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Petitioner: Messrs SHAMS AND BROTHERS VS Respondent: GOVERNMENT OF PAKISTAN and others
Court Name: Sindh High Court Judge(s): Anwar Zaheer Jamali, Syed Zawwar Hussain Jaffery Title: Messrs SHAMS AND BROTHERS vs GOVERNMENT OF PAKISTAN and others Case No.:Civil Petition No.D-1437 of 2005 and C.M. As. Nos.6030, 5807, 5366 of 2005,
and C.M.A. No.2005 of 2006 Date of Judgment:2006-10-27 Reported As: 2007 CLD 125 Result: Order accordingly Judgment ORDER ANWAR ZAHEER JAMAL1, J.---The petitioner, a registered Partnership Firm, has filed this constitutional petition on 27-10-2005, with the following prayers:-- (i) To direct the respondents Nos.1 and 2 to accept the highest bid of petitioner amounting to Rs.10,50,000 per month. (ii) To direct the respondents Nos. 1 and 2 not to award the contract to Respondent No.4 the second highest bidder at the rate of Rs.6,05,000 under a shabby, dubious, illegal and unlawful deal, thereby causing a huge oss of revenue to public exchequer to the tune of Rs.54,00,000 per annum and causing injustice to the petitioner (iii) To declare that it is clearly an act of nepotism, favouritism and under hand deal on the part of respondents in order to harm the interest of petitioner on one side and defraud the public exchequer from a huge amount, by way of showing extraordinary and illegal favour to respondent No.4, the second highest bidder Messrs Hanif Rajput. (iv) To restrain the Respondents Nos. 1 and 2 not to, accept the bid of the respondent No.4 and award contract to respondent No.4 till final disposal of this petition. (v) To declare that the second invitation was designed in collusion with Respondent No.4. (vi) Cost of the petition may also be awarded. (vii) Any other relief or reliefs as this Hon'ble Court may deem' fit and proper under the circumstances of this case to be passed in favour of the petitioner." 2. In brief, case of the petitioner is that it is a registered partnership firm, engaged in doing lawful business, while respondent No.2, is a Corporate Body, established for the purpose of promoting and
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developing uniform international standards of sports competition in Pakistan. The respondent No.2, which is functioning under the administrative control of respondent No.1, had invited bids/offers through press from interested parties to establish, run and maintain Marriage/Shadi Lawns on built, operate and transfer basis (BOT) at its PSB coaching center, plot at Sir Shah Muhammad Suleman Road, Karachi. 3. In the first process of inviting bids, 4-6-2005 was the last date for submission of sealed offers, as per terms and conditions disclosed in the advertisement. The petitioner submitted its sealed offer on prescribed "Terms of Reference" (TOR) form provided by respondent No.2, along with security deposit of Rs.5,00,000 in the shape of Pay Order, which was refundable in case of non acceptance of offer/ibid. In such process, nine parties including petitioner, participated, wherein on opening of bids on 4-6-2005, petitioner's offer in the sum of Rs.10,01,000 per month was found to be the highest, while second highest offer of Rs.5,25,000 per month was of respondent No.3. Such offer of the petitioner being the highest, was accepted by respondent No.2 and accordingly vide their letter, dated 6-7-2005, he was asked to provide certain documents/informations to process its case further. Such direction of respondent No.2 was responded by the petitioner by submission of required documents to their satisfaction. A design for Shadi Lawns was also submitted to respondent No.2, which was returned to the petitioner on 4-8-2005 with the suggestion of revision of design as per amendment proposed by them. Such compliance was also made, but thereafter some other conditions were proposed by respondent No.2 beyond the earlier agreed terms and conditions. The petitioner during this process, wrote several letters to respondent No.2 (Annexures J/1 to J/6 to the petitioner), but with no material outcome, though in the meantime the officials of respondent No.2 had verbally asked the petitioner to start the work of development of Shadi Lawns at the site and the petitioner had also spent huge sum of Rs.12,70,000 for the work undertaken by it, as detailed in para.12 of the petition. Further case of petitioner is that despite its all efforts to convince the respondent No.2 for finalization of its highest bid and execution of agreement in furtherance thereof, finally the offer given by the petitioner was cancelled, vide letter, dated 26th September, 2005 issued from the office of respondent No.2, with the observation that on assessment and verification of business profile and experience of the petitioner, it was found dissatisfactory. 4. Thereafter, fresh sealed offers for lease of same plot for marriage lawn purpose, on BOT basis, were invited by re-advertisement, got published by respondent No.2 on 4-10-2005, with the addition of new set of conditions and qualifications for the parties intending to participate in it and the last date for submission of fresh offers in terms of such advertisement was 21-10-2005. Though some of the newly added terms and conditions of respondent No.2 were entirely irrelevant for the purpose of establishment of Shadi Lawns, still the petitioner succeeded to meet all such requirements and, thus participated in the second round of sealed offers on 21-10-2005. On opening of sealed offers again, petitioner's offer in the sum of Rs.10,50,000 per month, was found to be the highest, while the second highest offer in the sum of Rs.6,05,000 per month was received from respondent No.4, whereas offer of respondent No.3 was this time in the sum of Rs.3,25,000 per month. The respondent No.2 again with some ulterior motives did not accept the highest offer of the petitioner, but contemplated to award contract to the respondent No.4 with the meagre offer of Rs.6,5,000 per month, which compelled the petitioner for filing this petition. For such conduct of the respondent No.2, petitioner has levelled allegation of nepotism, favouritism and underhand dealing between the respondents in order to harm the interest of the petitioner and also to cause huge financial loss to pubic exchequer. 5. On service of notice of this petition, on behalf of respondents Nos. 1 and 2, a statement was filed by their Deputy Director General, wherein he did not dispute participation of the petitioner in the first bid held on 4-6-2005 as well as their participation in the second bid held on 21-10-2005 and
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offering of highest bid by them on both occasions. However, in para.3 of his affidavit Deputy Director General Mr. Akhtar Nawaz Ganjera disclosed following grounds for rejection/cancellation of first bid, while justification for nonacceptance of highest bid of the petitioner on the second occasion was unfolded in para.12 of the affidavit. For the sake of convenience and to fully incorporate the defence offered by respondents Nos. 1 and 2, contents of these two paras. Are reproduced as under:-- "(3) That the offer, dated 4-6-2005 of the plaintiff was fairly considered for about 4 months by a Committee consisting of 7 officers of the respondents Nos.1 and 2 for opening of bids, proper assessm ent and verification etc. Which is as per Annex. R-19 at pages 73 to 83. The first offer of the plaintiff was rejected on the following grounds: (i) The plaintiff was raw hand and his firm was registered with Registrar of Firms on 12-7-2005 after tender opening. (ii) The plaintiffs firm was neither registered with the Income Tax Department nor with the Sales Tax Department. (iii) The plaintiffs Firm was not member of the Karachi Chamber of Commerce and Industry. (iv) The plaintiff/s Firm failed to submit last 4 months Bank Statement for assessment of business activity and sound financial background. (v) The plaintiffs firm retreated from its first bid on 13-62005 showing inability to honour its offer. (vi) The plaintiffs firm retreated third time from its first bid on 20-7-2005 by proposing to set up 4 Shadi Lawns instead of two. (vii) The plaintiffs firm retreated fourth time its offer on 6-8-2005 by asking to extend grace period from 4 months to 10 months. (viii)The plaintiffs firm fifth time retreated from its offer on 8-8-2005 to reduce the monthly rent and also asked to clear site from stones and rocks which was a clear violation of B.O.T., offer." (12) That the first higher bidder was also plaintiff in the 2nd Tender Enquiry but this time he failed to even meet the stipulations of the Tender Enquiry which are as under:-- (i) The first highest bidder had no catering experience which was necessary for P.C.B. To entertain foreign sports delegations etc. (ii) The first highest bidder's registration with Sales Tax and Income Tax was not five years old which was necessary to ascertain the past performance of plaintiff otherwise high risk of uncertainty was involved at the hands of plaintiff who retreated from his 1st offer on a number of occasions. (iii) The Plaintiff has no job-oriented staff and even has no Catering vehicles necessary for service on play grounds. (iv) The Plaintiffs office is located in a shop as is evident from the photo as per Annex-R-20 at page 84 which is evidently not an established office from any point of view. Even the name of the firm written on the shop does not reflect the nature of work undertaken by it. (v) The Plaintiffs firm is also not ISO certified and thus foreign nationals will not repose confidence for service of food etc. And result in poor arrangements by a host country. (vi) Besides the shortcomings of the plaintiff in fulfilling 2nd Tender Enquiry terms and conditions, his past dealings with the Respondents in first Tender Enquiry are evident from para.3 above, so his rejection/short listing by the respondent Nos.1 and 2 are most plausible." 6. Besides, respondents Nos.1 and 2 also strongly challenged the maintainability of the petition on the ground that offering of highest bid by the petitioner or its non acceptance by respondents Nos. 1 and 2 has not conferred any legal right in favour of the petitioner to agitate such grievance by way of this constitutional petition. It was further stressed by the respondents Nos. 1 and 2 in their reply that contract in favour of respondent No.4 has already been executed by respondents Nos. 1
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and 2 on 29-10-2005 and possession has also been delivered to him, therefore, no relief could be granted to the petitioner at this belated stage. 7. The respondent No.3 instead of filing any reply to this petition, moved C.M.A. No.2005/2006 under Order I, rules 3 and 10(2), C.P.C. With the prayer that his name may be struck off from the array of respondents in this petition as he has been un-necessarily joined as party to this petition with some ulterior motive. 8. The respondent No.4 in his reply to this petition claimed execution of valid contract with respondent No.2 for grant of lease of marriage lawn in his favour on the basis of his offer in response to advertisement published by respondent No.2. He also challenged the maintainability of the petition on various grounds, but did not dispute the factual assertions made in the petition. 9. Sardar Muhammad Yousuf, learned counsel for petitioner, in his arguments reiterated the facts stated in the petition and strongly contended that sufficient material has been placed on record by the petitioner, corroborating its claim against respondents Nos. 1 and 2 for adopting the policy of favouritism, and discrimination, with the ulterior motive of causing heavy financial loss to the public exchequer: He contended that in the normal course respondents may be right in saying that mere highest offer by the petitioner and its rejection by them/competent authority, will not give any locus standi or cause of grievance to the petitioner to invoke constitutional jurisdiction of this Court on that account, but in the peculiar facts and circumstances of the instant case, where first highest offer of the petitioner was accepted by respondent No.2; Pay Order of Rs.5,00,000 deposited by the petitioner was encashed by them; on the oral permission of respondent No.2 the petitioner had spent a sum of Rs.12,70,000 over the development of the area, and thereafter unilateral action for cancellation of highest bid was taken by the respondent without any reasonable justification, and in second bid despite fulfillment of all the conditions and qualifications by the petitioner to participate in the second bid, non-acceptance of its highest bid in the sum of Rs.10,50,000 per month, as against other ibid of respondent No.4 in the sum of Rs.6,05,000 per month, thereby causing monthly loss of Rs.4,45,000 per month to the public exchequer, the petitioner has acquired legal right being a citizen of this country to challenge the action of respondent No.2, inasmuch as position of a Corporate Body or Public Functionary for the purpose of exercising its discretion in such cases, is not at par with the Private Bodies/Institutions, as they are bound to act justly, honestly, equitably, fairly, impartially and in a transparent manner, without any element of favouritism, nepotism or ulterior motives for awarding contract to any particular party. In the instant case, if the petitioner had not met all the requirements of respondent No.2 for participation in the second bid as per conditions mentioned in the advertisement then the respondent No.2 would not have allowed it to participate in the bid. He further contended that the allegations levelled by respondent No.2 in paras.3 and 12 of their reply to this petition, are absolutely concocted and self-contradictory, inasmuch as, if the petitioner had not met all the conditions of bid at the time of first tender, the respondent No.2 could have rejected its bid straightaway instead of encashing its Pay Order and keeping the matter lingered on for over three months before its cancellation, vide letter, dated 26th September, 2005, that too after getting the petitioner outpocketed in the sum of Rs.12,70,000, which sum was spent by it on the project, as per details given in para.12 of the petition. While concluding his submissions, learned counsel lastly contended that process of inviting tenders for the second time was mala fide and with ulterior motive from the very inception as certain uncalled for and unreasonable conditions were incorporated therein only to ensure that petition is kept out of this process due to non-fulfillment of such flimsy conditions and qualifications. He, therefore, prayed that this petition may be allowed and respondent No.2 may be
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directed to award the contract of marriage lawn to the petitioner on the basis of its highest offer to avoid any further financial losses to the public exchequer. 10. In his reply arguments, Mr. Muhammad Aslam, learned counsel for respondents Nos. 1 and 2 was unable to controvert the factual assertions of Sardar Muhammad Yousuf, learned counsel for petitioner, with reference to the proceedings of first highest bid of the petitioner, which process ultimately ended in terms of letter, dated 26th September, 2005. Coming to the allegation of the petitioner, as regards second bid opened on 21st October, 2005, learned counsel contended that the petitioner having no past experience of catering etc., as required in terms of advertisement published by the respondent No.2 had attempted to overcome such deficiency by forming a joint venture with another party, though it has no such resources available with it, therefore, due to non- meeting of minimum requirement of the bid, the respondent No.2 was fully justified in rejection of its highest bid and awarding of contract in favour of respondent No.4, which stood executed and finalized on 29-10-2005. In support of his submission that mere highest bid by a party will not give it locus standi to challenge rejection of its bid, learned counsel had placed reliance on the following cases:-- (1) Rehmat All and 2 others v. The Revenue Board. West Pakistan, Lahore and others (1973 SCM R 342). (2) Calicon (Pvt.) Ltd. v. The Federal Government of Pakistan and 5 others (1994 SCM R 1758). (3) Munshi Muhammad and another v. Faizanulhaq d others (1971 SCM R 533). (4) City Schools (Pvt.) Ltd., Lahore Cantt. v. Privatization Commission, Government of Pakistan and another (2002 SCM R 1150). 11. Learned counsel Mr. Muhammad Aslarn was also unable to controvert the other submission of Sardar Muhammad Yousuf that in case financial loss to public exchequer was being caused due to some wrongful acts or omissions of public functionaries, every citizen of this country will have legitimate fight to challenge such acts or omissions of the public functionary to avoid loss to public exchequer. 12. Mr. A. Rauf Kasuri, learned counsel for respondent No.4, adopting the arguments of Mr. Muhammad Aslam, contended that the respondent No.4 is a well-reputed Finn engaged in the supervision of marriage lawns and catering services all over Pakistan, and looking to his high profile, respondents Nos.1 and 2, without any fear or favour have accepted his second highest bid in the sum of Rs.6,05,000 which cannot be termed as a mala fide or dishonest act on their part. 13. We have scanned all the material placed on record and carefully considered the pleas raised, on behalf of the petitioner and respondents, by their respective counsel. 14. Indeed, there is no cavil to the proposition of law canvassed in the four judgments of the Hon'ble Supreme Court of Pakistan cited by learned counsel Mr. Muhammad Aslam, but such principle of law is applicable only in the cases, where the whole process of inviting bids and awarding of contract in furtherance thereof by a public functionary, is just, equitable, fair and impartial. However, where transparency in the process is doubted, and mala fide or ulterior motive to oblige any particular party, to cause financial loss to the public exchequer is attributed, the powers of this Court under Article 199 of the Constitution can be invoked and exercised to examine, such aspects, and if required, to undo such wrongs to avoid any financial loss to the exchequer due to such acts of misdeed, collusion, or favouritism by certain individuals, involved in such process. 15. It may also be observed here that in a case where allegations of colourful exercise of powers, favouristism and underhand 'deal are rooting from the very stage of tendering process, even the nexus/rational of the terms and conditions of the contract can be examined and weighed by the Court to find out the truthfulness of such allegations. Moreso, as transparency in the process of tendering and awarding of
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contract is to be maintained by a Government functionary throughout i.e. From the very beginning of the process till its end. We may further observe that the terms and conditions imposed for awarding of contract must have nexus/rational to B the nature of contract intended to be awarded and its objective. For instance, for awarding of contract of some marriage garden, one cannot reasonably impose a condition for the applicant/participants in the process. Of tendering, that only those who have been born in the year, 1950 will, be eligible to participate in such process or only those who are clean shaven will be eligible for awarding of such contract. Thus this Court while dealing with the crucial issue for causing of heavy financial loss to the exchequer, which prima facie seems to be C the position in the present case, cannot sit as a silent spectator to approve such underhand devices, aimed to eliminate any particular party or to accommodate another. If any case law is needed to fortify this view, reference can be made in the case of Balochistan Construction .Company v. Port Qasim Authority (SBLR 2001 Karachi 661), wherein relying upon the famous judgment of the Indian Supreme Court in the case of Ramana Dayaram Shetty v. International Airport Authority of India (AIR 1977 SC 1628) and many other cases, following observations were made by Division Bench of this Court:- "The respondent is a statutory body performing functions under the Port Qasim Authority Act, 1973. Being a State functionary , the respondent in awarding contracts must act fairly, reasonably, honestly and justly. Though the Court cannot substitute its -opinion with that of the State functionary, yet it certainly has the power to judicially review administrative actions to check their fairness, reasonableness and t ransparency." "The respondent in declining the petitioner to participate had even failed to give any reasons. As far as the condition of having 50 million turn-over per year the key question would be as to whether this condition has any nexus with the performance of the work. In India in the Ramana case (cited supra) the Supreme Court has held that concerned authorities cannot accept tenders of persons, who do not fulfil the requisite qualifications, thereby implying that the authorities could impose any condition in their discretion. In Pakistan, we have gone a step further. In Amanullah Khan v. Federation of Pakistan, PLD 1990 SC 1092, our Hon'ble Supreme Court has held that the prescribed condition must have nexus with the object of the purpose. In other words, a prescribed condition having no nexus with the object can be judicially reviewed, read or struck down. In the context of tenders and award of contracts the prescribed condition must not be unreasonable, irrational and must have a direct nexus with the performance of the work sought to be performed by the contractors in the totality of circumstances. Whether- or not a condition would have nexus with the object will depend upon the facts and circumstances of each case." 16. Proceeding further, though for the purpose of grant of relief to the petitioner in this petition or otherwise, the proceedings held by respondents Nos.1 and 2 at the time of inviting first bids on 4-6- 2005 are not material, but in order to appreciate their conduct, it will be useful to also undertake such exercise at this stage. In this regard, there is no denial of the fact that at the time of opening of first sealed offers on 4-62005 there were nine contenders, and bid in the sum of Rs.10,01,000 P.M. Offered by the petitioner was the highest. While the second highest bid of Rs.5,25,000 was given by the respondent No.3, thus there was a huge difference of Rs.4,76,000 per month in the two offers. Further the security deposit paid by the petitioner through pay-order of Rs.5,00,000 along with his sealed offer was encashed by respondent No.2, which gives a strong presumption in favour of the petitioner that his highest bid was accepted by the respondents Nos. 1 and 2, being in accordance with the specified terms and conditions and to their satisfaction. There is ample material available on record to show that since thereafter up to the time of issue of letter, dated 26th September, 2005, for over three months, on one hand the petitioners were vigorously pursuing their case far
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execution of final agreement in their favour and on the other hand respondents Nos. 1 and 2 were putting up conditions, one after- another, beyond the scope of the terms and conditions provided in the advertisement published by respondent No.2 for inviting sealed offers, to frustrate the claim of the petitioner. Even the contents of letter, dated 26th September, 2005 reveal no sound or cogent reason for non-finalization of agreement by respondents Nos. 1 and 2 in favour of the petitioner, despite encashment of their pay-order of Rs.5,00,000. The explanation furnished on behalf of respondents Nos.1 and 2 in para.3 of their comments to justify their decision in this regard is also belied from the documents placed on record by the petitioner. However, since the petitioner, by their inaction in time, have accepted the verdict of respondents Nos.1 and 2 in the form of their letter, dated 26th CLD September, 2005 and have also received back the payment of their sum of Rs.5,00,000, later on through cheque, for the purpose of this petition, such controversy is not a past and closed transaction, and the above discussion is more of academic importance, except to judge the past dubious conduct of respondents Nos. 1 and 2. 17. Examining the process of inviting of second sealed offers by respondent No.2, at the outset, for the sake of comparison, it will be useful to reproduce hereunder the two advertisements published by respondent No.2 in the newspapers, for inviting the sealed offers of this purpose, which read as under:-- PAKISTAN SPORTS BOARD Kashmir Highway near Aabpara, Islamabad. INVITATION FOR OFFERS Establishment of Shadi Lawns at PSB Coaching Centre, Karachi 1. Offers are invited from interested private entrepreneurs for creation of marriage lawn, its operation and maintenance on BOT Basis at PSB Coaching Centre, Sir Shah Muhammad Suleman Road, Karachi. Land will be earmarked by PSB Coaching…
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