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Petitioner: TCS Private Limited & others VS Respondent: Pakistan Post & another
Court Name: Sindh High Court Judge(s): Muhammad Ali Mazhar, Agha Faisal Title: TCS Private Limited & others vs Pakistan Post & another Case No.: Constitutional Petition No. D-2987 of 2018 Date of Judgment: 2018-08-03 Reported As: PLD 2019 Sindh 69
ORDER SHEET IN THE HIGH COURT OF SINDH AT KARACHI
C.P. No.D-2987 of 2018 ------------------------------------------------------------------------- DATE ORDER WITH SIGNATURE OF JUDGE -------------------------------------------------------------------------
Present:- Mr. Justice Muhammad Ali Mazhar Mr. Justice Agha Faisal
TCS Private Limited & others………………………..Petitioners
Versus Pakistan Post & another……………………………Respondents
Date of Hearing: 31.05.2018, 06.06.2018, 08.06.2018, 13.06.2018, 20.06.2018 & 26.06.2018.
M/s. Anwar Mansoor Khan & Mir Muhammad Ali Talpur, Advocates for the Petitioners.
Mr. Salman Talibuddin, Additional Attorney General for Pakistan assisted by Mr. Abdullah & Ms. Alizeh Bashir, Advocates.
Mr. Shaikh Liaquat Hussain, Assistant Attorney General.
Mr. Ateeq-ur-Rehman, Assistant Director (Law), Pakistan Post.
Mr. Akbar Ali Dero, Post Master General, Karachi.
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Muhammad Ali Mazhar, J: This petition has been brought to seek out declaration that Pakistan Post Office has no right and authority to go beyond Pakistan Post Office Act, 1898 hence they cannot enter into a partnership with a private entrepreneur. The petitioners have sought further declaration that the Pakistan Post Office has no authority to tender and form a company to run business in terms of Request For Proposal‟ (RFP) which is illegal and incapable of being acted upon.
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2. The short-lived facts of this court case are that the Pakistan Post Office through an advertisement issued a „Request For Proposal‟ (RFP) for Private Public Partnership. As per terms of tender document, the bidder was obliged to build in partnership with the Pakistan Post an infra- structure to operate the project for a defined „Concession Period‟ and at the end of the „Concession Period‟, transfer the assets to the implementing agency i.e. Pakistan Post Office.
3. The learned counsel for the petitioners in the beginning drawn our attention to fleeting profile of the petitioners. He argued that petitioner No. 1 to 5 are providing services in relation to courier and domestic services. The petitioner No. 6 & 7 are the associations representing around 850 companies and firms engaged in the business of courier, logistics and other related services. It was contended that the indenture of „Request For Proposal‟ (RFP) shows that under the intended arrangement the Pakistan Post will be privatized. The functions of the Pakistan Post Department will be transferred to a private entity along with its assets for a concession period of 20 years commencing from the signing date of the Concession Agreement.
4. He further argued that under the “Scope of Work for Build, Operate, Transfer (BOT) of Pakistan Post Logistic Company”, a new company is to be formed under the name and style of “Pakistan Post Logistics Company” to provide services including Urgent Mail Services (UMS), Urgent Mail Services-Cash on Delivery (UMS-COD), Express Mail Services (EMS), Fax Mail Service (FMS), and Supply Chain Management (SCM). The learned counsel argued that the proposed arrangement and concession agreement is in complete violation of the law including the Post Office Act,
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1898 and the Pakistan Postal Services Management Board Ordinance, 2002.
5. It was further averred that a Pre-bid Investors Conference was held on 28.02.2018 wherein the CEO of the petitioner No. 1 participated and requested to allow some time to present his proposal. However, he was not allowed to present his proposal by giving him only a few minutes for such presentation, which time was not sufficient for presenting the detailed proposal. The CEO repeatedly informed the officials that he will require more time to present the proposal as his ideas were detailed, however, the time was not allowed and the conference was ended. It was apparent that the respondents did not want the petitioners to participate in the Bidding process by making it difficult for them. The correspondence in the form of chain of email is available at Annexure „E‟ on Pgs. 575 to 589 of the court file.
6. The learned counsel further argued Pakistan Post Office is a Department as defined in Section 2(k) of the Post Office Act, 1898 which is empowered to carry the postal articles as defined in Section 2 (i) and the Post Office as defined in Section 2(h). The words “in course of transmission by post” and “delivery” have been defined in Section 3 of the Post Office Act, 1898. For the purposes of the Post Office Act, 1898, the words in the course of transmission by post would include the delivery of postal article to a “postman” or other person authorized to receive postal articles for the post, and such shall be deemed to be a delivery to a post office. Under Section 4 of the Post Office Act, 1898, Pakistan Post has an exclusive privilege of conveying letters, and such letters can only be conveyed by the Pakistan Post and no one else. The said privilege is also followed by a specific restriction under Section 5 of the Post
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Office Act, 1898, which includes restriction on certain persons to carry “letters” as specified in Section 4. In the wake of monopoly, the Pakistan Post wants to intrude in the business of the citizens/Pakistani companies, that they would utilize the existing thousands of Post Offices, and employees of the Post Offices to enter into the Logistic Business.
7. The learned counsel further argued that Pakistan Postal Management Board Ordinance, 2002 only provides for the management of Pakistan Post Office Department by the Pakistan Postal Services Management Board as established under Section 3 of the said Ordinance. The powers and functions of the Board are listed in Section 11 of the Ordinance, 2002. The Board does not have authority to perform any function or exercise any power that is not provided in the said Section 11.
8. It was further contended that the respondents through RFP have attempted to curtail the competition. The intended partnership will have an effect of creating a monopoly and curtailing the competition in this sector which will be in violation of Article 18 of the Constitution of the Islamic Republic of Pakistan, 1973 wherein free competition has been encouraged. The rights of the petitioners guaranteed under Article 18, 24 and 25 have been violated as the foreign investor is being given preferential treatment over the local/domestic investors.
9. It was further contended that no approval or any permission of the Federal Government or of any authority under the Public Private Partnership Act, 2017, nor any policy approved by the Federal Government has been brought on record by the Respondents. Article 90 (1) of the Constitution of the Islamic Republic of Pakistan 1973
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defines the Federal Government which is not the Prime Minister but consists of the Prime Minister and the Federal Ministers. In support of contention, the learned counsel for the petitioners cited following judicial precedents:-
2010 SCMR 1437 rel. at Pg. 1442 at “B”, 2008 SCMR 1148 rel. at Pg. 1151 at “F” & “G”. 2007 SCMR 307 rel. at Pgs. 312-313 at “B”., PLD 2005 SC 842 rel. at Pgs. 854-855 at “B”, 2001 SCMR 838 rel. at Pg. 842 at “B”, 2017 SCMR 683 – Suo Motu Case No. 19 of 2016 – at Pg. 699 at “G” and Pg. 700 at “I”, PLD 2012 SC 132, PLD 2011 SC 997, PLD 2005 SC 193 and PLD 1975 SC 667
10. Quite the reverse, the learned Additional Attorney General conversed that Pakistan Post Logistics Company will be incorporated as a special purpose vehicle (SPV) regulated by the Securities and Exchange Commission of Pakistan. The project shall be implemented on a Build- Operate-Transfer basis (BOT) in three phases. It was further argued that under the terms of the Concession Agreement, the partner will develop, design, finance, construct, implement, insure, commission, test, manage, operate, maintain and upgrade existing services. With the resultant advancement in its present infrastructure and services, the scope of functions currently performed by Pakistan Post will be improved. The partner will also introduce Supply Chain Management defined as overseeing/coordinating the movement of materials, information and finances. The partner will launch, market, sell, operate and maintain these services, with an aim to attract corporate customers for Pakistan Post. The partner will pay to Pakistan Post, a minimum of PKR 327.468 million in each operational year of the project with a 5% increase in the guaranteed amount per annum. However the partner will only be entitled to share the revenue generated by PostLog during the operations stage of the Concession Period.
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11. It was further contended that Pakistan Post presently performs courier, urgent, fax mail, and express mail/parcel delivery services (local and international) in addition to regular mail services. These are major revenue generating operations and it will continue to perform its current services including the Urgent Mail Service (UMS) and Mobile Money Order. All post offices, office and residential buildings, vehicles and train lines currently owned and operated by Pakistan Post shall remain functional. Under the scope of work, the partner will provide the requisite technology and investment, in order to introduce track and trace facilities, expand the existing network, develop business, generate revenue and better the management of operations presently performed by the Pakistan Post, i.e. Urgent Mail Service, Urgent Mail Service-Cash on Delivery, Express Mail Service; and Fax Mail Service.
12. To answer specific query raised by the court, the learned Additional Attorney General, argued that employees, assets, offices and resources of the Pakistan Post will be utilized in the course of the project at all times with the prior approval of Pakistan Post but the ownership of all assets and employment relationship with such employees shall remain with the Pakistan Post. No redundancy or retrenchment is at all envisaged and all existing employees shall continue in the service of Pakistan Post and will remain as civil servants on the same terms and conditions and subject to the same laws applicable thereto. He further confirmed that Pakistan Post shall bear the cost of all employees who may be assigned to assist the project and expressly clarified that no employee shall be transferred and such employees shall continue to be employees of Pakistan Post however during the Concession Period.
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13. It was further averred that Pakistan Post is an attached department of the Federal Government. The definition of postal article includes anything transmissible by post intended to have a wide meaning. „Post‟, „mail‟, „courier‟ and „logistics services‟ demonstrate that these functions are synonymous whereas the meaning of „courier‟ is a person whose job is to carry messages, packages etc., from one person to another and „mail‟ is “a material (such as letters and packages) sent or carried in a postal system. Section 29 of the Pakistan Postal Services Management Board Ordinance 2002 does not derogate from or affect the Act; the „Pakistan Post Office‟ shall be read as and constitutes a reference to the Board. The Board established under section 3 of the 2002 Ordinance may prepare plans for development of postal and other services including expansion of its functions and services and may also formulate policies pursuant to directives of the Federal Government as was done for entering into the procurement process.
14. The 2010 Policy was formed being part of framework for Pakistan Vision 2025, which envisages public-private partnerships (PPP) and the mechanism of its implementation. The Postal Reform Agenda, emanating from these policies and directives was thereafter approved by the Prime Minister and subsequently set to action under the Pakistan Post‟s Policy. The 2010 Policy was approved by the Economic Coordination Committee of the Cabinet on 26 January 2010, pursuant to Rule 17 of the Rules of Business with the aims to promote social and economic development through improvement in infrastructure and encouraging investment in PPP. Consequent upon approval of the Board in its meeting held on 19 April 2017, the DG Post Office established a Public Private Partnership Cell
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(PPP Cell) which included members of the IPDF. The Pakistan Vision 2025 was approved by the National Economic Council pursuant to Article 156 of the Constitution of Pakistan 1973.
15. He further argued the court may not interfere in the policymaking domain of the Federal Government unless the policy is perverse, arbitrary, patently mala fide or in violation of the constitutional mandate. The petitioners have failed to demonstrate that these exceptions are applicable with respect to the policies relied upon. The petitioners have no locus standi, especially as they have raised no grievance. The subject matter has no public importance nor is the action taken by the Pakistan Post mala fide, illegal or detrimental to the public interest. The petition has been filed under the garb of public interest, but is intended only to delay and disrupt the implementation of the project as the petitioners seek to prevent a competitor from entering the market in which they provide services. The learned counsel cited the case of Air India Ltd. vs. Cochin International Airport Ltd., (2000) 2 Supreme Court Cases 617, Dr. Akhtar Hassan Khan and others vs. Federation of Pakistan, 2012 SCMR 455, Watan Party vs. Federation of Pakistan, PLD 2013 S.C. 167.
16. In rebuttal, Mir Muhammad Ali Talpur, Advocate for the petitioners argued that the meaning of “Post” and “Logistics” are different. The word “Logistics” is not defined in the Post Office Act, 1898. The word “Logistics” in business has a different connotation which includes much more than the management. It was further averred that the petitioners are private companies/firms and governed and derive their authority under their Memorandum &
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Articles of Association whereas Pakistan Post is a Government Department which derives its authority and powers under the Post Office Act, 1898. The Pakistan Post can carry letters which the private courier service company cannot do. He referred to the judgment reported as 2004 MLD 1949 rel. at Para 25 at Pg. 1961 and Para 27 & 28 at Pg.1962, wherein the question of privilege of Pakistan
Post was considered. It was further contended that if the law allows it to enter into Public Private Partnership, it could only be to the extent as prescribed in their law i.e. Post Office Act, 1898. He further argued that no policy has been approved by the Federal Government. Under the PPP Act, the approval of the Authority is required and if it is being done under the Policy, the approval of the Federal Government is required. He added that the apex court has condemned selling of valuable national assets and also stayed the process of privatization of PIA.
17. Heard the arguments. A cautious scrutiny of the Pakistan Post Logistics document designed to submit “Request For Proposal” (RFP) makes obvious that Pakistan Post through a private sector participation intends to launch a project that would be implemented in public private partnership to optimize current courier and express parcel services by integrating with existing international system. In the Request for Proposal for Pakistan post logistics in Section-A, page 18 (file page-79), it is articulated that CPEC, essentially a logistics partnership will increase the demand for cost effective and reliable supply chain partners by the industry. CEP and logistics market is about to explore, Pakistan Post is offering its infrastructure, evolved in well over a century and reach spanning across the country and the world over. The proposed logistic partnership will enrich customer
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experience but Pakistan Post will continuously monitor and track key performance metrics of the private partner and such performance metrics include but not limited to revenue growth, operating cost, reliability, transparency of services and customer complaints. The project will be implemented on the basis of Build-Operate-Transfer (BOT) methodology detailed in Pakistan Post Public Private Partnership Policy. The core strength of Pakistan Post includes 12085 post offices, 835 office buildings, 3315 residential buildings, 424 vehicles and train lines covering distance of 3500 KM. Robust treasury operations mandate to perform courier, express and logistics services domestically and internationally and mandate to perform Financial Services. The Request For Proposal further highlights that using nation-wide infrastructure, Pakistan Post is already providing mail, courier and express parcel services which include urgent mail service, cash on delivery, express mail service international and premier service arm and fax mail service. The service area intended to be launched on BOT basis would inter alia include customs clearance, supply chain management, warehousing, packaging, printing, transporting, sorting, tracking and delivering the consignment for which Pakistan Post will also offer its manpower, infrastructure, outlets, delivery and existing fleet for Less than Truck Load (LTL) consignments but the private operator will have to develop, acquire, construct, rent and arrange its own infrastructure and fleet wherever the need will arise.
18. The niceties and exactitudes of the project envisions that private partner shall bring investments to plug gaps in fleet, technology, training, management and manpower and operate and manage Express Post existing products and product line by offering supply chain and logistics solutions
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from current 1000 outlets to 12085 postal outlets. Pakistan Post would offer non-exclusive rights to Express Post assets including revenue, dedicated outlets, manpower, fleet and technology to the concessionaire who will be expected to complement Pakistan Post‟s other products and services and create further value by adding new products and services. All the projects risk shall be exclusively borne by concessionaire except chain in line and force measure. The concession period shall be for 20 years. The concessionaire will have to achieve Financial Close within sixty days from signing of Concession Agreement for its commercial debts for the project the successor bidder will have to invest 30% of the remaining project cost as equity and will also arrange 70% of the remaining project cost as debt as guarantee payment to Pakistan Post during each year amounting to PKR.327.468 Million escalated at 5% per annum.
19. The most important aspect is with regard to Human Resource Management wherein it has been clearly pointed out no redundancy or retrenchment shall be effected and all existing employees shall continue. An eloquent standpoint has been taken that Pakistan Post shall not transfer any employee cost to the concessionaire. The partnership may request Pakistan Post to transfer any particular employees but such employees shall stay on the payroll of Pakistan Post and Pakistan Post shall reserve the right to withdraw the services of such employees and on expiry date of the agreement or its termination prior to the expiry date the concessionaire shall transfer all rights and interest including projects assets and intellectual property to Pakistan Post free from encumbrances in nominal consideration of PKR. In order to ensure safe implementation of the project, the concessionaire has to
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setup special purpose vehicle for the sole purpose of implementing the project.
20. The documents available on record make it obvious that Pakistan Policy on Public Private Partnership (Private Participation in Infrastructure for Better Public Services) was approved by Economic Coordination Committee (ECC) of the Cabinet on January 26th, 2010. On 29th May, 2014 National Economic Council approved the manuscript of Pakistan Vision 2025 in which one of the components was Public Private Partnership (PPP). The council decided to promote Public Private Partnership through a comprehensive policy regime that would be used for better infrastructure development and improving connectivity to facilitate Private Sector Growth. The record reflects that on 29th December 2015, a meeting was convened by the Prime Minister to review the reform Agenda of Pakistan Post. It was attended by the Secretary Communication who led Pakistan Post Team Members. In the meeting, D.G keeping in mind the dire strait of financial health, dwindling mail traffic and emergence of new opportunities in logistics proposed to introduce/launch Pakistan Post Logistic Company and Mobile Money Order. The Prime Minister approved the rebranding of Pakistan Post and emphasized the significance of transparency and integrity in the launch and execution of approved initiatives. In view of the approval, a reform agenda meeting was convened in the office of Director General Pakistan Post on 12.07.2016 for launching logistic company to be established under the provisions of Companies Ordinance on Public Private Partnership basis and consequent upon the approval of the Pakistan Post Postal Service Management Board in its 41st meeting held on 19.04.2017, the Director General and Chairperson was pleased to establish Public Private
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Partnership Cell with the term of reference to conceive and develop PPP Project, evaluate project proposals, provide technical support to the PPP steering committee, develop operating guidelines, procedure and model document for project for approval by starring committee, develop bidding document, develop draft PPP agreement, advertise, evaluate and select preferred bidder/bidders and present it to PPP starring committee, evaluate, the type and amount of government support sought for a project, review bid evaluation report, prepare and regularly update on project and perform any other functions as may be assigned to it by steering committee.
21. On 01.08.2016, Pakistan Post invited Expression of Interest (EOI) for launching of Pakistan Post Logistics Company to develop a state of art logistics solution with a vision to reposition itself as the key player. However, on 17.02.2018 again a “Request For Proposal” was published in the newspaper for launching courier, express parcels and logistics services through public private partnership modality. As a rider, it was mentioned in the advertisement that in addition to the fresh bidders, the parties shown their interest pursuant to the issuance of Expression of Interest are also entitled to submit their proposals and all interested parties can obtain RFP documents free of cost.
22. At this juncture, we would like to refer to Public Private Partnership Authority Act, 2017 which was promulgated on 29th March 2017 to provide a regulatory and enabling environment for private participation in public infrastructure and related services through fair and transparent procurement processes and to promote domestic and foreign private investment in infrastructure to increase availability of public infrastructure, reduce
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transaction costs, ensure appropriate regulatory controls, and provide legal and economic mechanisms to enable the resolution of contract disputes. In Section 2, clause (e), Company means “Infrastructure Project Development Facility”…
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