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Petitioner: Raja MUJAHID MUZAFFAR and others VS Respondent: FEDERATION OF PAKISTAN and JUDGMENT
Court Name: Supreme Court of Pakistan Judge(s): Nasir-ul-Mulk, Asif Saeed Khan Khosa, Sh. Azmat Saeed Title:Raja MUJAHID MUZAFFAR and others vs FEDERATION OF PAKISTAN and
JUDGMENT
Reported As: 2012 SCMR 1651 Result: Petitions allowed Judgment JUDGMENT ' SH. AZMAT SAEED, J.---This judgment will dispose of Constitutional Petition No,91 of 2011 and C.M.A. No,2624 of 2011 and Constitutional Petition No,57 of 2012, as common questions of facts and law are involved therein. 2. The instant constitutional petitions have been filed to call into question the award of the Contract dated 29-12-2009. It appears that a Supply and Implementation Contract was executed inter se the Government of Pakistan through the Secretary, Ministry of Interior and Messrs Hauwei Technology Company Limited (respondent No,8). The said Contract was for the procurement of goods, equipment and services for the purpose of establishing a Command Center and Network, initially at Islamabad for the total cost of US$ 124,719,018. The said Project is referred to as Islamabad Safe City Project. 3. The essential factual background of the list at hand, which can be gleaned from the record made available by the parties, is that apparently in the summer of 2009, respondent-Messrs Hauwei Technology Company Limited a Chinese Company approached the, respondent-National
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Database and Registration Authority (NADRA) offering to implement and execute a comprehensive surveillance and monitoring system for security primarily at Islamabad i,e, the Safe City Project in question. Respondent-NADRA claims to have informed its parent Ministry i,e, Ministry of Interior regarding the offer made by respondent-Messrs Hauwei Technology Company Limited, where after a meeting was convened, chaired by the Secretary, Ministry of Interior on 29-8-2009 of the various governmental stakeholders concerned, wherein it was decided that a ground-check may be carried out involving the end user. .In the meanwhile, it was decided that a Memorandum of Understanding (MOU) be executed inter se NADRA and Messrs Hauwei Technology Company Limited with the Ministry of Interior not being made responsible for any contractual obligations. It was also decided that the said MOU may be presented to the Ministry of Law and Justice Division for their formal vetting. 4. In the above backdrop, a draft MOU was prepared and exchanged between the parties, however, such MOU does not appear to have been formally executed. Subsequently, vide a letter dated 1-10- 2009, the Chairman-NADRA indicated to the Secretary, Ministry of Interior of the possibility of obtaining a long term concessional loan from the Chinese Government/the Export-Import Bank of China whereupon Economic Affairs Division was activated by the Ministry of Interior inter alia for the allocation of the concessional loan from China. Various communications in this behalf were exchanged and meetings held, including of the Central Development Working Party (CDWP) on the 19th of November. 2009 and 19th of December, 2009. In the latter meeting, it was inter alia decided that:- "(i) The Interior Division will submit a summary to the Prime Minister for seeking decision regarding sponsoring and execution of the said project as the Prime Minister has already issued a directive to Ministry of Information Technology for execution of a similar project in 10 to 12 cities. (ii) Procurement of equipments should be done through international competitive bidding (ICB) as envisaged in the PPRA's rules. In case of a tide loan, the competition should be within at least Chinese Companies for Chinese equipment. If not possible, the Interior Division should seek special exemption from the Prime Minister. (iii) ..................................................................................................................................................... (iv) A feasibility study of the project and a quality assurance certificate of proposed equipments must be attached with modified PC-I." 5. Subsequently, a summery was submitted to the Prime Minister by the Secretary, M/o Interior, seeking approval for inter alia the following:-- "(i) The Ministry of Interior be approved as sponsor of this security related project instead of Ministry of Science and Technology and to execute it. The Ministry of Information Technology be required to extend due technical support to Ministry of Interior in expeditious completion of the project. (ii) Exemption of PPRA's Rules 2004 regarding international competitive bidding (Annex-B). (iii) The sponsoring agencies i,e, Ministry of Interior through (NADRA) to negotiate prices with Hauwei Company of China a reputed firm in manufacturing and supply of equipments/gadgets at lowest rates. (iv) Approval to enter into negotiation with concerned Chinese authorities for extension of loan to finance "Safe City" Project for Islamabad and Peshawar valuing US $ 124.7 million and US $ 110 million respectively." 6. The Ministry of Finance, vide its communication, dated 23rd of December, 2009, made the following proposals:-- "9. The proposals at para 7 (ii) and (iv) relate to the Finance Division. 10. Regarding para 7 (ii) relating to exemption from PPRA Rules, 2004, since the project is yet to be approved by the competent forum, a decision on exemption or otherwise from PPRA Rules may be taken after approval of the project, in the prescribed manner.
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11. Regarding para 7 (iv) relating to entering into negotiations with Chinese authorities for extending loan to finance the project, the proposal is supported as it would save valuable time to organize financing for the project." 7. Approval was accorded by the Prime Minister, as is mentioned in the letter. Dated 24th of December, 2009, in the following terms:-- "12. The Prime Minister has been pleased to approve the recommendations of the Finance Division contained in paras 10-11 of the Summary. 13. The Prime Minister has further desired that the Ministry of Information Technology may be kept on board on all issues related to this project and the formal approval of the project may also be obtained from the competent authority/Cabinet, as per prescribed procedure." 8. It appears that thereafter the Contract in dispute was executed on 29-12-2009. 9. It appears that contemporaneously, another project with more or less the same objective was being sponsored by Ministry of Information Technology with the involvement of another Chinese Company. The said Project was referred to as GOTA to which reference has been made in the Minutes of Meeting of the CDWP, dated 19-12-2010. It appears from the record that the Ministry of Interior and the Ministry of Information Technology were canvassing for the respective projects sponsored by them. Both the Projects i,e, Islamabad Safe City Project and GOTA were competitive and obviously overlapping and only one of the two projects could go through. Apparently. The matter was brought to the notice of the then Prime Minister, who chaired a meeting in this behalf. It appears. That in order to evaluate the two projects a Technical Committee was formed. 10. The Technical Committee formed a Sub-Committee. The Sub-Committee held its meeting on 26-3-2010, the minutes whereof are placed on the record in C.P. No,91 of 2011. In the said Minutes with reference to the cost of the Project, it was observed, as follows:-- "As far as the cost of equipment is concerned the cost of most equipment mentioned in the PC-1 is almost three times the cost of comparable equipment available in the market. (NADRA rep, are not a party to this comment). It is pointed out that all the equipment could not be companied because of their providing nature and absence of detailed specifications. The cost of Shell Software quoted was also higher in the same range (1:3) and it was informed that the vendor had quoted the Chinese prices. Also the cost of proprietary software could not be determined and assumed to be similarly highly priced. In addition, the cost of customization, integration, and consultancy are included as 10.5% of total cost of the project which is quite high." ' The said Committee made the following recommendations:-- "5. It is therefore recommended that we may indicate our requirements in the shape of a. Request for Proposal (RFP) providing details of our requirements of a pro-active and effective "Security System" along with a "Surveillance" and "Traffic Management System" and indicating our performance requirements e.g. Response times. The vendors may also be provided with design parameters (e.g. The Nos. Of exit/entry points, the types of detectors, cameras or various types, vehicle RFID readers, fingerprint, scanners etc we wish to install) and the details of telecom infrastructure already available in Islamabad and these details and specifications were required by the sub-committee of Technical Committee have been included in a specimen RFP (copy enclosed) which is proposed to be handed over to the vendors for proposing an optimum solution. A PC-1 has also been prepared (copy enclosed as Annex-B) based upon the realistic costs of various items included in the PC-1. The total cost of PC-1 is rupee equivalent of USD 78 million Based upon the lowest bid. PC-1 may be provided to the Planning Commission for approval." 11. Pursuant to the said meeting, a note was put up ta. The Prime Minister of Pakistan by the Deputy Chairman of the Planning Commission, copy whereof is available with the paper book of C.P. No,91 of 2011, wherein, it was observed inter alia as follows:--
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"v. The project will be executed as a pilot project in Islamabad or in any city to be identified by the Ministry of Interior. After its successful implementation, similar projects will be implemented in other important cities of the country benefiting from the lessons learnt. x. Ideally, the work should have been done after the proper feasibility study. But in view of the urgency of security requirements, the work already carried out by the Ministry of Interior is proposed to be accepted." ' The final recommendations were made as under:-- "xi. Final recommendation: (a) Ministry of Interior may indicate their requirements in the shape of a Request for Proposal (RFP) providing details for a proactive and effective "Security System" along with a "Surveillance" and "Traffic Management System" indicating performance requirements e.g. Response times of computing equipment and resolution of cameras etc. (b)- The vendors may also be provided with design parameters along with. Generic specifications (e.g. The Nos. Of exit/entry points, the types of detectors, cameras of various types, vehicle RFID readers, fingerprint scanners, etc.) and the details of telecom infrastructure already available in Islamabad. (c) All these details and the recommendations of the Technical Committee may be included in a RFP which is proposed to be handed over to the vendors for proposing an optimum solution. (d) Based upon the above recommendations a revised PC-1 may be prepared by the Ministry of Interior." 12. On 7-6-2010, a Summary was prepared by the Ministry of Interior for the Prime Minister of Pakistan regarding the said ' Project, which reads as follows:-- "Prime Minister was pleased to chair two presentations regarding the above subject. Ministry of Interior's presentation dealt with "Safe City Project" and Ministry of Information and Technology explained the GOTA Project. The Prime Minister was pleased to constitute a Committee headed by Deputy Chairman Planning Commission with Secretary Ministry of IT, Secretary Finance and Secretary Interior as members, to look into the possibility of integration and rationalization of the two projects (Annex-A). Deputy Chairman, Planning Commission vide P&D Division's U.O. No,3(101) ICT/PC/2010 dated 15th April, 2010 (Copy enclosed as Annexed-B) has submitted the recommendations of the committee to the Prime Minister. In the light of the said recommendations, NADRA has improved the project proposal with proactive and effective security system along with a surveillance and traffic management system based on performance requirements. (2) NADRA is of the view that the technically approved solution with aforementioned features, offered by Messrs Huawei Technologies Co. China, is of propriety nature. The Company, has a vast experience of installing such systems in China and a number of other countries. However, the Planning Commission Committee has advised Ministry of Interior to prepare a new PC-I and a request for proposal (RFP) which should be based on generic specifications for greater transparency. (3) NADRA as project executing agency has shown reservations on this approach. It was explained to the Committee that the Safe City Project is not merely a purchase of equipment and its assembly, it also envisages integration of various subsystems on a unified platform. NADRA is of the view that project components acquired through generic specifications would be hard to integrate and there were high chances of integration failure. It is also apprehended that preparation of new PC-I would delay the project as there was no assurance of foreign funding, particularly of Chinese concessional loan, for a new PC-I based on the generic specifications. (4) It is a recognized fact that complex security projects worldwide are mostly awarded through direct contracting. This is also permissible under PPRA Rules, 2004. Open tendering through generic specifications is preferable as long as it does not put the project itself in jeopardy. In the present case, this option may lead to technical difficulties and delays.
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(5) Ministry of Interior has been endeavouring to install safe city technology for the past more than three years, without success, mainly due to non availability of funds. The Chinese assurance of availability of concessional loan for security related projects has led to the formulation of safe city Islamabad and Peshawar projects. The real cost of safe city Islamabad project expressed in Planning Commission's standard criterion i,e, Net Present Value (NPV) terms is competitive prices @ $ 72 million, instead of the nominal amount of $ 124.7 million. (Detailed calculations are attached) (Annex-C). (6) Centre Development Working Party (CDWP) in its meeting on 19th November, 2009 had supported to arrange financing for the propriety solution proposed in the PC-I. Ministry of Interior on the recommendation of the CDWP and Finance Division was authorized by the Prime Minister to raise Chinese concessional financing. Proposals were accordingly submitted to the Chinese authorities. Ministry of Commerce, Government of China has formally recommended for inclusion of the project in the list of Pak China 5 years development program. This indicates that the load request is favorably being considered. (7) In view of the foregoing, approval of Prime Minister is solicited: (a) To implement Safe City Islamabad and Peshawar Projects through Huawei Technology Co. Solution for which Chinese concessional financing is being arranged. (b) To permit direct contracting with Messrs Huawei Technology Co. In terms of Rule 42(c)(v) read with Rule 2(g) of PPRA Rules 2004. (Annex-D), and (c) To authorize Planning Commission and Finance Division to assess price reasonability and negotiate with Huawei Technology Co. (8) Minister for Interior has seen and authorized submission of the summary." 13. Subsequently, another Summary dated 2-7-2010 was sent by the Ministry of Interior to the Prime Minister of Pakistan, which reads as follows:-- "(12) The committee constituted by the Prime Minister headed by Deputy Chairman Planning Commission with Secretary Ministry of IT, Secretary Finance and Secretary Interior as members reviewed the Safe City Projects and was satisfied with the technical aspects of the projects. It however recommended converting the propriety technology solution into generic specifications and awarding the project on the basis of open tender. It is apprehended that if we go for such generic tendering, the project may be indefinitely delayed. (13) Based upon the above the following submissions are made: (a) Security projects worldwide are mostly awarded through direct contracting. It is never advisable to publicize security project's capabilities. China wants such projects to be done in low profile. (b) Safe city proposal is based on Huawei Technology Co. Propriety solution. They are a leading company in China with proven ability. Open tendering on the basis of generic specifications and award of work to unproven multiple vendors is likely to create integration and technical problems. (c) Messrs Huawei Technology Co. Has been greatly instrumental in arranging soft loan. The soft loan request is tied to Messrs Huawei Technology Co. Proposal. The loan offer is likely to be diverted to other countries (Sri Lanka) if not availed in time. (14) There are many instances where tender waiver for acquisition of technology in sensitive areas has been granted. The case of Strategic Plans Division is cited. Tender waiver was granted for PAKSAT-IR and Pakistan Remote Sensing Satellite (PRSS) Project. Permission was accorded by the office of the Prime Minister on 19th November, 2007. (15) Safe city technology is essential to effectively combat terrorist threat. We cannot afford to delay acquisition of this capability. (16) In view of the forgoing, Ministry of Interior seeks approval for the following:
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(a) Permission for direct contracting with Messrs Huawei Technology Co. In terms of Rule 42(c)(v) read with Rule 2(g) of PPRA Rules 2004. (b) To authorize Planning Commission and Finance Division to assess price reasonability and negotiamn with Huawei Technology Co. (17) Minister for Interior has seen and directed for submission of the summary." 14. The main thrust of the Summary appeared to be for seeking exemption from the operation and application of Public Procurement Regulatory Authority Ordinance, 2002 (PPRA Ordinance) and the Public Procurement Rules, 2004, (PPRA Rules). The request for such exemption was endorsed by the Secretary, Ministry of Finance and granted by the Prime Minister, as is apparent from the communication issued by the Principal Secretary to the Prime Minister on 5-7-2010, however, in the context of the Summary, Ministry of Interior, dated 7-6-2010, referred to above, further discussions were called for. 15. On 17-12-2010, a Framework Agreement was executed inter se the Government of the Islamic Republic of Pakistan and the Government of the People's Republic of China, whereby the Government of the People's Republic of China agreed that the Export-Import Bank of China would provide a concessional loan not exceeding Rimini 850 million Yuan for the purpose of implementing "Safe City. Islamabad Project". It is further agreed by the Chinese Government that it would pay interest subsidies for the Project Loan and the maturity period of the Loan would not exceed twenty years, including grace period of five years. It was also perceived that a separate loan agreement would be executed inter se Export-Import Bank of China and the Government of Pakistan. Consequently, on the same day i,e, 17-12-2010, a Concessional Loan Agreement was executed inter se the Government of the Islamic Republic of Pakistan and the Export-Import Bank of China. The said Agreement envisaged a loan facility up to Renminbi 850 million Yuan for funding the said "Safe City Islamabad Project". 16. That in January, 2011, the Contract in question, dated 29-12-2009, was called into question, before this Court vide Constitutional Petition No,11 of 2011, filed by a citizen making allegations inter alia of lack of transparency and loss to the public exchequer by way of award of the said Contract. A Human Rights Application was also filed levelling similar allegations. Vide order dated 18-2-2011, this Court directed that both the Constitutional Petition No,11 of 2011 as well as the above-mentioned Human Rights Application be clubbed and heard together. The said matter was heard by this Court, notices were issued to the respondents therein and response solicited from the Government. Eventually, after several dates of hearing, upon an application of the petitioner in Constitutional Petition No,11 of 2011, the proceedings were withdrawn, vide Order dated 2-12-2011. Whereafter, the instant C.P. No,91 of 2011 was filed also on behalf of citizens through an Advocate Supreme Court whereupon proceedings commenced. Subsequently, C.P. No,57 of 2012 was filed also challenging the award and implementation of the Contract dated 29-12-2009, wherein the petitioner a citizen is appearing in person. 17. In pith and substance, it is case of the petitioners that the entire transaction has been carried out in an illegal and unlawful manner causing a huge loss to the public exchequer. It was contended that a similar project was undertaken for the City of Karachi in the year 2008-2009 at a total cost of US$ 8 million. Furthermore, even as per the report of Planning Commission referred to in the Summary to the Prime Minister dated 7-6-2010, the net present value of the Project was @ US$ 72 million, while the Contract has been awarded for a total amount of US$ 124.7 million. Furthermore, all. Government Departments and concerned authorities other than the Ministry of Interior repeatedly indicated the cost of the project is atleast three times higher than the value of the equipment being supplied. It is added that the Contract in question was executed on 29-12- 2009 when the PC-I had not even been prepared.
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18. It is further contended that the Contract in question dated 29-12-2009 has been executed with a Foreign Company in the name of the President of Pakistan purportedly in terms of Article 173 of the Constitution of the Islamic Republic of Pakistan, 1973 without fulfilling the necessary requirements contemplated by the Rules of Business, 1974. It is submitted that the Contract has executed without consultation with the Ministry of Finance as required by Rule 12 of the Rules of Business, 1974, and also no approval by the Ministry of Law and Justice was obtained, as required by Rule 14 of Rules, 1974. 19. It is added that the entire exercise was carried out in a nontransparent manner without soliciting any proposal or issuing any tender for the Project in question. And in this behalf, the provisions of Public Procurement Regulatory Authority Ordinance, 2002 and the Public Procurement Rules, 2004 were violated. It is submitted that there was no legal or factual basis for exempting the transaction from the provisions of the said law. Reference to Rule 42(c)(v) of PPRA Rules, 2004, in the Summary to the Prime Minister, is wholly misconceived, firstly, as there was no Emergency as defined in Rule 2(g) of the Public Procurement Rules, 2004, and secondly, admittedly, no declaration in this behalf by the necessary authority was ever made, as required by the proviso to Rule 42(c)(v) of the said Rules. Further contended that term "Emergency" is not even mentioned in the Summary and the allied documents. The learned counsel further submitted that there was no desperate urgency in the matter as the project had been conceived at least 3-1/2 years prior to the execution of the Contract in question as has been mentioned in the Summary of Ministry of Interior dated 7-6-2010. Furthermore, an almost identical project in the City of Karachi has been executed after issuance of tender and following the procedure as has been laid down by the PPRA Ordinance and the Rules framed thereunder. 20. It is added- that the entire exercise of the evaluation of the Project and the exemption of the PPRA Rules was mala fide inasmuch as the process was undertaken after the award of the Contract; that too without making any reference to the fact that the Contract in question had already been executed. 21. Mr. Raza Kazim, Senior Advocate Supreme Court, learned counsel for the respondent-NADRA, controverted the contentions raised on behalf of the petitioners. At the very outset, the learned counsel raised a preliminary objection as to the very maintainability of the instant Constitutional Petitions. It is the case of the said respondent that through the captioned petitions, no issue of public importance has been raised nor the enforcement of any fundamental right of the petitioners is involved. Consequently, the provisions of Article 184(3) of the Constitution of the Islamic Republic of Pakistan, 1973, are not attracted. In this behalf, he further added that the petitioners are not aggrieved persons, hence, have no locus standi to maintain the instant constitutional petitions. 22. On merits, it is contended by the learned counsel that the Safe City Project was conceived as a consequence of a spate of terrorists attacks carried out across the Country in…
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