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Petitioner: ZAHIR ENTERPRISES VS Respondent: GOVERNMENT OF BALOCHISTAN and others
Court Name: Balochistan High Court Judge(s): Iftikhar Muhammad Chaudhry, Amanullah Khan Title: ZAHIR ENTERPRISES vs GOVERNMENT OF BALOCHISTAN and others Case No.: Civil Petition No,355 of 1998 Date of Judgment:1998-11-11 Reported As: 1999 MLD 3112 Result: Petition accepted
JUDGMENT
JUDGMENT ' IFTIKHAR MUHAMMAD CHAUDHRY, J.---This Constitutional petition, has been filed by Messrs Zahir Enterprises, styling themselves as Dealers in supply of wheat, to persons interested, including the Government Functionaries. As per the averments of petition, the Government of Balochistan, through its Secretary, Food Department, has entered into a secret deal, with the respondent No,3 (Messrs U.S. Traders) for purpose of 100 million M.T. Of wheat, at the price of Rs 760 or 750, per hundred kgms, without inviting publicly open tenders from the Traders, generally dealing in supply of wheat to interested persons or the Government Department, Thus, on coming to know about this fact, vide letter, dated 6th October, 1998, petitioner Firm requested the official respondents to refrain from illegal deal and to also provide equal chance of participation to all concerned in the public interest, but no response was shown, therefore, a legal notice through Advocate, was served upon the official respondents, but without any success. Inasmuch as, the official respondents were approached and requested to provide copies of relevant documents, but same were refused. As such, instant petition has been filed, claiming following relief:-- ' "It is accordingly respectfully prayed that this Honourable Division Bench may be pleased to declare: (i) That the deal of official respondents for purchase of wheat from the private respondent is not transparent inasmuch the same was not made public, and therefore, action of official respondents is without lawful authority; (ii) That petitioner who like others deals in the same business has Constitutional right to participate and contest in the purchase of wheat by the Government;
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(iii) That official respondents have acted unfairly, unreasonably and partially in purchasing the wheat from private respondent and has been dealt with discrimination in allowing him to participate in the proceedings of purchase of wheat; (iv) Resultantly, grant of contract by official respondents in favour of private respondent and action taken in the matter or intended to be taken may be declared to have been without lawful authority; (v) Permanently restraining the official respondents not to in any, way act upon the contract of purchase of wheat granted/to be granted in favour of private respondent and not to start receipt of wheat from the private respondent; , (vi) Any other relief which this Honourable Court may deem fit and proper in the circumstances of the case may also be awarded, in the interest of justice and equity." ' Accordingly on 20th October, 1998, pre-admission notice was given to respondents, directing the Secretary and Director, Food Department, to appear and produce the record, pertaining to allowing contract to private respondent, for the purchase of wheat. In response to the notice, on 22nd October, 1998, the Secretary, Food Department, produced three files, for our perusal. On having gone through them, it was noticed that the contract of supply of wheat, granted to respondent No,3, is not transparent and has not been awarded, in accordance with the relevant Rules and Regulation, as well as the pronouncements of Superior Courts. As such, the petition was admitted for regular hearing and in the meanwhile, the official respondents were restrained from entering into any Agreement, transaction etc. With the respondent No,3, regarding supply of wheat. As in the petition, it was alleged that respondent No,3 has been blacklisted, therefore, the Advocate-General, was directed to produce the complete record, to ascertain, whether the allegations are correct or otherwise? Simultaneously, he was also asked to collect complete list of cases pending with the Anti-Corruption Establishment, against the Contractors, Officials, etc. Of Food Department, for perusal and necessary order by the Court. ' It was also considered necessary to appoint Mr. Ehsanul Hach Advocate, to assist the Court, as amicus, curiae, as the matter involved in petition, was of public interest. ' The official respondents filed reply to the petition, wherein following averments were made with regard 'to the deal of allocating, contract of supply of wheat, to respondent No,3:--- ' "That the deal with M/s. U.S. Traders has not yet been finalized and no such orders for the supply of wheat have so far been issued. Hence the allegations levelled in Para. 2 of the petition are denied. The matter is under consideration with the Government in the light of the observations of the Finance Department regarding calling open tenders, consent of the Federal Government MINFAL was also to be obtained before the finalization of purchase of wheat through private importer, that is why supply order to M/s. U.S. Traders has not yet been issued." ' On 26th October, 1998, the respondent No,3, submitted counter-affidavit to the application; filed by petitioner seeking interim relief. In its paras. 5 and 6 following facts were mentioned:-- "(a) That the contents of para. 1 of the petition as stated are not admitted and I say that the petition has been malafidely filed at the behest of the business rivals of the respondent No,4 with ulterior motives. (b) That the contents of para. 2 of the petition as stated are not admitted, it is, however, submitted that the respondent No,3 did offer to supply the wheat to the tune of one million tonnes imported by him from Australia, Turkey and other countries as is evident from Annexures 'D-1' and 'D-2', annexed to this counter-affidavit supported by the bills of lading annexed herewith as Annexures 'D-3' and 'D-4' alongwith the relevant import Registration Certificates etc. To substantiate that the respondent No,3 is substantial and potential importer of wheat and also own flour mills in Balochistan as he hails from District Lasbella, Balochistan. ' It is submitted that the Government of Balochistan was within its rights to replenish the stocks for the immediate consumption of the public and that the respondent No,3, had offered to supply
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imported wheat at lower rate than the rate fixed by the Government of Pakistan, therefore, his offer was being considered by the Government of Balochistan and the matter had not so far been matured, under the circumstances it is submitted that the petition is premature, as such, on this sole ground is not maintainable and is liable to be dismissed." ' In continuation of above reply, on 27th October, 1998, a further statement was filed on behalf of respondent No,3. Relevant contents therefrom, for sake of convenience, are also reproduced hereinbelow:-- ' "It is submitted that the Government of Pakistan had asked the PASSCO to arrange and supply 40 thousand tons of wheat to the Government of Balochistan, but no wheat could be purchased as the Government reserve price of purchase was Rs,240 per 40 kgms and the market price is Rs,300 for per 40 kgms. ' That there was undertaking/understanding given by the respondent No,3 to the Government of Balochistan that he was prepared to give credit to the Government of Balochistan for payment of entire consideration to facilitate the payment of entire price of one million bags of wheat." ' Later on, a counter-affidavit, dated 2nd November, 1998, was filed, in which, the above stand was reiterated. However, a copy of reply, dated 20th October, 1998, sent by the Government of Balochistan Food Department, to the counsel of petitioner (Mr. Mujeeb Ahmad Hashmi) in response to his legal notice, dated 15th October, 1998, was also placed on record. In this reply, the Government of Balochistan, took the stand, that Food Department was of the view that in Balochistan there would be no sound party to invest amount in importing wheat from abroad, hence, to avoid confusion, the tendering idea was not considered. Messrs U.S. Traders being approved H/T Contractors (not black-listed) approached in April, 1998, that they intend to import Australian wheat and shown their willingness to offer at the lower raters than the rates charged by the MINFAL (copy enclosed). On 26-8-1998, the said Firm again approached through the Chief Minister Balochistan, offering one million wheat to Government of Balochistan as imported from Australia/Turkey at the rate Rs,7,500 per metric ton. In support of their offer, the documents to prove that the wheat is imported one and confirming to the standard was also submitted (copy enclosed) by the Firm. Case on the directions of Chief Minister Balochistan, has been processed and submitted to the Chief Minister, Balochistan through proper channel, as laid down in the Rules of Business. Since the offer is beneficial to the Government to save an amount of Rs,1,35,36,000 as compared to the purchase from MINFAL, therefore, after considering all financial aspects besides physical inspection of the available imported stock by the High Power Committee "who also approved the available wheat" confirmed upto the standard (copy enclosed). The Government of Balochistan is, thus, considering to purchase one lac tonnes imported wheat from the Firm M/s. U.S. Traders. ' From the perusal of pleading of respondents, referred to hereinabove, it is abundantly clear that the Food Department, in fact in principle had agreed to purchase one lac tonnes of wheat from respondent No,3, because in pursuance of his offer, the High Power Committee, visited Karachi, allegedly inspected the wheat, imported from Australia and Turkey and confirmed that is upto the laid down standard, but before issuance of work order, instant Constitutional petition was filed and petitioner succeeded in getting stay order on 22nd October, 1998. ' At this stage, it is equally important to make reference to the official files, to ascertain the nature of deal and objections, if raised by the concerned department. ' A minute scrutiny of files, indicates that first application was moved on 3rd April, 1998, by the Proprietor of U.S. Traders (Mr. Abdul Sattar Lasi) addressed to the Secretary, Food Department, with copy to the Principal Secretary to Chief Minister, Government of Balochistan, introducing therein itself to be importer of wheat and informing that expected time of arrival of the currently shipped consignment is around 20th April, 1998 and request was made for willingness of the Department
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allowing the respondent to submit lowest possible rates for the supply of wheat. Alongwith this application, a FAX Message, sent by the Emirates Trading Agency (L.L.G.) Dubai to Messrs Seatrade (Private) Ltd., Karachi, with a copy to Messrs U.S. Traders, Karachi, was also attached, wherein it was informed to the Addressees that the subject Vessel has sailed Port Lincoln on 8th. April, 1998, with 12580 MT of wheat cargo, with expected date of arrival of ship at Bin Qasim Port, around end of April. A perusal of the application and the FAX Messagee reveals that till the time of submission of application, the Government of Balochistan had not requisitioned supply of wheat in bulk quantity from the recognized Traders etc. And in fact, it was the respondent No,3's Firm who itself took the initiatives. But it appears, that no response was given by the concern department. This application was followed by another application, dated 21st April, 1998, wherein the same request was repeated, with an addition of quoting the rates i,e, Rs,7,600 per metric tonnes in package of 100 kgms with empty Gunny bags at Port Bin Qasim or Rs,760 per bag. The rates at the destination from Port Bin Qasim will be Rs,7,600 per metric tonnes plus approved H/T (Handing & Transportation) rates of the Government of Balochistan, It appears that on this application, without the orders or directions of competent Authority, on 22nd April, 1998, the Director, Food Department, wrote a letter, which was signed by him on 23rd April, 1998 wherein, after mentioning few facts, particularly the rates of Ministry of Food, Agriculture and Livestock (in short "MINFAL") at Karachi, the contents of the application of respondent No,3 were supported, by making recommendations, to purchase this quantity of wheat, after clearance of quality, moisture contents and other specifications by a Committee, constituted for the purpose. It was also recommended that the mode of payments to the supplier may be made through cash credit limit, after approval of competent Authority and is adjustment made from sale proceeds. The letter so addressed was placed before the then Secretary, Food Department (Mr. Mubasher Ahmed Zafar), who fully supported the proposal, made by the director, Food Department. Contents of paras. 3 and 4 of the summary, being important to highlight the state of affairs, are reproduced hereinbelow:-- "(3) In the light of the report received from the Food Directorate, this department would like to submit the following for consideration:-- (a) MINFAL has all along been the sole supplier of imported as well as indigenous wheat to the Province according to our requirement, however, in 1995 a quantity of 40,000 tonnes indigenous wheat was purchased through sources other than Government. (b) Normal monthly requirement of this Province is roughly 24,760 metric tonnes. Presently we have a stock of about 40,000 metric tonnes. This should suffice for the requirement of one and half month. Procurement of local indigenous wheat has also been started but it is apprehended that the prevailing market trends may not allow PASSCO to achieve the procurement target of 40,000 metric tonnes as private traders are offering better support prices. (c) At present there is no imported wheat in the Province as well as port Bin Qasim. The Food Department is of the view that due to bumper crop of wheat in Punjab and Sindh, the Federal Government may not go for imports. However, if import is considered, we may get the imported wheat somewhere in October, 1998. (d) A comparison of the rates given by M/s. U.S. Traders and the rate charged by MINFAL show that the offer in competitive. Traders Rate MINFAL RATESDIFFERENCE Cost of wheat including all expenses.Rs. 7,600.00Cost ofwheat Incidental.Rs. 6,500.00 Rs. 1,135.36 Total. Rs. 7,600.00Rs. 7,635.36Rs. 35.36 4. Apparently the Government can save Rs,35.36 per tonne or Rs,8,85,000 on 25,000 metric tonnes." .
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' The Secretary, put-up the Summary before the Minister for Food, who after signing it on 28th April, 1998, forwarded it to the Chief Minister. The,Principal Secretary to Chief Minister, called following explaptions:--- "(a) How may the proposal affect the quota of wheat for Balochistan which is supplied by the Federal Government? (b) Are there any other parties to offer competitive prices on such purchase? (c) How the quality of the wheat can be ascertained and its compatibility with the price be ensured? These querries, the Chief Secretary, made a Note "The --- was sent bypassing me" and marked the file to Secretary, Food, who replied the above querries and Objection' Chief Secretary or not submitting the file to him, in lowing paras:-- ' "Reference query at para. 3 ante. It is pointed about that the file has been properly marked to the. Minister. Food, Chief Secretary and the Chief Minister (in that order), however, if. The Minister chooses to take the file to the Chief Minister personally the undersigned cannot help it. ' As far as the points raised by the Principal Secretary to the Chief Minister are concerned, the replies are given below seriatim. (a) Federal Government has over the years reduced our monthly off-take of wheat to 28% of the actual requirement i,e, 66,000 metric tonnes. Presently we are getting only 24,000 metric tonnes per month. They can indeed raise an objection but presently we are facing shortage of wheat because of the procurement season in the country and the likely suspension of Atta supply from Punjab within the coming week. Therefore, the Federal Government can be asked to either meet our requirements or allow us to arrange supply of wheat on our own. Restrictions on inter-Proviincial movements of wheat which are unconstitutional may also be removed to allow free trade. (b) Since no other private party has to our knowledge imported wheat prices cannot be judged. However, when compared with prices of 'MINFAL' charge the Provincial Government, the rates offered by the Contractor look economical. (c) As already mentioned at para. 6 of the summary under submission a Committee can be constituted to ascertain the quality of wheat and compatibility of prices. ' Views of the Finance Department may also be solicited in this respect because the Balochistan Government shall have to pay the cost of wheat proposed to be purchased from the Contractor." ' On receipt of file, the Chief Secretary, sent their case to Chief Minister and in turn, the Principal Secretary to. Chief Minister, asked the Finance Department to examine the proposal and give comments, for perusal of Chief Minister. Accordingly the Secretary, Finance (Mr. Ata Muhammad Jaffar), noted that the proposal of Food Department, is silent on following two important points:-- (a) Where from the amount of Rs,20 crores will come for purchasing the wheat particularly in view of the fact that the Food Department has to pay an amount of Rs,17 billion to MINFAL as liability and the Provincial Government is already having over-draft of about Rs,2 billion upto this month? (b) Why the Food Department has chosen the option to take quotation from one party and compared it with the rates of MINFAL and avoided tenders for purchase of wheat from open market? ' The Secretary, Finance, asked the Secretary, Food, to process this case and resubmit the whole case to the Chief Minister, for his orders. It appears that after the Note of Secretary, Finance, the matter was not processed ahead, nor respondent No,3, took interest in perusing the case. ' On 26th August, 1998 the respondent No,3 submitted another application, addressed to the Chief Minister, Government of Balochistan, in which, after introducing himself to be a Trader, dealing in the import of wheat, an offer was made to purchase the wheat at the cost of Rs,7,500 per ton, Ex- Port Qasim including cost of wheat and others incidentally, comparing to the cost of Rs,7,635 per ton Ex-Port Qasim, which Provincial Government is paying to MINFAL. In this application, it was not mentioned that earlier two applications were submitted and those were processed, upto the office
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of Secretary, Finance and that happened thereafter. On this application, the Chief Minister referred the matter to Secretary, Food, for putting up Summary/detailed report and to process the same on priority. As such, the matter again went, firstly before the Director, Food, who recommended the purchase of wheat from respondent No,3 also suggested following modus operandi, for purchase of wheat, vide his letter, dated 7th September, 1998:-- (i) A committee will be constituted by the Food Department for inspection quality/quantity at the source. (ii) The transportation to P.R. Centres will be offered to above Private Trader at the approved rates of Government to avoid transit shortages if handled by the different contractors. (iii) An agreement will be executed with the importer on prescribed agreement form and a security of 2% will be taken being refundable just to cover the lossess/shortages if any. (iv) The payments will only be made for quantity delivered at the destination by producing certificate or receipt alongwith inspection certificate conducted by the Committee. (v) The Food Department may like to add other condition if any to safeguard the Government interest." ' At this moment, it is also pertinent to note that in this letter, reference to earlier proceedings drawn on the application of respondent No,3 was not made at all by the Director, Food (Mr. Fazlur Rehman). ' It is also important to note that in the meanwhile the Former Secretary, Food (Mr. Mubassher Ahmed Zafar) was transferred and new Incumbent Mr. Fasihuddin took over the charge as Secretary, Food. However, when this file was presented to him, he had no knowledge about the past history of case and as such, he prepared the summary, almostly on the same lines, as was submitted by the Former Secretary on 25th April, 1998 contents whereof, have been mentioned hereinabove. This Summary was rooted through Minister for Food who wrote following note, on it:-- ' "Chief Minister may peruse the Summary and pass orders accordingly. The proposal is beneficial for the Government of Balochistan vide para. 4 of the Summary. (Sd.) Minister for Food, 25-9-1998." ' In turn, the Chief Minister pressed following order:-- ' "Approved paras. 4 and 6 as recommended by Minister of Food, Efforts be taken to reduce the costs of wheat, quality of the wheat be checked strictly. (Sd.) 28/9" ' In pursuance of above order, the Chief Secretary, concurred with the order of Chief Minister in following words:-- ' "The committee should ensure the quality and weight of the bags/wheat as directed by C.M. Any shortfall in weight or quality will be the entire responsibility of the Committee/Food Department. This issue with approval of C.M. (Sd.) 28/9" ' Thereafter, the file was put-put before Minister, Food, who passed following order:-- ' "The Minister Food had perused the above orders and has desired that the case may be referred to Secretary Finance for financial approval." ' Accordingly, the Secretary, Food submitted the file to the Secretary, Finance with the observations, that Secretary Finance may please initiate action vide paras. 5 and 6 of the summary as well as orders of the Chief Minister, Balochistan.
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' At this stage, it may be noted that during this time, Mr. Mubasher Ahmed, Former Secretary, Food was transferred as Secretary, Finance. Therefore, again in his department, the case was processed and Food Department was asked to constitute a Committee to examine the quality/quantity/moisture contents and other pre-requisite/tenchical matters, and case was referred back to Food Department. The Secretary, marked the file to Deputy Secretary, Food, with the Note "Please put-up". Accordingly the Deputy Secretary, prepared following Notification, dated 1st October, 1998, which was approved and signed by the Secretary, Food (Mr. Fasihuddin Khan):-- "No, SOL/Wheat/Purchased/98/7821-27 Government of Balochistan, Food Department. Dated: Quetta the 1st October, 1998. ' NOTIFICATION ' No, SOI/Wheat/Purchased/98. With the prior approval of the Chief Minister, Balochistan, the Secretary Food Department, Government of Balochsitan is pleased to constitute a committee comprising of the following Officers of the Food Department to examine the quantity/quality/moisture contents and other pre-requisites of the wheat stock to be purchased by the Food Department from M/s. U.S. Traders:-- (1) Mr. Fazlur Rehman, Director Food, Balochistan...Chairman. (2) Mr. Muhammad Azam Mushtaq, Deputy Director Food (Despatch) Food Directorate, Balochistan.... Members. (3) Mr. Abdul Ghaffar, Chief Accounts Officer, Food Directorate, Balochistan....Member/Secretary. 2. The Committee will also conduct negotiations with the representatives of the U.S. Traders to reduce the price of the wheat upto maximum extent. The Committee will submit its report within a week's time immediately. (Sd) (Fasihuddin Khan) Secretary ' Stated by the Committee so constituted, somewhere after 1st October, 1998, submitted report to the effect that as per standard, the wheat grain should contain; 85% sound grain, 10-11% Moisture contents and 0.03% other foreign matters, and it was recommended that the wheat which they have physically seen at Karachi, fulfil this standard and for further verification, they have also collected samples from different lots, for laboratory analysis, at Quetta. On the submission of report, the Section Officer-1, submitted the file to Deputy Secretary, with a favourbale note on 5th October, 1998, who with his note, marked the file to Secretary, Food. The Secretary, Food, referred the matter to the Secretary, Finance, with following Note:- ' "Para. 4/n from the Secretary Finance is referred. ' As asked for the report of the Committee constituted for the purpose may please he gone through vide pages 11-C to 20-C and approval be accorded for the purchase of one lac Metric tonnes of imported wheat from M/s. U.S. Traders (Private) at the rate of 7,500 per M.T. Within the available Budget under intimation of the MINFAL for their concurrence in this regard keeping in view the overall supply/availability of wheat against the demand/requirement of this Province." ' On reference of file…
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