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Business Law and Corporate Governance

Written Assessment of Case

PART I

The words of Prof. Raj Kumar Chakravarty stating that First come people and then the state a
state is formed by the people, guided by the people and controlled by the people are given
credence in the preamble of the constitution where the preamble states that the sovereign
authority over everything is Almighty Allah and the people of Pakistan have the right to exercise
that authority within the prescribed limits by Allah. This sentence in the preamble clearly gives
the right of authority to the people of Pakistan and it is the fundamental right of the people of
Pakistan to exercise that authority.
Likewise, the fundamental right of the people of Pakistan are covered in Chapter 1 of Part-II of
the constitution of Pakistan, whereby Article 4 (2a) of the constitution squarely states that no
action detrimental to the life, liberty, body, reputation or property of any person shall be taken
except in accordance with the law.
Also article 8 of the constitution nullifies any laws that the state shall make which are in direct
contravention of the fundamental rights of the people as explained in Chapter 1 of Part-II of the
constitution of Pakistan. This article holds the state i.e. parliament or any other organ that has the
authority to make laws and levy taxes, accountable for the laws they pass and any law that
nullifies any fundamental right of the people of Pakistan is not a valid law.
The function of the state is not only to make laws that uphold the fundamental rights of the
people Pakistan but also to eliminate all forms of exploitation of its subjects and ensure the
fulfillment of their fundamental rights. So as the state is there to serve and cater to the people of
Pakistan, then the constitution puts the people before the state.
Other articles that uphold the fundamental rights of the people of Pakistan include article 10-A,
which confers the right to fair trial and due process to any and all Pakistani citizen for the
determination of civil rights and in any criminal charge. These rights and obligation cannot be
determined without due process and fair trial.
The article 19 and 19A confers the right to freedom of speech and the right to information on to
the people and gives them this right as long as it does not contradict or puts to disrespect Islamic
values or is detrimental to the security of Pakistan.
On the other side article 5 and article 6 support the state over the people and informs the subjects
of the state to be loyal to the state and the penalty for treason. This is a simple case of rights and
obligations. Whenever the people are given rights there are some reciprocal obligations that have
to be fulfilled.
The objectives resolution as put forward in 1949 and made a fundamental part of the constitution
via article 2A. Some of the objectives of the objective resolution states the following:

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Authority should be delegated to the State through its people under the rules set by Allah
Fundamental rights including equality of status, of opportunity and before law, social,
economic and political justice, and freedom of thought, expression, belief, faith, worship
and association, subject to law and public morality should be given to all the citizens of
the state.

These articles of the objective resolution make the basis of the constitution and they give the
people of the country sovereignty over the state.
All the above rights are to be guaranteed by the judiciary of the country. For this reason the
judiciary is an independent organ of the state.

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PART II

The following is the advisory note to the Privatization Commission regarding the privatization of
Heavy Electrical Complex. The government plans to sell 100 % shareholding of the HEC:
The selling of 100% of shares of Heavy Electrical Complex entails a complex procedure,
however, the privatization commission needs to take care of the following points to protect its
interest and to save it from any problems arising from the sale:
The first thing that makes the contract valid is the intention of the parties to make a contract. The
intention of the parties to get into contract can be confirmed by calling for expressions of interest
from interested parties. This reveals to the PC which parties are willing to get into contract.
The next step would be to issue the invitation for bids for 100% shareholding of HEC. This
would constitute an invitation for proposals which would be valid in any court of law. The
proposals received would constitute an agreement between the parties regarding sale of
shareholding of HEC. However, for the contract to be a valid contract the following conditions
have to be met:

The party that has bid for the shareholding has the capacity to enter into a contract.
The consideration that is offered by the company should be only the as a sum of money
which is lawful consideration.
There should be no undue influence, coercion or fraud implicit in the finalization of the
bids.

In general the contract between the privatization commission and the party should follows the
section 10 of chapter 2 of the contract act of 1872 i.e. All agreements are contracts if they are
made by the free consent of parties competent to contract for a lawful consideration and with a
lawful object, and are not hereby declared to be void.
The rights of the privatization commission once in contract with the company is the money it
will receive from the other party. And its obligations include the handing over of all management
control to the bid winning party.
On the flip side the company that is awarded the bid has the obligation to submit the money in
the stipulated period and has a right to the management control and ownership of the heavy
electrical complex.
However, if any one of the parties fails to fulfill any of its obligations then the contract is void.