 20 of the Monopolies and Restrictive Trade Practices ,Control and Prevention) Ordinance, 1970, to challenge the orders passed by the respondent, the Monopoly Control Authority, imposing penalty under section 19 of the said Ordinance. The penalty has been imposed for the reason of the appellants having failed to get registration in accordance with the provisions of section 16(1)(g) of the said Ordinance. In the case of Habib Bank (Overseas) Ltd., a penalty of Rs.30,000 has been imposed, and a recurring penalty of Rs.3,000 per day has also been imposed till compliance is made with the provisions of section 16 of the Ordinance. In the case of Habib Insurance Co. , the penalty imposed is a sum of Rs.10,000. Being aggrieved by the order of imposition of penalty, the appellants have filed separate appeals.

2. I have heard Mr. J. H. Rahimtoola, for the appellants, and Mr. Khalid M. Ishaque, for the respondent, the Monopoly Control Authority.

For the sake of convenience, appellant Habib Bank (Overseas) Ltd. is herein after referred to as the Overseas Bank. Habib Insurance Company is referred to as "the Insurance Co.", the Monopoly Control Authority as "the Authority", and the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, as "the Ordinance".

2‑A. Section 20 of the Ordinance provides for an appeal to this Court against the order of the Authority, and such appeal is in the nature of a restricted appeal, which lies only on the following three grounds: ‑‑

(a) that the order is contrary to law or to some usage having the force of law,

(b) that the order has failed to determine some material issue of law or usage having the force of law;

(c) that there has been a substantial error or defect in following the procedure provided in this Ordinance which may possibly have produced error or defect in the order upon the merits.

For the purposes of disposal of these appeals, I must state that the controversy on facts is, however, minimal.

3. The case of the Overseas Bank is that this bank was incorporated in Pakistan with the sole purpose of establishing branches in foreign countries. It is their case that this Bank does not render any banking service in Pakistan nor does it hold a licence, enabling it to carry on banking operations within Pakistan. On 15‑1‑1972, the Overseas Bank wrote a letter to the Authority, stating the position in regard to absence of banking operations in Pakistan. In this letter, the Overseas Bank disclosed that they had obtained advice, perhaps of its legal advisers, and had been advised that it was not necessary for them to register the Overseas Bank in pursuance of Rule 10 framed under the Ordinance as it was not an associated undertaking" of Habib Bank Ltd. , within the meaning of clause *(b) of subsection (1) of section 2 of the Ordinance. The Authority by a letter, dated 29th January, 1972, informed the Overseas Bank that "it appears that the Habib Bank (Overseas) Ltd. , is not a registerable undertaking". In this very letter, it was impliedly stated that the Insurance Co. would fall within the definition of an associated undertaking". Again, on 26th January 1972, the Executive Vice‑President of the Overseas Bank wrote a letter to the Authority, which is reproduced hereunder:‑‑

"We invite your kind attention to our letter No. HDH/167, dated the 15th January, 1972 where we have mentioned that, in spite of the fact that our Bank and Habib Bank Limited had got common management, it was not necessary for us to get ourselves registered as an associate undertaking, because we have been advised that we do not have any operations in Pakistan but are solely operating in foreign countries. Now on the issue of the Companies (Managing Agency and Election of Directors) Orders, 1972 we have separated the managemer4 of our bank and Habib Bank Limited no longer manages our work.

We have now to inform you that Mr. Rashid D. Habib, Managing Director of Habib Bank Limited and our bank has ceased to hold the office of Managing Director of our bank. He only continues as an ordinary director of our bank. We have got another Managing Director appointed by our Board. Our management is now separate and‑ independent and our Head office is located separately at the above address with effect from the 20th instant."

Again on 31st January, 1972, the Authority wrote another letter to the Overseas Bank, stating that the said Overseas Bank was registerable under section 16(1)(g) of the Ordinance, and the Overseas Bank was advised to register itself immediately. On 7th February 1979, the Executive Vice‑President of the Overseas Bank wrote a letter to the Authority stating that they did not require any registration under the Ordinance. On 21st February, 1972, the Authority once again informed the Overseas Bank that it was registrable, and fixed a time of ten days to obtain registration. Registration was admittedly not obtained, although, on 6th March, 1972, the Executive Vice‑‑President of the Oversea~: Bank wrote a letter to the Authority to re‑consider the question and except the Overseas Bank from the requirement of registration. Before this letter was written but after the expiry of ten days from 21st February 1972, the Authority issued a notice to the Overseas Bank to show cause why action under suction 19 of the Ordinance should not be taken against it. Cause was shown, which was not found to be valid or good, and, by an order, dated 26‑6‑1972, the penalty, as stated above, was imposed on the Overseas Bank.

4. In the case of Insurance Co. the facts are similar, and, for such reason, need not be repeated. A notice under section 19 of the Ordinance was issued by the Authority to the Insurance Co. to show cause against the imposition of penalty. By an order, dated 21st May, 1972, a penalty, as stated above, was imposed on the Insurance Co. Both the appellants have been held to be "associated undertakings" with Habib Bank Ltd.

Mr. J. H. Rahimtoola has, in the case of Overseas Bank, raised the following contentions:‑‑

(1) that the appellant is not a bank,

(2) that the appellant is not an undertaking nor an "associated undertaking" of Habib Bank,

(3) non‑registration was not wilful in terms of the requirements of law, and

(4) that the Authority was coram non judice for the reason that the final order should have been passed by a minimum of three members, and the same has been passed by only two members.

In the case of Insurance Co. the same contentions have been raised as far as these are applicable.

5. It is necessary to reproduce some of the provisions of the Ordinance to understand the scope of arguments in these appeals. The word "undertaking" is defined in section 2(1)(m) of the Ordinance. The definition is as follows:‑‑ "undertaking" means any concern, institution, establishment or enterprise engaged in the production, supply or distribution of goods, or in the provision or control of any service".

The words "associated undertakings" have been defined in section 2(1)(b) of the Ordinance, and such definition reads as follows:‑‑

"(b) 'associated undertakings' means any two or more undertakings interconnected with each other in the following manner, namely:‑‑

(i) if a person who is the owner or a partner, officer or director of an undertaking or who directly or directly holds or controls shares carrying not less than twenty per cent, is also the owner as a partner, officer of director of another undertaking or, directly or indirectly, holds or controls shares carrying not less than twenty per cent, of the voting power in that undertaking:

(11) if the undertakings are under common management or control or one is the subsidiary of another."

The provision about registration is contained in section 16 of the Ordinance, and clause (9) of subsection (1) of section 16 provides as follows:‑‑

"(16) Registration.‑‑(1) In order that information relevant to the performance of its functions under this Ordinance is available to the Authority, the following undertakings, individuals and agreements shall be registered with the Authority in such manner as may be prescribed by rules, namely:‑‑

(g) A bank, investment company or insurance company which, in relation to any other undertaking, is an associated undertaking."

6. The relevant provision about the constitution of Authority is contained in section 8 of the Ordinance, subsections (1) and (6) whereof are relevant for the purposes of these appeals. These sections read as follows:

(8) Constitution of authority.‑‑(1) For the purposes of this Ordinance the Central Government shall, by notification in the official Gazette, constitute a Monopoly Control Authority consisting of not less than three members appointed by it one of whom shall be appointed to be the Chairman .

........................................................

(5) No act or proceeding of the authority shall be invalid by reason only of the any vacancy among its members of any defect in its Constitution. "

It may lastly be stated that it is one of the functions of the[. Authority to register undertakings and reference in such behalf may be made to section 10 of the Ordinance.

7. I will first take up the last contention raised by Mr. J.H. Rahimtoola in regard to the Authority being coram non judice. The provision in regard to constitution of the Authority is contained in section 8 of the Ordinance, and there are two subsections, namely, subsection (1) and subsection (6), which have a hearing on the case. While subsection (1) states that the Authority shall be composed of no less than three members, subsection (6) is in the nature of a curative clause designed to protect the validity of orders passed by less than three members. Mr. J.H. Rahimtoola has contended that subsection (1) is a controlling provision via‑a‑via subsection (6), and he further contends that, in any case, the provision, are conflicting. I have not, been impressed by this argument, for the reason that subsection. (1) provides for constitution of the Authority and subsection (6) deals with cases in which all the members of the Authority do not sit to decide. It is also incorrect to state that subsection (1) controls subsection (6). Nor is correct to say that there is a conflict, inherent or seeming between the two provisions. In fact, the purport of the two provisions is independent. Even if the two provisions are read together, the inescapable conclusion is that the Authority shall consist of a minimum of three members, but a lesser number of members could sit to decide a particular case, and, by the mere reason of three members not being the deciding members, the validity of the decision is not affected. Mr. J.H. Rahimtoola additionally relied on Rules 6 and 7 of the Monopoly Control Authority Rules, 1971 P L D 1972 C S 302 to expound the said contention. On a perusal of these rules, it would seem that the contention of Mr. J.H. Rahimtoola is misconceived. On‑the other hand, Rule 7 reads as follows:

(1) Decisions of the authority.‑‑(1) All sittings, of the Authority shall be presided over by the Chairman, and in the absence of the Chairman, by a member authorised in that behalf by the Chairman.

(2) The decisions of the Authority shall be expressed in terms of the opinion of the majority of the Members.

(3) Where a case is heard by two Members by reason of a vacancy and there is difference of opinion amongst the Members, the case shall be reheard by the full Authority, after the vacancy has been filled."

8. A bare reading of the above rule would clearly show that a decision of the Authority given by less than three members is contemplated by the rule, and would, for such reason, not be invalid decision. In fact, sub‑rule (3) clearly envisages a case being heard by two members, and similarly sub‑rule (1) also contemplates that the Authority can proceed to decide a case in the absence of Chairman, which would mean that by less than three members. In that content, it may further be stated that Mr. Khalid M. Ishaque, for the respondent, also attempted to raise a point that this ground based on coraim non judice had not been raised as a group in the memo. of appeal. While the statement is correct, I find that the fact is stated in the facts of) the case, so that it cannot be said that such grounds cannot be considered by me. In any case, my conclusion is that the Authority was properly constituted, and the decision is not invalid for the mere reason of the same having been made by two members of the Authority. In the case of Overseas Bank, the first contention of Mr. J.H. Rahimtoola is that the appellant is not a bank. Mr. Rahimtoola relied on section 5(c) of Banking Companies Ordinance LVII of 1962 to contend that a banking Company is such company which transacts the business of banking in Pakistan. His contention is that, unless the Overseas Bank accepts the deposits of money from public in Pakistan, it could not be considered to be a banking company. He stated that the Overseas Bank did not accept any deposits in Pakistan. Now this argument not available to the Overseas Bank, because clause (i) of subsection (1) of section 16 of the Ordinance makes reference to "a bank .......... which in relation to any other undertaking is an associated undertaking". The concept of a banking company as mentioned in the Banking Companies Ordinance is thoroughly foreign and irrelevant in the circumstances. The words are totally different. In the Ordinance all such banks are envisaged which without doing any independent business in Pakistan can be termed as a associated undertaking of another undertakings. The stress is on the words "associated undertaking" as distinct from actual carrying on of business in Pakistan. The Scheme of the Ordinance is no less relevant in the context. The Ordinance aims at breaking monopolies and avoiding under concentration of economic power. One mode of avoiding undue concentration of economic power is to break or at least weaken such associations which in fact are commonly managed but have the semblance of separate entities. In such case acceptance of deposits in Pakistan is hardly of any relevance and the omission of the words devoting the carrying on of business in Pakistan appears meaningful in the context of circumstances. On the other hand, holding the Overseas Bank to be not a bank at all would be a fraud on the statute itself. It call, itself a bank, and in fact does banking business. It is admitted case that it accepts moneys from persons abroad for being remitted to Pakistan. It is also holding the money of Habib Bank in deposit or a loan. A banking transaction involves the acceptance of money and also disbursement. Upon the amount accepted from foreign depositors overseas is disbursed in Pakistan, a process of banking is definitely carried out within Pakistan also. It cannot be said that the process of banking ends with acceptance of deposits and does not include the disbursal thereof. Besides, the Commissions are earned in Pakistan, for commissions are payable on fulfilment of the contract of disbursal. This company is incorporated in Pakistan for all these reasons, 1 am in no doubt whatsoever that the Overseers Bank is "a bank" within the meaning of clause (g) of section 16(1) of the Ordinance.

10. The next contention of Mr. J.H. Rahimtoola is that the Overseas Bank cannot be termed as an undertaking "within the meaning of clause (m) of subsection (1) of section 2 of the Ordinance, and even if it is considered to be an "undertaking" within the meaning of the statue, it is not an "association undertaking" qua the Habib Bank In that context, it must be straightaway stated that on and until the 15th January, 1972, which was the date line for registration, the Overseas Bank was directly controlled and managed by the Habib Bank Ltd., and both the concerns had Mr. Bashid D. Habib as their Managing Director,

Subsequently, of course, the separation took place after the managing agency system was forbidden by the Economic Reforms under No. 1 of 1972. However, we are not concerned with the subsequent events. The word "undertaking" has been defined, and the definition has been reproduced in a foregoing paragraph of this judgment. This word would include an establishment, which provides, or controls any "service". The word "service" is again defined in clause (j) of subsection (1) of section 2 of the Ordinance. It means and includes banking and insurance. Since the Overseas Bank was providing "service" in the form of Banking, and the Insurance Company in the form of insurance. It would be included within the definition of the word "service" and, therefore', should be termed as an undertaking". This point need not detain as any further.

11. The next question in the context is, whether the Overseas Bank could be termed as an "associated undertaking" within the meaning of clause (b) of section 2(1) of the Ordinance. This clause from the Ordinance has also been reproduced above. Mr. J.H. Rahimtoola has contended that for two concerns, or, establishments being taken to be "associated undertakings", both sub‑clauses (i) and (ii) have to be satisfied. In short, the argument is that these sub‑clauses have to be read conjunctively, and the conditions laid down in both of them have to be satisfied before two establishments could be termed as "associated undertaking". Mr. J.H. Rahimtoola has pressed before me that, if the Legislature intended these two sub‑clauses to be disjunctive, the word "or" should have appeared at the end of sub‑clause (i). In that context, it needs to be pointed out that alternatively if the Legislature intendeu the two sub‑clauses to have conjuctive effect, the word "and" should have found a place at the end of sub‑clause (i), but the omission is conspicuous. Additionally, it must be stated that the use of a semi‑colon at the end of sub‑clause (i) would seem to lay down that the two clauses are disjunctive. In that context, it must be str4ghtaway state that punctuation in a statute is never of much assistance in the interpretation thereof. It would be profitable to reproduce a passage appearing in Art. 199 from "statutory construction" by Crawford (1940 Ed.) at page 342 which reads as follows:‑‑ "of course, the punctuation of a statute may lend some assistartbe in its concentraction, but when the intention of the statute and the punctuation thereof are in conflict, the former must control, even where the punctuation is regarded as a part of the statute. In other words, the punctuation will not control the plain meaning of the text of an enactment. It is subordinate to the text, and the retention of a word is of far more importance than the position of a comma. Indeed, the Court may punctuate, or disregard existing punctuation, or repunctuate in order to give the legislative intention effect. Thus, a semi colon may be placed where a comma appears, or a semi colon substituted in lieu of the word "and"."

12. Similarly, the controversy about the use of omission of the words "and" or "or" is also of very little significance. In fact, there are some cases in which it has been held that the word "and" is conjunctive. 1967 .I A C 192 J W. Dwyer Ltd. v. Met. Pol. Receiver and(1967) 2 QR and the use of the word "or" indicates, disjunctive clauses (R. V . Survey Quarter Sessions (1963) Q B 990). But the statute is replete with the use of these two words, and there is a mass of case law on the point that these two words can be used interchangeably. Reference may profitably be made to the cases reported in 1967 1 W L R 580 and (1959) 2 Q B 350. In these circumstances, I am clear in my mind that the use of the semi‑colon at the end of sub‑clause (i) of t4he absence of the word "or" at the end of the said sub‑clause is of, very little assistance in the interpretation of this clause. However, on a reading of the two sub‑clauses, the scheme of the Ordinance becomes manifest. Sub‑clause (i) deals with such conditions when a person being the owner or partner of officer or director of two undertakings joins the undertaking as associated undertakings but sub‑clause (ii) contemplates such situations when two undertakings are at a common managiament or control or one is subsidiary to the other. The continuity of two undertakings may well arise out of unity of a single person serving in both the undertakings, or, by the two undertakings so related to each other that both are termed as "associated undertakings". Such interpretation is a pointer to the fact that the two clauses have, as of necessity, to be read disjunctively, and not conjunctively. Taking the opposite view would lead to absurd results, because the very fact of two undertakings being under common management would include a case where a single person is the owner or partner or officer or director of the same two concerns.

13. On the point of unity of management as between Habib Bank Ltd., and the appellants, there is a finding of fact by the Authority that they were under common management, because there were' common directors, and, therefore, the concept of "associated undertaking" evolved in clause (b) of subsection (1) of section 2 of the Ordinance was clearly attracted. I hold that the findings of the Authority are amply justified.

14. The last contention of Mr. J.H. Rahimtoola was that even if it was held that the appellants needed to be registered, still non registration was not wilful. This argument is equally fallacious. Whether an act is wilful or not, has to be determined in the circumstances of each case. In the present case,. long correspondence has been exchanged between the parties, and ultimately the appellants were given time to get themselves registered. The appellants committed a default, and entered into needless obstinate correspondences to evade registration. My attention has also been invited to clause (d) of section 10 of the Ordinance, which provides for the authority to give advice to persons. or, undertakings in the matter of action proposed to be taken by such undertakings, so as to comply with the provisions of the Ordinance. In this case, at least a doubt must have arisen in the mind of the appellants in regard to the necessity of registration. They should then have sought the advice of the Authority, but they did not seek any advice and even when the Authority required them to get registration, they failed to comply with such requirement. The absence of registration was, therefore, wilful.

15. The last question is in regard to quantum of penalty. In the case of Overseas Bank a recurring penalty has also been imposed. A recurring penalty is contemplated by subsection (2) of section 19 of the Ordinance. A reading of this subsection would indicate that., before a recurring penalty can be imposed, ,the same procedure as is provided in subsection (1) has to be followed. Subsection (1) provides for giving the person, or, undertaking an opportunity of being heard, or in short the giving of a show‑cause notice. Such second show‑cause notice ha not been given to the Overseas Bank before imposition of recurring penalty. To that extent, the recurring penalty of Rs.3,000 per ‑day is in violation of subsection (2) of section 19 of the Ordinance and has to be set aside.

In the result, both these appeals fail, subject to appeal of Habib Bank (Overseas) Ltd., succeeding to the extent that further penalty of a sum of Rs.3,000 per day for every day after 15th June, 1972 is set aside. Costs in favour of respondent.

A. A. Appeal dismissed.