Al Wakeelo
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Petitioner: Ishaq Khan Khakwani and another VS Respondent: Railway Board through its Chairman and others
Court Name: Supreme Court of Pakistan Judge(s): Ijaz-ul-Ahsan, Sh. Azmat Saeed, Faisal Arab Title:Ishaq Khan Khakwani and another vs Railway Board through its Chairman
and others Case No.:CONSTITUTION PETITION NO.2 OF 2011 AND CIVIL MISCELLANEOUS APPLICATIONS NO.1864 AND 2960 OF 2019 Date of Judgment:2019-04-11 Reported As: PLD 2019 Supreme Court 602, 2019 P.S.C 1372, 2019 SCP 238 Result: petition allowed Judgment IJAZ UL AHSAN, J.- The brief facts necessary for decision of the instant matters are that the Provincial Government granted a lease in perpetuity of a prime property located on Canal Bank Road, Lahore to the Railways Department during pre-partition times. The Railways Golf Club ("Club") was set up on such property in 1911. Its objective was to provide recreational facilities to the employees of the Railways Department. The Club comprised of an 18-hole golf course, a swimming pool, club house and housing accommodation for the lower staff of the Railways Department. In 2000, a decision was made to offer the Club on commercial lines to interested parties to finance, redesign, develop and manage its operations. To this end, advertisements were issued in various newspapers, i.e. advertisement in an English newspaper dated 16.03.2000 ("First Advertisement"), advertisements in English and Urdu newspapers dated 23.08.2000 ("Second Advertisement"), and advertisement in an English newspaper dated 10.09.2000 ("Third Advertisement"). Pursuant thereto, six parties submitted their expressions of interest and applications for pre-qualification, i.e. Husnain Construction Company-Unicon Consulting Joint Venture, Pakistan Services Limited, Meinhardt Singapore Private Limited, Bradenton International Enterprises, Fidelity Investment Bank Limited and Gharibwal Cement Limited. A three-member committee carried out an initial evaluation and pre- qualified four parties, namely, Husnain Construction Company-Unicon Consulting Joint Venture, Pakistan Services Limited, Meinhardt Singapore Private Limited and Gharibwal Cement Limited, which were issued the bid documents. Vide letter dated 01.04.2001, an Evaluation Committee comprising of Director Marketing, Director Property and Land and Divisional Superintendent was recommended to evaluate the proposals received for the project. Out of the pre- qualified parties, Husnain Construction Company-Unicon Consulting Joint Venture, Pakistan Services Limited and Meinhardt Singapore Private Limited submitted their bids. The Evaluation Committee completed the evaluation of the bids and vide evaluation report dated 20.04.2001 ("Bids Evaluation Report") recommended to the Evaluation
---
## Page 2
Committee of the Railway Board to award the contract to Husnain Construction Company-Unicon Consulting - Maxcorp Joint Venture having scored 89 marks, while Pakistan Services Limited was awarded 36 marks and the bid of Bradenton International Enterprises was declared to be non-responsive. Finally, pursuant to an approval dated 20.04.2001 of the Executive Committee of Pakistan Railways, the Pakistan Railways Golf Club Lahore Leasing Agreement dated 26.07.2001 ("Agreement") was executed in favour of a consortium comprising of respondents No.14, 15 and 16, namely Maxcorp Development Sdn Bhd ("Maxcorp"), M/s Husnain Construction Company (Private) Limited ("Husnain Construction Company") and Unicon Consulting Services (Private) Limited ("Unicon Consulting"), respectively ("Maxcorp consortium"). According to the Agreement, Maxcorp-Husnain (Private) Limited was to be the lessee, which subsequently became respondent No.17, i.e. Mainland Husnain Pakistan Limited ("MHPL"). Be that as it may, construction work was undertaken and various facilities including restaurants/dining areas, swimming pools, etc. were constructed. The golf course was also redesigned. Simultaneously new membership was opened with a new name "Royal Palm Golf and Country Club". The membership fee was increased manifold and membership of old members of the Railways Golf Club was cancelled. In consequence of misgivings expressed about the mode manner and transparency of the process the matter was taken up by the National Assembly of Pakistan which constituted a Committee ("NA Committee") to examine this issue. The NA Committee summoned the parties, recorded statements and prepared a report ("NA Report"). In its report, the NA Committee came to the conclusion that the lease had been awarded under questionable circumstances. However despite the NA Report, neither Pakistan Railways nor the Government of Pakistan took any action against those alleged to be involved in this matter. 2. It is alleged in the instant matters that the lessee(s) defaulted in its payment obligations and various payments which were due were paid after considerable delay; that on account of various acts, omissions and commissions on the part of the respondents, huge losses to Pakistan Railways and the national exchequer had been occasioned; the process of award of the contract was tarnished, tainted and non-transparent; and amounts in excess of rupees one billion were collected by way of membership fee which was utilized by the management in a non-transparent and questionable manner. The petitioners claim to have moved various applications with the then Chief Exec utive of the country , the then Federal Minister for Railways and Communications and the General Manager Pakistan Railways, Lahore in additi on to a large number of State functionaries. However , their efforts proved to be an exercise of futility . Having exhausted all other avenues and considering the colossal nature of potential loss to the State exchequer , the petitioners, who are public spirited citizens, approached this Court by filing a constitution petition under Article 184(3) of the Constitution of Islamic Republic of Pakistan, 1973 ("Constitution") . Petitioner No.1 is a former minister , former member of the National Assembly of Pakistan and member of the erstwhile Club, while petitioner No.2 is a former minister and former member of the National Assembly . 3. The matter was initially taken up by this Court on 13.01.201 1 when the following order was passed:- This petition under Article 184(3) of the Constitution of the Islamic Republic of Pakistan, 1973 along with listed Human Rights Case has been instituted on behalf of Ishaq Khan Khakwani and Dr. Mubashir Hassan, wherein alleged scam in awarding on lease equal to 141 acres of land lying in the heart of the city of Lahore to respondent No. 15 Husnain Construction Company (Pvt) Ltd. has been highlighted. 2. According to the facts narrated by Mian Allah Nawaz, learned Sr. ASC for the petitioners, the land belonging to the Railways Department has been leased out in a highly non-transparent manner without following settled procedure in vogue in the country for such purpose. In this behalf, in the notice published in the newspaper under the caption "Expression of Interest", no specification of the land with its measurement etc was mentioned, however, subsequently, this very notice was converted into an "Invitation" and on the basis of recommendations of a Committee this prime land was leased out as aforesaid. Initially, the area which was to be given to the lessee was equal to 103 acres but, subsequently the same was increased to 141 acres. Probably according to learned counsel, in pursuance of some negotiations when the final agreement was executed the area was raised to 141 acres and the period of lease of 33 years, too, was converted into 49 years. He explains that a lot of hue and cry was raised against this deal from different quarters including1
---
## Page 3
persons well-connected with it and the citizens of the country, but no appropriate and timely action was taken. The Special Committee comprising parliamentarians was, later constituted which gave its recommendations, copy of which has been placed on record, despite that no action seemed to have been taken so far. He further states that after filing instant petition, rather; he was astonished to know through newspaper 'The Express Tribune' dated 9t January, 2011, that recommendations of the Special committee were dropped. It is to be noted that the relevant news item was published under caption "Political Expediency , Report of Railway Land Fraud Dropped", contents of which are reproduced as under:- 3. With a view to confirm the above news item, on being asked, Mr. Rauf Klasra, its originator attached with the said newspaper, has appeared and stated that according to his knowledge after receipt of recommendations from the Special Committee in the month of October, 2010, no action has been taken upon it, the reasons of which he has mentioned in the story published in the newspapers (details of which have been reproduced herein above). As per his interpretation, a case of big scam in which initially Rs.25 billions of this nation now increased to Rs.50 billion involved, has been spelt out. He further states that he has strong reasons to substantiate his plea in view of the background of this case which he explained precisely and added that initially Mr. H.U. Baig was the Chairman of Public Accounts Committee (PAC) who had taken up this matter but without making final conclusions about this scam despite availability of an authentic audit report of the Auditor General confirming the allegations of land scam in the Railway Department. According to his belief, he states, after the general elections Mr. Allah Yar, MNA was made Chairman of PAC who also did not venture to finalize report of his predecessor Chairman PAC or the report of Committee and in this manner a period of about more than 8 to 10 years passed away without any progress, therefore, his apprehension as expressed by him in the news item noted hereinabove is substantial and is liable to be sustained. Similarly Mr. Munawar Abbas, Additional Secretary, National Assembly, confirms that Special Committee had completed its report in the month of August, 2010 and so far it has not been placed before the House. 4. Mian Allah Nawaz, learned Sr.ASC with his petition has also placed on record report of the Special Committee on Railways' land scam contents whereof have been confirmed with the news item published in newspapers, the Daily 'The News' Daily 'Dawn', etc. clipping of which are also available on record. 5. Thus, on having gone through the material available on record placed by the petitioner for perusal of this Court, we are prima-facie of the opinion that in terms of sub Article (3) of Article 184 of the Constitution a number of questions of public importance with reference to fundamental rights of public, the owners of the public property, as its income ultimately is likely to be spent upon the welfare of the public in the national interest, are involved falling within the four corners of Article 9 of the Constitution, therefore, this petition is admitted to regular hearing and notices are directed to be issued to the respondents as under: i. The Railway Board through its Chairman/Secretary Railways, Government of Pakistan, with directions: a. to produce complete file of the transaction which had taken place between the Railways and the Lessee and the record along with details/particulars of the officers involved in the transactions and also serve upon them notices to appear in the Court notwithstanding the fact whether he was Minister, or the Chairman or whatever his capacity may have been/may be. The latter on receipt of notices from the Chairman, shall appear before the Court on the next date of hearing to file reply to defend the instant petition and submit their point of view. b. The Chairman/Secretary, Pakistan Railways, to put up on record the audit report prepared by the audit in respect of instant transaction. He shall also submit the details of the criminal cases, if any, got registered in connection with the affairs of the instant case and with fate of the same and if the matter is pending before the Court, report shall also be obtained from the Court concerned and if no action has been taken so far, explain as to why the matter has not been taken up seriously so far, if the allegation of the scam alleged is correct. ii. Respondent No.2 to produce on record the notifications/appointment letters of the officers/officials with their details who were posted as the Chairman, the Secretary or officers in any other capacity at the time when the deal was executed. iii. Senior Member Board of Revenue, Punjab, to put up the revenue plans of the property indicating the ownership of the land in question.h -
---
## Page 4
iv. The Executive Committee of Railway Board to place complete record of the deliberations undertaken before finalizing the deed and any other document which it considers necessary. Also, to file its reply and furnish the names of the Golf Club with their antecedents. v. General Manager , Manufacturing & Services P.R, Railway Carriage Factory , Islamabad, Respondent No.5 and Member Finance, Ministry of Railways, Respondent No.6, to submit the reply of this petition and any other valuable information available with them. vi. Director General (Audit) Railways with direction to place on record the authentic copy of the audit report prepared in this behalf and also submit whether the same was submitted before the Chairman PAC Mr. H.U. Baig and subsequently before the Chairman P AC Mr . Allah Yar and what was the fate of the same. vii. Lt. Gen. (R) Javed Ashraf Qazi, respondent No.8 and respondents Nos.9, 10, 12, 13, 14, 15 and 16 to file comments/reply of the petition along with supportive documents and explain with regard to the above noted documents which according to the petitioners were prepared and placed before the PAC but no action has so far been taken. So far as respondent No.15 M/s. Husnain Construction Company , is concerned they have to disclose the names of the persons/partners who are the lease holders and sponsors, Directors, etc. responsible for the functioning of the Royal Palm golf Club. viii. Notice be also issued to Lt. Gen. (R) Saeed-uz-Zafar, Ex Chairman/Secretary, Pakistan Railways, Khurshid Alam Khan, Ex.-chairman/Secretary, Pakistan Railways and Major General (R) Hamid Hassan Butt, Ex.- General Manager through respondent No.1 enabling them to file the reply/comments as they are also allegedly involved in the scam, to be present during hearing of the case so they may have full opportunity to defend themselves. If they fail to appear, it would be deemed that they have nothing to rebut the allegations which have been leveled against them. 6. The replies by the concerned should be submitted within 10 days. The case is ordered to be fixed on 31st January, 2011. Thereafter, the matter was taken up on various dates of hearing and arguments were heard at length several times. While the matter was pending before this Court, various matters were initiated by the parties before various fora including the Lahore High Court which passed various orders from time to time. One such order constituted a management committee to run the Club. We were however informed that the said committee was ineffective, under the influence of the existing management and the funds of the Club were being syphoned off and all relevant records were being clandestinely removed. Thus on 27.12.2018, the following order was passed:- ...Therefore the aforementioned orders are modified in that the committee constituted by the learned High Court is dissolved. A. F. Ferguson & Co. is appoin ted as the receiver of the Club. It is directed to immediately take over the Club and take into custody the entire record. The existing management is restrained from entering the Club, or removing any document/record therefrom or in any manner directly or indirectly interfering in the affairs and working of the Club till further orders. However , the normal activities of the Club and its operations shall not be impeded in any manner whatsoever including but not limited to its dining areas, gymnasium, sports activities, swimming pools, cinema halls and wedding functions that have already been booked and are to be held therein, which should be allowed to be held strictly as per the booking orders etc. 3. Writ Petition No.22818/2016 is withdrawn from the learned High Court and shall be heard along with Constitution Petition No.2/201 1... A. F. Ferguson & Co. filed its preliminary report vide C.M.A. No.41/2019 and concise statements vide various civil miscellaneous applications. Pursuant to this Court' s order dated 04.04.2019, NAB has also filed its compliance reports vide C.M.A. No.3254/2019 containing a copy of Reference No.9/2018 filed in the Accountability Courts, Islamabad against various persons including the respondent(s) in Const.P . No.2/201 1. 4. Learned counsel for the petitioners submitted that during Gen. (R) Pervaiz Musharraf 's era, various army personnel were inducted into Pakistan Railways on key posts without any comp etitive process. Several senior officers were removed from service through promulgation of an Ordinance. Then by way of another Ordinance, the Secretary , Ministry of Railways was to be the Chairman of the Board and there was to be an Executive Committee consisting of the Secretary , Ministry of Railways who was to be its Chairman for taking day to day decisions to be
---
## Page 5
approved later on by the Railway Board. According to the learned counsel, this was done to accommodate Lt. Gen. (R) Ashraf Javed Qazi who was first appointed as Secretary/Chairman, Pakistan Railways and subsequently as Federal Minister for Railways and Communications. He in turn appointed several persons of his choice without any competitive process as is required for such appointment and these positions were doled out to personal favourites without any consideration of competence or merit. Learned counsel pointed out that few months later, manipulated advertisements were issued inviting expressions of interest to finance, redes ign, develop and manage the operations of the Pakistan Railways golf course. The Club was suddenly closed and memberships cancelled after which the buildings were bulldozed. It is the petitioners' case that the advertisements calling for submissions of expression of interest neither provided the details of the property to be commercialized nor asked the interested parties to submit their bids. According to the learned counsel, the expression of interest documents were taken to be offers against the canons of contract law. Thereafter , an Evaluation Committee was constituted which prepared a report dated 20.04.2001 and gave its recommendations. The Executive Committee of the Railway Board on the same date recommended Maxcorp for undertaking the project. Learned counsel questioned as to how the report of the Evaluation Committee was prepared in Lahore and sent to Islamabad on the same day for the signatures of the members of the Executive Committee of the Railway Board. Thereafter , unauthoriz ed negotiations were carried out resulting in conversion of the expression of interest into a financial bid. He submi tted that the foregoing indicates that everything was pre-planned in order to favour Husnain Construction Compan y. Learned counsel argued that the terms of the Agreement were different from the decision dated 20.04.2001 in that the period of the lease was increased from 33 to 49 years in a one-sided and arbitrary manner , which was extendable, the area was mysteriously increased from 103 to 141 acres, Phase II was added, the usage charges of land amounting to Rs.21.6 million were omitted and Rs.4/- per square yard were kept with 15% increase every three years. All these steps were taken and changes in basic terms and conditions made behind the backs of other potentially interested parties to grant undue favours. It is subm itted that different categories of membership were offered for which the fee ranged from Rs.5 to 15 lakh. Learned counsel fully supported the findings of the NA Report according to which the Railways Department had suffered colossal losses. In support of his arguments, he relied upon the judgments of this Court reported as Habibullah Energy Limited and another v WAPDA through Chairman, etc. (PLD 2014 SC 47). 5. Learned counsel for respondent No.1, the Railways Board, submitted that the area of the land handed over (141 as opposed to 103 acres as advertised), the tenure of the so-called lease (an unregistered document purporting to be a renewable lease for 49 rather than 33 years) and the terms pertaining to the use and revenue sharing (exclusion of all revenue from the sale of food and beverage) reflect a most substantial departure from the terms that were advertised and on the basis of which bids were invited. According to the learned counsel, the documentary evidence substantiates the fact that the foregoing terms were altere d for the benefit of respondents No.14, 15 and 16 after the last date for the submission of bids without a fresh advertisement being issued indicating the change in the said terms. Furthermore, the terms granted to the said respondents through the Agreement were substantially different, to their benefit, from the terms that were approved by the Railway Board' s Executive Committee on 20.04.2001. He argued that the foregoing constitutes a gross violation of due process and transparency in the execution of the Agreement and in light of the law laid down in Habibullah 's case (supra), the Agreement and all related transactions are liable to be declared void. Furthermore, he pointed out that Pakistan Railways has terminated the Agreement vide letter dated 26.05.2016 which has not been challenged in any Court of law by the private respondents. Learned counsel submitted that contracts that deal with public assets or carry an element of public interest or grant access to public assets may be set aside in judicial review by the superior Courts under Articles 199 and 184(3) of the Constitution when such contracts are found to be tainted on account of a failure to follow due process, including departure from the terms/conditions advertised to the public at large. Learned counsel also submitted that it is within this Court' s jurisdiction under Article 184(3) supra to issue a declaration to the effect that the dubious and non-transparent Agreement executed in favour of respondents No.14, 15 and 16 is non est and void ab initio and refer the matter to NAB to determine criminal liability related to the transaction in question. Furthermore, according to him the instant civil proceeding s and the criminal proceedings
---
## Page 6
before NAB can proceed simultaneously and independently without being affected by each other . He referred to various judgments of the superior Courts of the country in support of his contentions. 6. Learned counsel for respondent No.4, the Executive Committee of the Railway Board, stated that the then members of such Committee were Mr. Khurshid Ahmed Khan (Former Member Finance and Secretary/Chairman Railways), Lt. Gen. Retd. Saeed Uz Zafar (former Secretary/Chairman Railway Board), Maj. Gen. Retd. Hamid Hasan Butt (former General Manager Manufacturing and Services Railway) and Mr. Iqbal Samad Khan (former General Manager Manufacturing and Services Railway). He submitted that during the period that the afore-named persons were part of the Executive Committee, the performance of the Railways Department remained outstanding with an increase in revenues. Learned counsel argued that the assertions raised by the petitioners are fake, baseless and against the true facts; that no Railway administration raised any objection against the Agreement since its signing till 2016; and previously NAB had recommended closure of this case. According to him, the said persons have filed their respective version s vide C.M.As. No.393 to 395 and 535/201 1 which may be considered as part and parcel of his arguments. Learned counsel prayed that the instant petition be disposed of without any observations against the afore-named persons who are currently facing trial before the Accountability Courts lest it may prejudice them and their cases. 7. Learned counsel for respondent No.8 submitted that his client was appointed Secretary Railways on 27.10.1999 and held that office till 04.09.2000 after which he was appointed as the Minister for Railways on 05.09.2000 and held such office till November , 2002. While he was Secretary Railways, he was directed to generate his own funds as the Government was not in a position to do so. Although the Cabinet authorized him to sell land, if necessary, he did not do so. Previously, the golf course of the Club was generating only Rs.12 per year as lease money. Respondent No.8 decided to cancel the lease and commercialize the land to generate more revenue for Pakistan Railways. During his tenure as Secretary Railways, two advertisements were issued…
Read the unabridged text and precedent citation network on Al Wakeelo Legal Research Platform.