Al Wakeelo
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Petitioner: M/s Bio-Labs Private Limited VS Respondent: Province of Punjab and others
Court Name: Lahore High Court Judge(s): Jawad Hassan Title: M/s Bio-Labs Private Limited vs Province of Punjab and others Case No.: Writ Petition No.426 of 2020 Date of Judgment:2020-03-09 Reported As: PLD 2020 Lahore 565, 2020 LHC 972 Result: Petition dismissed
JUDGMENT
Judges are meant to interpret laws but, increasingly, they make them. In the past few decades, legislatures throughout the world have suffered from gridlock. In democracies, laws and policies are just as soon unpicked as made. It seems that Congress and Parliaments cannot forge progress or consensus. Moreover, courts often overturn decisions made by elected representatives. In the absence of effective politicians, many turn to the courts to solve political and moral questions. Rulings from the Supreme Courts in the United States and United Kingdom, or the European court in Strasbourg may seem to end the debate but the division and debate does not subside. In fact, the absence of democratic accountability leads to radicalisation. Judicial overreac h cannot make up for the shortcomings of politicians. JUDGMENT JAWAD HASSAN, J. It needs to be emphasized, as a prefatory , that the core question which garners the indulgence of this Court and lies at the heart of the controversy is the interpretation of Rule 63 of the Punjab Procurement Regulatory Authority Rules, 2014(the "PPRA Rules" ). Threading the relevant rules of the procurement law regime along with the holistic reading of the case law developed so far by our Courts around this question can surely provide an answer as will be seen in my findings in the latter half. Through the instant Constitutional petition, filed under Article 199 of the Constitution of the Islamic Republic of Pakistan, 1973(the "Constitution" ), the Petitioner has impugned the letter dated 04.01.2020, issued by the Respondent No.10/Grievance Redressal Committee, Nishtar Hospital Multan (the "Committee" ). I. BACKGROUND OF THE CASE 2. The Petitioner/M/s. Bio Labs Private Limited (the "Petitioner Company") claims to be a pharmaceutical company and is in the production of high quality medicines since 1989 and is also a license holder under the Drug Regulatory Authority of Pakistan. Bids for procurement of different medicines, surgical disposable items, lab kits1
---
## Page 2
and X-Ray Films, etc. were invited by the Respondent No.4/Medical Superintenden t Nishtar Hospital, Multan under Rule 38(2) of the PPRA Rules. In respons e thereof the Company participated in the bidding process and ultimately framework contract for the procurement of drugs/medicines for the financial year 2019-2020 was awarded vide letter dated 27.11.2019. After the award of contract, allegedly the Company started importing various items from the foreign companies including M/s. ZHUHAI United Laboratories Trading Company Ltd. China. Meanwhile one M/s. Wilshire Laboratories Pvt. Ltd./the Respondent No.11 (the "Respondent-Company" ) assailed order dated 09.11.2019 by filing Writ Petition No.18535 of 2019 which eventually was disposed of on 29.11.2019 with a direction to the Respondent No.4 to place the same before the Grievance Redressal Committee for redressal of grievance however , the representation of the Respondent-Company was rejected vide minutes of meeting dated 03.12.2019. The said order was again challenged before this Court through W.P.No.19408 of 2019 with the specific ground that the Committee was not constituted in accordance with the Law and Rules, as a result of which the learned Legal Advisor of Nishtar Hospital appeared before this Court and made conceding statement regarding constitution of the Committee being illegal. Consequently , vide impugned letter dated 04.01.2020 the Committee ordered for retender of award/contract. II. PETITIONER'S SUBMISSION 3. Learned counsel for the Petitioner -Company , Mr. Khalid Ashraf Khan, ASC and Mr. Mahmod Ashraf Khan ASC, inter-alia contended that framework contract awarded vide letter dated 27.11.2019 regarding procurement of eight drugs/medicines mentioned at Sr.No.55,5 6, 60, 61, 62, 66, 124, 260 still holds the field because that award has never been challenged at any forum as such the Grievance Committee has no authority to retender the same; that while passing impugned letter , the Respondent No.4 has ignored the important aspect that the supply order has already been issued in favour of the Petitioner -Company ; that the Committee was constituted on 04.01.2020 to hold meeting and on the same day the impugned order was passed as such the same is self-contradictory; that there was no objection with regard to acceptance of Technical Evaluation Report as well as approval of the bid of financial aid of the Petitioner -Company hence no adverse order could be passed against the order dated 27.11.2019; that before rescinding the award already granted to the Petitioner-Co mpany , neither any notice was issued nor an opportunity of hearing was afforded hence the Company has been condemned unheard which is violation of Article 10-A of the Constitution; that by award of contract to the Petitioner -Company , vested rights have been created in terms of Rule 35 and 63-A of the PPRA Rules; that till today the bid has not been cancelled and re- tendering of the same is not permissible under the PPRA Rules. Learned counsel for the Petitioner-Company relied on "ABDUL MAJEED through L.Rs. Versus MUHAMMAD BOOT A"(2004 SCMR 807),"DIRECT OR GENERAL, ORDNANCE SERVICES, GENERAL HEADQUAR TER, RAWALPINDI Versus MUHAMMAD ABDUL LATIF" (2003 SCMR 410),"Messrs ARMY WELF ARE SUGAR MILLS LTD. Versus FEDERA TION OF PAKIST AN and others"( 1992 SCMR 1652 ),"Dr . MARIAM RAZA SYED and anothe r Versus PAKIST AN MEDICAL AND DENTAL COUNCIL through Registrar and others"( PLD 2019 Lahore 558), "Messrs FUN INFOT AINMENT NETWORK (SMC-VT) LIMITED/NEO TV, through Muhammad Nasrullah Khan Versus PAKIST AN ELECTRONIC MEDIA REGULA TORY AUTHORITY through Chairman and others"( PLD 2019 Lahore 486),"Messrs EASTERN MEDICAL TECHNOLOGY SERVICES Versus PROVINCE OF PUNJAB and others"( PLD 2019 Lahore 395),"KHUSHDIL KHAN MALIK Versus SECRET ARY, MINISTR Y OF DEFENCE RAWALPINDI CANTT and others"( PLD 2017 SC 173),"GHULAM AHMAD CHAUDHR Y Versus AKBAR HUSSAIN through Legal Heirs and another" (PLD 2002 SC 615),"Ch. MUHAMMAD YOUNUS Versus The ISLAMIC REPUBLIC OF PAKIST AN through the Secretary , Ministry of Communication, Government of Pakistan, Islamabad and 3 others" (PLD 1972 Lahore 847),"CHIEF COMMISSIONER, KARACHI and another Versus Mrs. DINA SOHRAB KATRAK" (PLD 1959 Supreme Court (Pak.) 45),"JDW SUGAR MILLS LTD. and others Versus PROVINCE OF PUNJAB and others"(PLD 2017 Lahore 68), "ANW AR SAIFULLAH KHAN Versus THE STATE, etc."( PLD 2001 Peshawar 7), "Messrs NEW ERA TECHNOLOGIES PRIV ATE LIMITED through Chief Executive Officer, Lahore Versus PROVINCE OF PUNJAB through Chief Secretary , Lahore and others"( 2019 CLC 1128) and "PETROSIN ENGINEERS AND CONTRACT ORS P.T.E. Ltd. Versus FEDERA TION OF PAKIST AN and others" (2003 MLD 646 ).
---
## Page 3
III. RESPONDENTS SUBMISSIONS i. Arguments of Respondents No.1&2 (Government of Punjab) 4. Learned Law Officer, Mr. Tariq Nadeem, states that once contract has been awarded to the Company , vested right has been created in its favour , which cannot be cancelled or withdrawn. ii. Arguments of Respondents No.3 to 10 (Nishtar Hospital) 5. Learned Legal Advisor for the Respondents No.3 to 10 argued that the contract has rightfully been awarded to the Petitioner -Company which still holds the field. He further argued that the Respondent No.11 has been given proper right of hearing before the Grievance Committee which perused the previous decisions of the Technical Evaluation Committee dated 14.10.2019 and of the Grievance Committee of Nishtar Hospital Multan, dated 06.11.2019, wherein the Respondent No.11 was declared as non-eligible/non-responsive for the procurement process for the purchase of Drugs/Medicine items for the financial year 2019-2020. He adds that the Respondent No.11 did not challenge the framework Contract for the financial year 2019-20 awarded to the Company for items having comparative statement No.55, 56, 60, 61, 62, 66 and 260 on 27.1 1.2019. iii. Arguments of the Respondent No.1 1 (W ilshire Laboratories) 6. Syed Muhammad Ghazanfar , Advocate for the Respondent Company inter-alia contends that that the Respondent-Company is the lowest bidder than that of the Petitioner -Company , therefore, the impugned order regarding re-tendering is in accordance with law; that under Rule 63(b) of the PPRA Rules the procurement contract can only commence from the date of which signatures of both the procuring agency and the successful bidder are affixed to the written contract and the issuance of award letter in and of itself does not vest any rights in favour of the Petitioner -Company ; that acceptance of bid award letter dated 27.11.2019 is a mere letter of intent which can be cancelled by the competent authority and the whole process can be put to re-auction if a valid contract has not been entered in to betw een the parties; that as the contract has not been signed and no vested right has been created in favour of the Petitioner -Company , therefore, the procuring agency had ample powers under Rule 36 of PPRA Rules to proceed to re-tender the products; that the bidding documents clarify where Rule 63(a) and 63(b) are applicable; that the bidding document is defined under 2(g) of the PPRA Rules which states that bidding document? means a document or a set of documents prescribing the quantity , quality , characteristic, conditions and procedures of the transactions proper to the actual procurement and on the basis of which bidders prepare their bids and under Rule 2(n) the contract means the agreement proposed to be entered in to between the procuring agency and the successful bidder; that the Committee has no power to withdraw its re-tendering order . He relied on the judgments cited as "PETROSIN CORPORA TION PVT. LTD. SINGAPORE and 2 others Versus OIL AND GAS DEVELOPMENT COMP ANY LTD. through Managing Director , Islamabad"( 2010 SCMR 306), "MUNSHI MUHAMMADAND ANOTHER Versus FAIZAN UL HAQ AND ANOTHER"( 1971 SCMR 533),"Messrs AL-NOOR through Partner Versus The PROVINCE OF SINDH through Chief Secretary Sindh and 8 others" (PLD 2019 Sindh 400),"KITCHEN CUISINE PVT. LTD. Versus PAKIST AN INTERNA TIONAL AIRLINES CORPORA TION and others" (PLD 2016 Lahore 412),"Messrs PAKIST AN GAS POR T LTD. Versus Messrs SUI NOR THERN GAS CO. LTD. and 2 others" (PLD 2016 Sindh 207),"A.M. CONSTRUCTION COMP ANY PVT. LIMITED through Chief Executive Officer and another Versus NATIONAL HIGHW AY AUTHORITY through Chairman and 2 others"( 2017 CLC 178),"SINO TEC CO. LIMITED through Authorized Representative Versus PROVINCE OF KHYBERP AKHTUNKHW A through Secretary , Energy and Power Department and 5 others" (2015 CLC 1589 ),"Messrs MEGA SIGN and others Versus CAPIT AL DEVELOPMENT AUTHO RITY and others"( 2014 CLC 516), "AFZAL MOT ORS PVT. LTD. through Managing Director Versus HIGHER EDUCA TION ARCHIVES AND LIBRARIES DEPARTMENT through Secretary and 7 others" (2010 CLD 1182),"PLA TINUM INSURANCE COMP ANY LTD. Versus DIRECT OR INSURANCE"( 2010 CLD 1190), and "SIGNAGE SECURITY SYSTEM PVT. LTD. Versus CAPIT AL DEVELOPMENT AUTHORITY and others" (2010 CLC 567), "CITY SCHOOLS PVT. LTD. LAHORE CANTT . Versus PRIV ATIZA TION COMMISSION, GOVERNMENT OF PAKIST AN and another"( 2002 CLD 1158) and "Messrs BAGH CONSTRUCTION COMP ANY Versus FEDERA TION OF P AKIST AN and others"( 2001 YLR 2791 ). IV. CONSTITUTIONAL MOOT POINTS
---
## Page 4
7. In order to resolve the controversy in the matter , this Court deems it appropriate to frame the following constitutional moot points: i. Whether the Company was duly awarded contract under the PPRA Rules? ii. Whether the Grievance Redressal Committee can re-tender the contract without hearing the parties under the Rules? iii. Whether the Grievance Redressal Committee can pass any order without hearing the Petitioner? 8. I have heard the learned counsel for the parties at length and have also perused available record. V. DETERMINA TION BY THE COURT A. Prologue -Philosophy and Legal Anthropology of procurement law regime 9. Legal practices, processes, and claims are among the most powerful forces that shape our lives. Legal anthropology has historically tried to understand the relationship between legal processes and other aspects of social, cultural, economic, and political life as well as the meanings and implications of legal practices on their own terms. For our purpose, while dealing with the procurement law regime it needs to be understood that the concept of procurement has always been in existence but mostly developed due to the strict requirements of the international financial institutions and the international donor agencies. Maybe not in the same regulated way that it is now; but people and businesses have always had to purchase goods, material and labour to complete projects. 10. A book written by Charles Babbage in 1832 titled `On the Economy of Machinery and Manufactures' discussed the need for an introduction of a so-called `materials man? in the mining industry . He said that the materials man should be someone who selects, purchases and tracks the goods used on a project - essentially the modern-day procurement agency . It has been established that the procurement is primarily the process of finding and agreeing to terms, and acquiring goods, services, or works from an external source, often via a tendering or competitive bidding process. However , the procurement is used to ensure the buyer receives goods, services, or works at the best possible price when aspects such as quality , quantity , time, and location are compared. The corporations and the public bodies often define processes intended to promote fair and open competition for their business while minimizing risks such as exposure to fraud and collusion. Hence, the bidding is a most important element of procurement. It is an offer (often competitive) to set a price tag by an individual or business for a product or service or a demand that something be done. Moreover , the bidding is used to determine the cost or value of something which can be performed by a person under influence of a product or service based on the context of the situation. Formalized acquisition of goods and services has its roots in Military logistics, where the ancient practice of foraging and looting was taken up by professional quarter masters, a term which dates from the 17th Century . The first written record of what would be recognized now as the purchasing department of an industrial operation is in the railway companies of the 19th Century . "The intelligence and fidelity exercised in the purchase, care and use of railway supplies influences directly the cost of construction and operating and affect the reputations of officers and the profits of owners." An early reference book from 1922 explains that: "The modern purchasing agent is a more important man by far than he was in older days when purchasing agents were likely to be rubber stamps or bargainers for an extra penny . A Purchasing agent of the modern breed is a creative thinker and planner and now regards his work as a profession." 11. Correspondingly , Government or public procurement is the formal process through which official government agencies obtain the necessary goods, services and work to carry out government activities. 12. Every Government across the globe needs some material, equipment and services (including consultancy services) to perform its activities. The acquisition of these materials, equipment and services warrants that the whole activity should be undertaken in the most transparent, economical and efficient manner that results in best value to the government and the people. Transparency and accountability in a public procurement system essentially covers important aspects of the procurement system that includes stakeholders as part of the system. It requires an enabling environment, an institutional framework, management capacity and a legislative framework. B. Global Practices in Public Procurement Policy Making2
---
## Page 5
13. The research on the historical development of the procurement laws identifies that most countries have public procurement laws that set out the rules and processes to be followed for all forms of public procurement. Most international financial institutions, such as World Bank (IBRD), the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD) and the Inter-American Development Bank (IDB), require a transparent, competitive bidding process as a condition of financing for major Infrastructure projects. In most cases the process to be followed for procurement of PPP projects that are supported by IFIs are included in their procurement guidelines. The World Bank has issued a specific Guidance Note on Procurement Arrangements Applicable to PPP Contracts Financed under World Bank Project in September 2010 and its Procurement Guidelines 201 1. 14. Another useful source of guidance in this area, specifically related to procurement in infrastructure projects, is UNCITRAL - Legislative Guide on Privately Finance Infrastructure Projects, 2001, in Chapter III and Recommendations 14 to 29. This provides guidance and draft legislative provisions. This can also be found in different languages on the UNCITRAL website. There is also UNCITRAL Model Law and guidance on Public Procurement, 201 1 on general public procurement. 15. An extract from the report "Curbing Corruption in Public Procurement in Asia and the Pacific" Progress and Challenges in 25 Countries Asian Development Bank Organisation for Economic Co-operation and Development states that "A majority of the countries in the region (Australia; Bangladesh; P.R. China; Hong Kong, China; Indonesia; Japan; Korea; the Kyrgyz Republic; Mongolia; Pakistan; Palau; Philippines; Singapore; Vanuatu; Vietnam) have passed comprehensive and widely applicable public procurement laws or regulations. Some of these frameworks are the fruit of recent efforts to establish or substantially modernize procurement. Indonesia and Mongolia passed new procurement frameworks in 2000; Mongolia, in 2005, was preparing institutional and procedural improvements. The Philippines established new procurement rules in 2002. P.R. China did the same in 2003, as did Bangladesh, the Kyrgyz Republic, and Pakistan in 2004. A similar reform process started in Kazakhstan in 2002. In 2005 India revised its General Financial Rules, which lay down the principles for central government procurement, and passed new procedures for the defense sector . Indonesia has adjusted its procurement framework repeatedly in 2003- 2006. Vietnam enacted procurement legislation in mid-2006, and supplementary decrees are expected to be passed in the second half of 2006. Papua New Guinea's procurement system was undergoing reform in 2006, following the promulgation of new legislat ion on finance instructions in relation to procurement. Bangladesh, the Fiji Islands, and Nepal are preparing new procurement legislation, and Thailand is modernizing its procurement regulations by revising the existing regulation. Some of the recently adopted laws and regulations--notably those of Bangladesh, the Kyrgyz Republic, Mongolia, and Pakistan have been strongly inspired by the model law on public procurement of the UN Commission on International Trade Law (UNCITRAL). The proposal to revise Thailand's procurement regulations is also based on the model law. However , regulations on public procurement in Cambodia, Malaysia, and Nepal are still fragmented and are spread over several legal documents. Procurement rules need to be unambiguous and reliable over time to provide for steady and consistent practice and transparency , and to ensure that training programs in the subject are not made obsolete by constant changes in the procurement framework. Today , there is a growing consensus that the stability of the framework over time clearly benefits from the establishment of the constitutive elements of procurem ent rules in parliamentary law. Regulation at this level protects the framework against short-lived modifications through government decrees and confusion caused by overriding or confli cting parliamentary laws. Violations of procurement rules laid down as guidelines or in manuals may also fall out of the scope of judicial review and may thus go unsanctioned, as such rules are often not legally binding. Given the specific legal traditions and very particular circumstances of some countries, regulation at a lower level may also achieve the goal of stability?. C. National Underpinnings- Pakistani Example 16. Government procurement in Pakistan is overseen by the Public Procurement Regulatory Authority (PPRA), an autonomous body based in Islamabad which was established by the Public Procurement Regulatory Authority
---
## Page 6
Ordinance of May 2002. The PPRA is responsible for issuing regulations and procedures for public procurement undertaken by federal level public secto r organizations. Its brief is to improve the governance, management, transparency , accountability and quality of Pakistan's public procurement. The PPRA also monitors other public sector agencies' procurement activity . Pakistan has observer status with respect to the Government Procurement Agreement. In Pakistan current procurem ent regime started functioning in 2002 when the Government of Pakistan created PPRA at Federal level through a presidential ordinance. The system was strengthened by adding Public Procurement Rules 2004 and Public Procurement Regulations 2008. The Punjab Province adopted the system in 2007 through an ordinance which was under the same nomenclature was converted into an Act 2009. Punjab Procurement Rules 2009 were also notified in the same year to beef-up the procurement system in the province. Subsequently Rules of 2014 are in place. The salient features of the current procurement system include a regulatory body mandated to monitor the public procurement activities, legal framework elaborating a mechanism as well as procedure on public acquisition of goods, works and services by the public sector enterprises, establishment of grievance redressal/app eal mechanism exclusively for settlement of complaints on the contract management issue, a mechanism for wide dissemination of Government policy decision, procurement opportunities and results of evaluation exercises for award of contracts and regulatory arrangements for ensuring access to information on the public procurement system. D. Contextual Perspective: Punjab Procurement Rules 2014 17. The Punjab Procurement Regulatory Ordinance was promulgated in 2007 to establish the Punjab Procurement Regulatory Authority . Thereafter , Punjab Procurement Rules 2009 were framed and implemented under the Punjab Procurement Regulatory Ordinance 2009. Some amendments were made in 2013 in Punjab Procurement Rules 2009 which were renamed as Punjab Procurement Rules 2009 (Amended). These rules have been repealed in 2014 and new Punjab Procurement Rules have been enforced as Punjab Procurement Rules 2014. Like all the government departments and public sector corporations that are using public funds, the City Districts Governments/District Governments/V ASAs/Development Authorities have to follow Punjab Procurement Rules 2014 for procurement of goods, works, services and consultancy services. E. Redreesal Mechanism under the PPRA Rules 18. In order to determine the moot points framed in this case, the Rule 67 of PPRA Rules has to be examined first which deals with the redressal of grievances of the bidders. It enjoins the procuring agency to constitute a committee having odd number of persons with proper powers and authorization to address the complaints of bidder occurring before enforcement of the procurement contract. Furthermore, it would also be instructive to refer to the judgment cited in "MESSRS MIA CORPORA TION (PVT) LTD Versus PAKIST AN PWD AND OTHERS" (PLD 2017 Islamabad 29 ) in which it has held as under: "PPRA Rules are not exhaustive and do not cater for each and every eventuality that can be thought of in the realm of tender- bidding. The PPRA Rules are codified norms and requirements of a fair, open, competitive and transparent tender bidding required to be conducted by the Government or Public Sector Organizations . The mere fact that a certain process adopt ed for bidding by a procuring agency is not expressly prohibited by the PPRA Rules will not pose as an obstacle before this Court to examine the process on the touchstone of fairness, reasonableness and transparency . These requirements are also stipulated in Rule 4 of the PPRA Rules, which provides that procuring agencies, while engaging in…
Read the unabridged text and precedent citation network on Al Wakeelo Legal Research Platform.