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Petitioner: HABIBULLAH ENERGY LIMITED and another VS Respondent: WAPDA through Chairman and JUDGMENT
Court Name: Supreme Court of Pakistan Judge(s): Jawwad S. Khawaja, Iftikhar Muhammad Chaudhry, Sh. Azmat Saeed Title:HABIBULLAH ENERGY LIMITED and another vs WAPDA through Chairman and
JUDGMENT
Reported As: PLD 2014 Supreme Court 47 Result: Order accordingly Judgment JUDGMENT ' SH. AZMAT SAEED, J.---The Water and Power Development Authority (WAPDA) granted 20-years lease to Messrs Associated Group (Messrs AG) in respect of GENCO-IV Lakhra Power Generation Company Limited on 11-9-2006. The said transaction was challenged by Messrs Habibullah Energy Limited (Messrs HEL) before the learned High Court of Sindh by filing Constitutional Petition No,D- 442 of 2007, which was dismissed vide judgment dated 7-5-2008. Being aggrieved, Messrs HEL challenged the aforesaid judgment through Civil Petition for Leave to Appeal No,545 of 2008 before this Court. 2. The grant of lease on 11-9-2006 by WAPDA to Messrs AG was also challenged by the Zonal Labour Union, Lakhra (ZLU) and others before the learned High Court of Sindh through Constitutional Petition No,D-441 of 2007, which was also dismissed vide judgment dated 28-2-2008. Being aggrieved, the said ZLU invoked jurisdiction of this Court through Civil Petition for Leave to Appeal No,351 of 2008. 3. In both the afore-mentioned Civil Petitions for Leave to Appeal, this Court vide Order dated 8-3- 2010 granted leave to appeal and the said Petitions were converted into Appeals i,e, Civil Appeals Nos.149 and 150 of 2010. The relevant portion of the Leave Granting Order is reproduced herein below:-- "After having heard the learned counsel on behalf of the parties at length, we feel that there are certain legal, Constitutional and factual ticklish questions which need some discussion and
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accordingly leave to appeal is granted, inter alia, on the question as to whether the process has been completed in a fair and transparent manner. .." 4. Both the aforesaid Civil Appeals involving common questions of law and fact were heard together and were allowed by this Court vide short Order dated 21-8-2013 in the following terms:-- "We have heard the learned counsel for the parties at length and have examined the pleadings/documents placed before us for ascertaining as to whether transaction between the parties i,e, the Lease for 20-years in respect of Lakhra Power Station GENCO-IV, dated 11-9-2006, followed by Power Purchase Agreement dated 15-12-2007 had been entered into in a transparent manner following the PEPRA Rules and allowing open opportunity to interested parties to participate in the competition for acquiring the said Leasehold Rights. (2) The conclusion is that the transaction noted herein above between Messrs Associated Group (AG) and the Water and Power Development Authority (WAPDA) is not sustainable being non- transparent and also suffers from irregularities, illegalities, omissions and commissions as well as violates the, relevant Rules as well as precedents set-forth by the superior Courts. (3) Therefore, while setting .Aside the transaction noted herein above, we direct the Federal Government of Pakistan to conduct an inquiry/probe to fix the civil and criminal liability upon the persons/beneficiaries, etc in accordance with the law as a result of above conclusion. ' For the reasons to be recorded later, both the appeals allowed with costs throughout." ' The detailed reasons of the above-said Order are as follows:-- 5. The brief facts necessary for adjudication of the lis at hand as gleaned from the voluminous record made available by the parties are that apparently the Coal Fired Lakhra Power Plant consisting of three (03) Generating Units of 50 MW each (total 150 MW) were set up by WAPDA in Kashmore, District Jamshoro, Province of Sindh. The said Plant i,e, Coal Fired Lakhra Power Plant apparently became operational in 1995. In February, 2002, the Lakhra Power Generation Company Limited (LPGC) was incorporated as a subsidiary of WAPDA in which the said Plant vested. 6. In the meeting held on 12-6-2001, the Task Force on Thar Coal decided that the Government of Sindh should take necessary action/steps to privatize the Lakhra Power Plant in consultation with WAPDA. Perhaps it was pursuant to the aforesaid decision that the LPGC was incorporated. On 26- 7-2003 an advertisement was issued on behalf of LPGC, inter alia, in the Daily Dawn, News and the Nation inviting applications for Pre-qualification/Expression of Interest for privatization of 150 MW Fluidized Bed Combustion Coal Fired Power Plant Lakhra near Khanote in District Jamshoro, Sindh. The salient features of the said advertisement were that a decision had been taken by the Federal Government to privatize the Lakhra Power Plant through the Sindh Privatization Commission (Commission). However, the said Power Plant required major rehabilitation for which an Internationally experienced Operator for Rehabilitation, Operation, Maintenance and Management (ROMM) was to be appointed. The offers were invited only for the Pre-qualification for appointment as a ROMM Operator. Pursuant to the aforesaid advertisement, 17 parties purchased the Information Package, 8 parties responded/submitted their Expression of Interest disclosing their experiences and financial standings. However, only two parties i,e, Messrs Muhammad Ismail and Company (Pvt.) Limited, Hyderabad and Messrs Habibullah Energy Limited, Karachi (the Appellant in Civil Appeal No,149 of 2010) submitted the Pre-qualification documents before the due date. ' It may be pertinent to mention that Messrs AG neither submitted any Expression of Interest nor any Pre-qualification documents pursuant to the afore-said advertisement. 7. The offers made pursuant to the advertisement dated 26-7-2003 were not found satisfactory and in this behalf objections were also raised by the Commission. Consequently, on 17-3-2004 the Water and Power Development Authority decided to terminate the process and to undertake an inhouse maintenance programme, so as to increase the capacity and feasibility of the said Power
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Plant. In pursuance of the aforesaid decision, the Purchase Orders, both local and international, were placed for the procurement of material for rehabilitation of the Lakhra Power Plant. 8. Messrs Rupali Polyester Limited vide letter dated 22-6-2004 expressed its interest in lease of the said Power Plant. The said request was turned down by WAPDA, thereafter, on 20-8-2005 Messrs AG apparently wrote a letter to WAPDA expressing its interest to get a lease of the said Power Plant. Pursuant to the said letter, as per the case of the Federation before us, a meeting was held in October, 2005 in the Presidency between Messrs AG and the Chief of Staff to the President, followed by a meeting with the then President on 29-11-2005. 9. In the above backdrop Messrs AG wrote a letter on 6-1-2006 to the Chairman, WAPDA which is reproduced hereunder for reference:-- "To ' Chairman WAPDA, WAPDA House, Lahore ' Sub: Lease of Lakhra Coal Fired Power Project-Presentation/Documents ' Dear Tariq Bhai, ' We appreciate your cooperation in giving us opportunity to present 3 x 50 MW Lakhra Fluidized Bed Coal Power Project assessm ent study executive summary by PIC Marubeni Energy Group tomorrow at 3 PM. However, due to the presentation scheduled tomorrow for Prime Minister in Islamabad on the same subject will request you to kindly reschedule the presentation for next week. ' Per the proper protocol we wanted to brief you about our work before meeting the Prime Minister tomorrow but you have been tied up in other meetings. Our presentation covers the detailed work that has been carried out and give you a good overview of the project. ' For your information and review please find the Plant Condition Assessment Report and a draft MOU. We look forward to meeting you. ' Thank you very much, Sincerely yours, (Sd.) Iqbal Z. Ahmed Chairman" 10. A perusal of the Memorandum of Understanding (MOU) appended with the letter dated 6-1- 2006 indicated that the lease would be for a period of 20-years and in case of privatization, Messrs AG would have the first right of refusal. In response, WAPDA vide letter dated 19-1-2006 asked Messrs AG to submit its technical and financial proposals. On 9-3-2006 the Representatives of Messrs AG met with the then Federal Minister for Water and Power and gave a presentation. 11. A meeting was convened on 22-3-2006, the Minutes whereof are available on the record wherein the then President and the Prime Minister, inter alia, took the following decision:-- "WAPDA to finalize terms and conditions for leasing Lakhra Power Plant to Associated Group within one week." 12. WAPDA addressed a letter dated 25-3-2006 to six of the Companies which had shown interest pursuant to the advertisement dated 26-7-2003 for Pre-qualification for appointment as a ROMM Operator, to submit their proposals for lease of the Lakhra Power Plant within four weeks, which time was subsequently extended up to 22-5-2006. Messrs AG did not submit any fresh proposal purportedly in view of the decision dated 22-3-2006 referred to above. In a subsequent meeting dated 12-5-2006 chaired by the then President of Pakistan, it was decided that Messrs AG should be given the first right of refusal in respect of lease of the Coal Fired Lakhra Power Plant. The said decision was communicated vide Prime Minister's Secretariat letter dated 25-5-2006. Messrs HEL, Appellant in Civil Appeal No, 149 of 2010, was the only Firm which submitted its proposal by due date i,e, 22-5-2006. Another meeting was held in the President House at Islamabad on 13-7-2006, in pursuance whereof vide letter dated 17-7-2006, both Messrs Habibullah Energy Limited and Messrs Associated Group were advised to submit their revised bids by 21-7-2006 to be opened on the same date. Such revised bids were submitted and opened. Messrs AG made two separate
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offers based on two separate proposals. One of the offers of Messrs AG after some adjustments through negotiations with WAPDA was approved by the Board of Directors of LPGC on 19-8-2006. The Government of Sindh vide letter dated 24-8-2006 conveyed its No Objection. The offer was approved by the WAPDA Board on 6-9-2006 whereupon a Lease Deed was executed in favour of Messrs AG on 11-9-2006. Pursuant thereto, we are informed that a Power Purchase Agreement dated 15-12-2007 has since been executed. 13. The grant of lease to Messrs AG was challenged variously, both by the Messrs HEL and the ZLU through two separate Constitutional Petitions filed before the learned High Court of Sindh. Both the Constitutional Petitions were dismissed by two separate judgments dated 7-5-2008 and 28-2-2008. Feeling aggrieved Messrs HEL and the ZLU invoked jurisdiction of this Court through two separate Civil Petitions for Leave to Appeals Nos.545 and 351 of 2008, which were converted into instant appeals i,e, Civil Appeals Nos.149 and 150 of 2010, respectively. 14. We, have heard the learned counsel for the parties as well as the learned Additional Attorney General for Pakistan. 15. It is contended by the learned counsel for the appellant-Messrs HEL that the advertisement dated 26-7-2003 was for inviting applications for Pre-qualification/Expression of Interest for appointment as a ROMM Operator only The said appellant was one of the two Companies which had submitted its Pre-qualification documents as is evident from the record. In the circumstances, the respondents-WAPDA/LPGC were bound to pre-qualify the appellant. Messrs AG did not even participate in the pre-qualification process and in the absence of such pre qualification it was a rank outsider whose bid could not even be considered by WAPDA/LPGC. 16. The learned counsel further contended that no specific advertisement was issued inviting bids for lease of the said Power Plant, and in absence of such an advertisement for information of public-at-large the entire process was liable to be set aside. Even otherwise, the offer submitted by Messrs AG was unsolicited, therefore, invalid. Furthermore, the bid submitted by Messrs AG contained two alternative proposals, which is not permitted in law and such bid should have been treated as non-responsive and rejected. It is added that the documents on record illustrate that Messrs AG had easy and exclusive access to the persons involved in the decision making process for grant of lease, as a consequence whereof the entire process was far from transparent. The learned counsel further added that a decision to award the Contract to Messrs AG was taken on 22-3-2006 at the highest level, whereafter with mala fide intention and by way of deception, notices were issued on 25-3-2006 to some of the Companies which had participated in the pre- qualification process for appointment of a ROMM Operator. Even then, the notices were not issued to all the parties who had shown their interest in response to the advertisement dated 26-7-2003 mentioned above. It is further added that Messrs AG was exclusively granted the first right of refusal which was not available to any other bidder. ' The learned counsel further contended that the transaction for the lease of the Lakhra Power Plant fell squarely within the purview of the Privatization Commission Ordinance, 2000 (Ordinance, 2000) and could only be effected by the said Privatization Commission in accordance with the mode of privatization prescribed in the Ordinance, 2000 and the Rules framed thereunder as in view of Section 42 of the said Ordinance, 2000, the provisions thereof would override any other law for the time being enforce. In short, it is contended that the transaction was carried out by an Institution which had no jurisdiction in a manner not provided by law. The learned counsel added that the provisions of the Public Procurement Rules, 2004 (Rules, 2004) were not adhered to especially with reference to Pre-qualification. In view of the above, it is contended that the award of the Contract to Messrs AG was not sustainable in law. 17. In support of his contentions, the learned counsel placed reliance on the judgments, reported as Wattan Party through President v. Federation of Pakistan through Cabinet Committee of
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Privatization, Islamabad and others (PLD 2006 SC 697), Petrosin Corporation (Pvt.) Limited and others v. MOL Pakistan Oil and Gas Co. And others (PLD 2008 SC 472) and Messrs Subhan Deepwell Corporation, Bahawalpur v. Project Director, Punjab Rural Water Supply and Sanitation Project HUD and PHE Department, Lahore and another (2001 CLC 1762). He also referred to the various provisions of the Rules, 2004 as well as the PCO 2000 and the Privatisation (Modes and Procedure) Rules, 2001. 18. The learned counsel for the appellant-Zonal Labour Union, Lakhra and others echoed the contentions raised on behalf of Messrs HEL and further added that the process for appointment of a ROMM Operator had been formally terminated and a specific decision in this behalf had been taken which is on the record. Therefore, grant of lease to Messrs AG was the outcome of a separate and independent procedure which had been initiated without the issuance of a public advertisement inviting offers and in the absence of such public advertisement, the entire process is illegal and invalid in view of the law laid down by this Court. He further contended that the offer of Messrs AG was unsolicited and non-responsive and the Contract had been obtained by it through unfair means and by exercise of influence on account of its connections with the decision making Authorities at the highest level which is self-evident from the record. The learned counsel further submitted that the award of the Contract was illegal and void, and should be declared as such. 19. The learned counsel for Messrs AG controverted the contentions raised on behalf of the appellants. He further contended that the mode, process and the procedure to be adopted was the prerogative of WAPDA/LPGC and Messrs AG participated in the same, hence, cannot be penalized for the irregularity, if any, in the process. He laid great stress that the offer made by Messrs AG was financially more beneficial to WAPDA/LPGC than any other offer received by them at any point of time. The offer made by Messrs AG is also in the public interest, as it would help in generating electricity at a very economical cost. 20. The learned counsel for WAPDA at the very outset stated that perhaps it would have been more appropriate to issue an advertisement, inviting bids for grant of lease of the Generating Plant, however, in the peculiar facts and circumstances which existed the most efficient and fair procedure was adopted. He further contended that three (3) Generating Units at Lakhra desperately needed rehabilitation involving a large input of fresh capital. A decision to privatize the same was taken and as a precursor to such privatization, it was decided to appoint a ROMM Operator. The response to the advertisement in this behalf was very poor and impractical. Consequently, a decision to explore alternative possibilities was made and an offer was received from Messrs AG for lease of the said Plant which also included a large investment by the lessee. All the Firms and Companies which showed any interest in the Lakhra Power Plant were invited and the offers therefrom solicited. Messrs HEL participated in the said process but the offer made by Messrs AG admittedly was more economical, hence, it was accepted after some adjustments for the benefit of WAPDA and LPGC. It is further contended that the Contract as awarded is bona fide and in the public interest, therefore, minor inconsequential irregularities cannot be made basis for invalidating the Contract awarded. It was also the case of the learned counsel, that in view of the failure to find a ROMM Operator for the Coal Fired Laldira Power Plant for the purpose of rehabilitating the same as a preclude to its eventual privatization an alternative way forward had to be found. The peculiar facts and circumstances necessitated the leasing of the Plant and in this behalf the offer of M/s. AG was accepted through a proper process. Such offer was not only economical for the WAPDA but also in the public interest, therefore, minor deviation, if any, neither adversely effect the integrity of the process nor furnished a legal basis for judicial review. It is emphasized that the offer made by Messrs AG was more attractive than any other offer received from any other party, including Messrs HEL (appellant). 21. The learned counsel was of the view that the transaction in question had been carried out in exercise of the powers conferred under section 8(2)(vii) read with the explanation to section 8(2)
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(v) of the WAPDA Act, 1958 and did not come within the purview of the Ordinance, 2000. 22. In support of his contentions, the learned counsel relied upon the judgment, reported as Dr. Akhtar Hassan Khan and others v. Federation of Pakistan and others (2012 SCMR 455). The learned counsel also disputed the locus standi and bona fide of the appellants. 23. The learned Additional Attorney General for Pakistan appearing on behalf of the Federation disowned the award of the Contract to Messrs AG. On instructions, he stated that the Federal Government is of the view that the entire leasing transaction is without lawful authority and in excess of jurisdiction. A number of irregularities and serious lapses were committed, impairing the transparency, with the sole purpose of benefiting a particular party/beneficiary at the cost of the State and the people. 24. Heard. Available record perused. 25. Adverting first to the legal objection raised by the learned counsel for WAPDA regarding the locus standi of the present appellants to invoke the constitutional jurisdiction of the learned High Court, it may be noted that such objection is with reference to Messrs ZUL (appellant in Civil Appeal No, 150 of 2010) and not with regards to Messrs HEL (appellant in Civil Appeal No,149 of 2010). Since both the Constitution Petitions from which the instant two Appeals arose had been filed to challenge the same transaction of the contract/lease granted in favour of Messrs AG for which Messrs HEL had also submitted a bid, the said A legal objection pales into insignificance and looses all relevance. Even otherwise, as has been repeatedly held the jurisdiction of the Superior Courts of Judicial Review for the enforcement of Fundamental Rights is not a "closed shop" particularly, in the context of Public Interest Litigation (PIL), therefore, the contentions of the learned counsel even on a stand alone basis with reference to Civil Appeal No,150 of 2010 are rather suspect, more so as the jurisdiction had been invoked by the workers employed in a public Asset to question the proprietary and integrity of the process of the transfer of rights in such Asset. 26. The nature, scope and extent of the power of judicial review by the superior Courts of administrative actions and the grounds on the basis whereof such actions can be set aside has evolved with the passage of time and its contours stand clearly defined especially in the context of the award of the contracts by the State or its instrumentalities. In the case, reported as Messrs Airport Support Services v. The Airport Manager, Quaid-e-Azam International Airport, Karachi and others (1998 SCMR 2268), the following was held:-- "Further a contract, carrying elements of public interest, concluded by functionaries of the State, has to be just, fair transparent, reasonable and free of any taint of mala fides, all such aspects remaining open for judicial review. The rule is founded on the premises that public functionaries, deriving authority from or under law, are obligated to act justly, fairly equitably, reasonably, without any element of discrimination and squarely within the parameters of law, as applicable in a given situation. Deviations, if of substance, can be corrected through appropriate orders under Article 199 of the Constitution. In such behalf even where a contract, pure and simple, is involved, provided always that public element presents itself and the dispute does not entail evidentiary facts of a disputed nature, redress may be provided. A number of precedents have contextually come to occupy the field and, inter alia, may be noted (1) Anjuman-e-Ahmadiya, Sargodha v. Deputy Commissioner, Sargodha, PLD. 1966 SC 639, (2) The D. F.O. South Khari v. Ram Sanehi Singh, 1971 (3) Supreme Court Cases 864-AIR 1973 SC 205; (4) Rashid A. Khan v. West Pakistan Railway Board PLD 1973 Lahore 733; (5) The Majilisi-lntizamia, Jamia Masiid, Ghulam Muhammad Abad Colony v. Secretary to Government of West Pakistan, Communication and Works Department, PLD 1975 SC 355, (6) Muhammad Ashraf Ali v. Muhammad Naseer and 2 others 1986 SCMR 1096 (7) Messrs Dwarkadas Marfatia and Sons v. Board of Trustees, Bombay Port, AIR 1989 Supreme-Court 1642; (8) M.H. Abidi v. State Life Insurance Corporation, 1990 MLD 563; (9) Mahabir Auto Stores v. Indian Oil Corporation, AIR 1990 Supreme Court 1031; (10) Shrilekha Vidyarthi v. State of U.P. AIR 1991 Supreme
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Court 537; (11) M/s Pacific Multinational (Pvt.) Ltd v. Inspector-General of Police Sindh PLD 1992 Karachi 283; (12) Messrs Presson Manufacturing Ltd. v. Secretary Ministry of Petroleum and Natural Resources and 2 others 1995 MLD 15 (Lahore) and (16) Shoaib Bilal Corporation v. Government of Pakistan KLR 1997 Rev. Cas. 27 Lahore." ' The aforesaid judgment was noted and followed by this Court in the case reported as Messrs Ramna Pipe and General Mills (Pvt.) Limited v. Messrs Sui Northern Gas Pipe Lines (Pvt.) and others (2004 SCMR 1274). 27. This Court, in the case reported as Raja Mujahid Muzaffar and others v. Federation of Pakistan and others (2012 SCMR 1651), has held as under:-- "31. Public funds, public property, licenses, jobs or any other government largesse is to be dealt with by public functionaries on behalf of and for the benefit of the people. Public authority must necessarily be examined in accordance with law keeping in view the Constitutional Rights of the citizens. Thus, this Court has not hesitated in the exercise of its jurisdiction of judicial review ...". ' In Suo Motu Case No, 13 of 2009 (PLD 2011 SC 619), this Court held as follows: "24. It is well-settled that in matters in which the Government bodies exercise their contractual powers, the principle of judicial review cannot be denied. However, in such matters, judicial review is intended to prevent arbitrariness or favouritism and it must be exercised in larger public interest. It has also been held by the Courts that in matters of judicial review the basic test is to see whether there is any infirmity in the decision making process. It is also a well-settled principle of law that since the power of judicial review is not an appeal…
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