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Petitioner: I. PURI TERMINALS LTD VS Respondent: PORT QASIM AUTHORITY and otherss
Court Name: Sindh High Court Judge(s): Shabbir Ahmed Title: I. PURI TERMINALS LTD vs PORT QASIM AUTHORITY and otherss Case No.: C.M.A. No,8190 in Suit No,1489 of 2001 Date of Judgment:2002-01-16 Reported As: 2003 CLD 153 Result: Application dismissed
JUDGMENT
JUDGMENT This order shall dispose of the C.M.A. No,8190 of 2001, filed by the plaintiff under Order 39, rules 1 and 2, C.P.C. Wherein it has been prayed on their behalf that till final disposal of the suit, the defendants Nos, 1 and 2 be retrained from awarding the contract to defendant No,3. The application is supported by affidavit, counter-affidavits by defendants and rejoinder/counter- affidavit by plaintiff. The averments/contentions canvassed through same would be referred as and when necessary. In order to appreciate the contentions canvassed, it is necessary to have short and swift facts leading to the filing of the application and suit, which are as follows. Under the Government of Pakistan policy of privatization and deregulation of the economy, Ports and Shipping, an important and significant sector of the economy, has been opened up to the Private Sector. In pursuance of said policy, the Port Qasim Authority, to encourage all private entrepreneurs and sponsors both Pakistanis and foreigners, interested in the Liquid Cargo Terminal at Port Qasim were invited to participate in the said project on Build, Operate and Transfer (BOT) basis and advertised inviting tender in the year 1995 and subsequently re-advertised in the year 1996-97, which remained unresponded. The project was re-advertised in the press on 7-6-1998 and its validity period was subsequently extended up to 15-9-1998. The plaintiff, who is engaged in the business of, inter alia, construction and operation of liquid and re-qualified storage submitted the bid, which was duly approved after scrutinizing by the relevant authorities. Letter of Intent (LOI), dated 5-11-1999 was issued by defendant No,2 (the Port Qasim Authority). In pursuance of Letter of Intent, the implementation agreement was executed by the plaintiff, but for the reasons known to defendant No,2, they did not execute the said implementation agreement. Instead defendant No,2
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once again vide public notice, dated 5-6-2000 re-invited bids for construction of liquid cargo terminal on Build, Operate and Transfer basis. The plaintiff without prejudice to its right, as an abundant precaution, vide its letter, dated 8-8-2000 requested the defendant No, 2 to issue tender documents to enable the plaintiff to submit bid documents. Defendant No,2 for ulterior and mala fide reasons did not issue the tender documents to the plaintiff and after exchange of legal notice, the same was issued to plaintiff on 30-11-2000. It is also the case of the plaintiff that re-invitation of tenders/proposals was mala fidely extended by defendant No,2 from time to time, without assigning any reason and finally vide Public Notice, dated 12-12-2000 of daily Dawn, time for submission of proposal was extended up to 17-1-2001, only to accommodate the defendant No,3, who was incorporated on/or after 17-1-2001, for the reason that Chief Executive of defendant No,3, namely, Muhammad Bashir Jan Muhammad is also on the Board of defendant No,2 and the dates for submission of bids were extended from time to time to accommodate the defendant No,3 to participate in the bidding, which was then being incorporated. A pre-bid conference was held by defendant No,2 on 10-8-2000 where several participants were present, the defendant No,3 were not present and NESPAK (The consultant of defendant No,2) explained that there were no fixed/written criteria for evaluation and selection/acceptance of proposal. However, three factors will be considered as major factor while carrying out evaluation of the bids, which were:--- (i) The suitability of technical proposal (Best technical proposal). (ii) Tariff structure and parameters of financial model (Best financial proposal). (iii) Royalty offered to PQA. It is the case of the plaintiff that plaintiff submitted bid documents on 17-1-2001, which were opened by defendant No,2 alongwith the bid documents of defendant No,3. The main features of the bids of both were as follows:-- S. No.Name of ParticipantsCost of Project (USS)Tariff (USS)Royalty (USS) 1. I Puri Terminals Ltd.13.5 Million 2.36 per MT3.75% of Revenue 2. FWQ ENT (Pvt.) Ltd.12.5 Million 2.59 per MT2.75% of Revenue It is the case of the plaintiff that its bid was, prima facie, much better than of defendant No,3 but both the bids were referred for detailed evaluation to NESPAK, the consultants of defendant No,2. It is the case of the plaintiffs that. NESPAK, the consultant of defendant No,2 after evaluation, recommended defendant No,2, to consider the bid of the plaintiff and negotiate with the plaintiff as to the financial parameters vis-a-vis the revised rates of Tariff and royalty submitted subsequently by defendant No,3. Though there was no term in tender documents for revision of bids. The defendant No,2 have not approved the plaintiff's bid for ulterior and mala fide reasons. The case of the plaintiff was that entire process of evaluation of the bids by defendant No,2 was mala fide and non-transparent inasmuch as Bashir Jan Muhammad, the Chief Executive of defendant No,3 was also on the Board of defendant No,2 and was in a position to influence the decision of defendant No,2 and the other members of the Board to appease Bashir Jan Muhammad have acted unfairly, arbitrarily and mala fidely in the process of evaluation of contract. Defendant No,2 in a clandestine manner placed the revised bids for evaluation without giving an opportunity of the same to the plaintiff. The defendant No,2 has deliberately and contrary to the recommendation of NESPAK maneouvred unscrupulously and eventually to award the contract to defendant No,3. During the final presentation held on 16-10-2001 to the defendant No,2, it became crystal clear by the attitude of the officers of defendant No,2 that they were not even interested to hear the final presentation as being made by the plaintiff and defendant No,2 was bent upon to deprive the plaintiff of its legal
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right for award of contract. The defendant No,2 being a Government Controlled Organization is bound to protect the financial interest. Thus the suit with the following prayer:-- (i) Declare that the bids submitted by the plaintiff were the best and therefore, defendants Nos,1 and 2 are specifically liable to award of the contract to the plaintiff as invited by the defendant No,2. (ii) Declare that defendant No,2 has acted arbitrarily, unfairly and illegally and the procedure adopted by defendant No,2 in evaluating the bids and in particular the revised bids of defendant No,3 was not fair, equitable and transparent. (iii) Permanently restrain defendants Nos,1 and 2 from awarding the contract to defendant No,3 on the basis of the revised bids submitted by defendant No,3. (iv) Grant mandatory injunction directing defendants Nos,1 and 2 to award contract in a fair, equitable and transparent manner on the basis of original bids submitted by the parties. (v) Grant mandatory injunction directing defendants Nos,1 and 2 to do all further and necessary acts so as to enable the plaintiff to revise its bid submitted by defendant No,3 and/or in the alternative to re-invite the tenders afresh. (vi) Grant mandatory injunction directing the defendants Nos,1 and 2 to give cogent reasons for not awarding contract to the plaintiff in terms of Letter of Intent, dated 5-11-1999 issued in favour of the plaintiff. (vii) In the alternative, if this Hon'ble Court comes to the conclusion that the contract cannot be specifically awarded to the plaintiff for any lawful reason then to grant cost, compensation and damages amount to Rs,1,500,000,000 to the plaintiff against defendants Nos,1 and 2 jointly and severally. (vii) Grant costs of the suit; and (ix) Grant any other or better relief(s), which this Hon'ble Court deems fit and proper in favour of the plaintiff. The application has been contested by defendants Nos,2 and 3 by filing separate counter- affidavits. The defendant No,2 have admitted inviting tender as maintained by the plaintiff as well as letter of intent in favour of the plaintiff but maintained that such proposal was subject to approval of the Government of Pakistan. In terms of para.13 of the Letter of Intent. This stood terminated in March, 2000. The proposal was not approved by the Government of Pakistan and bid was re-invited under directive of the Government. They have denied the allegation of ulterior motives and mala fide for delay in issuance of guidelines and pleaded that guidelines (booklet) was not issued immediately as Mr. Puri's case had gone to NAB. They have admitted that Muhammad Bashir Jan Muhammad is member of the Board of the defendantsauthority but did not participate in the meeting when the said contract was evaluated on merits. The plaintiffs proposal was conditional and plaintiff made no firm commitment regarding investment of funds, who has no experience in the field. Extension was allowed at the request of the plaintiff and other prospective biddeRs, They have also denied the allegation that the defendant No,3 has not participated in the pre-bid meeting and maintained that the guideline was purchased in the name Mapak but later made a new company and became directors and sponsors of defendant No,3. The technical and financial proposals of plaintiff were definitely not best proposal. The consultant had pointed out deficiencies. Defendant had given detailed guidelines which mention the important and relevant factors like experience, funding, etc. They have maintained that there was no need to seek clarification regarding tariff and royalty from any of the parties. Certain other technical clarifications were sought from the plaintiff and competitor. NESPAK did not recommend the plaintiff. In fact they pointed out serious deficiencies of plaintiff. However, the NESPAK suggested that plaintiff may give revised part of bid if defendant No,3 was to be entertained. The defendant authority, however, has not accepted revised part of the defendant No,3 bid and that was not the
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basis of evaluation and thus is irrelevant. The relevant factors were whether bids are conditional or unconditional, experience of the party and firm commitment of funds/investment. None of the factors weighed in favour of the plaintiff who in fact made futuristic uncertain plans to raise money from public through Stock Exchange and not invest its own ready money. The plaintiff has made deliberately false statement in the plaint regarding in operation of terminal and jetty. The Construction of Port Terminal and its operation is highly specialized job. The construction work on the project needs to be started as early as possible to support and boost the edible oil industry in Pakistan. The plaintiff will not suffer any loss. The balance of convenience is in favour of defendant No,2. The claim of injunction cannot be granted as plaintiff itself has made money assessment in prayer clause of its imagined loss seeking specific amount thus negating irreparable loss and need for injunction. The carrying out of public works and particularly construction cannot be stopped by injunction. The plaintiff has no experience at all in the subject field. Grant of application of plaintiff will seriously prejudice the interest of the Authority, public and the Government and delay in economic regeneration activity and subsequently result in rise in costs of project. The defendant No,3 through affidavit of Muhammad Meher Alam has controverted the plea taken by the plaintiff and maintained that the plaintiff is operating storage terminal but they intend to convey the impression as if they are operating Liquid Cargo Terminal (or Jetty/Berth), which is the subject of the tender in question. This appeals to have been necessitated by them in order to prove that, contrary to the factual position., one they fulfil of the paramount conditions under clause 4.2.15 of the guidelines, which stipulates:- The project sponsors must have experience in the design construction, operation and management of Jetty and Terminal handling liquid cargoes. The defendant No,3 is the only party, who fulfils the terms and conditions and stipulations of the tender in question, inter alia, following stipulations:--- (A) The condition of experience (as Sponsors of defendant No,3 FELDA Group of Companies of Malaysia own and operate jetties and terminals at Pasar Gudang Johor, Malaysia and Sabah, East Malaysia). (B) The status of their bid is clean and unconditional, as against the plaintiff's bid which has various conditions and re-openers, rendering their bid rejectable under general norms of tendering. (C) Financial strength, having 60% of project cost as equity guaranteed from sponsors sources, as against plaintiffs 40% equity with no guarantee as it is intended to be raised from Stock Exchange/Bank loans, etc. (D) 40% portion of the Project cost to be met out from bank loan, duly substantiated by commitment letters of the bank whereas the plaintiff have failed to provide such commitment letter-this being one of the conditions of the tender terms. The bidders have no right and/or authority to question the wisdom of the defendants Nos,1 and 2 inviting fresh tenders/bids/offeRs, One of the reasons that defendants Nos,1 and 2 did not find it appropriate to award or to sign agreement with the plaintiff is attributable to the fact of reported investigations that were being undertaken by the authorities for certain irregularities committed by the plaintiff which ultimately resulted in re-invitation of the bids. They have also denied that defendant No,3 were not represented in pre-bid conference, their case was that representative of defendant No,3 (4 Malaysian Nationals) Joint Venture Partners in defendant No,3 and 3 representatives of local sister concern-Mapak Edible Oils (Pvt.) Limited) were present in pre-bid Conference. The basic parameters/criteria for selection/acceptance of proposal also included certain conditions of the bidding like factors of "experience" and the best financial proposal (and financial strength) of the biddeRs, Mere submitting of bids does not constitute a right to a contract. The authorities having evaluated bids of the parties have to take the decision on long term basis taken into consideration various factors pertaining to the business involved including the integrity
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and status of the parties of the bidding. They have disputed the comparison made by the plaintiff on the basis of throughput, the estimated income of defendant No,2 in shape of Royalty and Port Dues is much higher over Rs,29 Million under the proposal of defendant No,3 than the proposal of plaintiff, who have also admitted that the throughput is higher than their figures. There is no compulsion for revision of the tariff and/or royalty. The discretion exercised by the defendants is not personal but of the nation requiring minute and strenuous application of mind, wisdom, knowledge. In rejoinders the allegations/pleas raised through counter-affidavits were controverted. I have heard Mr. Tufail H. Ebrahim, learned counsel for the plaintiff and Messrs Muhammad Arif Khan and Ghulam Muhammad Ebrahim, learned counsel for the defendants Nos,2 and 3 respectively. Learned counsel for the plaintiff has canvassed the following points in support of the application:--- (1) That the defendant No,2 delayed the issuance of guideline to the plaintiff and their action of re- invitation, its extension of time from time to time was only to accommodate the defendant No,3, thus mala fide act of the defendant No,2. (2) In pre-bid conference held by the authority on 8-10-2000, the defendant No,3 was not even present in the said conference. (3) The defendant No,3 was allowed to revise its proposal whereas, the plaintiff was not given opportunity thus discriminated. (4) The plaintiff was given bias treatment as the Chief Executive of defendant No,3 was member of the Board of defendant No,2. Thus defendant No,2 in order to appease its member, namely, Muhammad Bashir Jan Muhammad have acted unfairly, arbitrarily and mala fidely in the process of evaluation of the contract. Before considering the respective contentions, it would be advantageous to refer the case-law, on Court's power of judicial review in respect of the matter involving award of contract/tender by Government or its owned or controlled authority or entity. Broadly speaking the principles are that the Government shall act fairly, reasonably, justly and not arbitrarily and in a discriminatory manner. The entire process of tendering and a subsequent award should also be transparent, fair and reasonable. In Pacific Multinational (Pvt.) Ltd. v. I.-G. Police (PLD 1992 Karachi 283), a Division Bench of this Court accepted the proposition that the State has a Constitutional obligation to act fairly even when performing administrative functions; when a party complains to the Court that the State while awarding a contract to a party had acted in an unfair or arbitrary manner or had discriminated against one of the parties, who contested for the award of the contract such grievance could be judicially reviewed and the Court could strike down such action, which was found to be unfair or arbitrary or discriminatory. Dadabhoy Investment (Pvt.) Ltd. v. Federation of Pakistan (PLD 1995 Karachi 33) is also relevant to this subject. The petitioners were the highest bidders and they were subsequently asked to raise the bid to the maximum reserved price. Once that was done by the petitioners, their bid was cancelled without assigning any reason. It was held that Government had the discretion to accept or reject the bid however, that discretion could only be exercised fairly, justly, reasonably and honestly. The petition could not be rejected without assigning any reason. The rejection of petitioner's bid without assigning any reason was struck down and the direction to the Government not to auction the subject property except to the petitioner: In Port Services (Pvt.) Ltd. v. Federation of Pakistan (PLD 1995 Karachi 374), another Division Bench of this Court has held that though. The Court would be reluctant to substitute its discretion with that of the authority, however, such discretion could not be exercised in an arbitrary unjust and unreasonable manner. Arif Builders and Developers v. Government of Pakistan (PLD 1997 Karachi 627) is another important decision in which a learned Single Judge of this Court has held that the Government would not have unfettered powers to deal with its properties or to award
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contracts, licences or other benefits and unlike other private individuals it could not arbitrarily pick and choose persons for bestowing favours Government action should be based on reasonable and rational procedure, which was nondiscriminatory and aimed at, on one hand to provide equal opportunity to eligible persons and of the other to avoid loss to exchequer, discretion vested in the State functionaries must be exercised judiciously not arbitrarily and should be based on sound principles of justice and fairness. In Balochistan Construction Company v. Port Qasim Authority (2001 CLC 1412), a Division Bench of this Court after following the above judgment allowed the petition and the petitioner was allowed time to file further documents or material with the respondent to establish that it complies the four requirements mentioned by the respondent. In case the respondent finds the petitioner to be eligible, it may permit the petitioner to participate in the tender and further process the tender without delay, strictly in accordance with law, fairly, justly, reasonably and without fear or favour. In Petrosin Products Pakistan (Pvt.) Ltd., Islamabad v. Federation of Pakistan (2001 YLR 2716), the Division Bench of Lahore High Court observed that it is also true that no vested right accrues to a person whose bid is not approved. The bids are usually rejected when they do not represent adequate market considerations for the State largess. However, while doing so, the Government has to act fairly and not arbitrarily. And where the Government acts arbitrarily, the cause of action arises. Reliance was palced on (i) Shir Harminder Singh Arora v. Union of India and others (AIR 1986 SC 1527), (ii) Javed Hotel Ltd. v. CDA (PLD 1994 Lahore 315), it was further observed that the Branch of the Government has to perform the judicial function i,e, the Courts have also to ensure that the discretion which is vesting in the Executive Branch of the Government was exercised fairly and not arbitrarily and wherever the discretion by the Executive Branch of the Government smacks of arbitrariness, discrimination or unfairness, a need arises for judicial review of administrative actions. The discretion should fulfil the following requirements (1) open plans; (ii) open policy statement, (iii) open rules; (iv) open finding; (v) open reasons; (vi) open precedent and fair informal procedure. In Pak Shaheen Container Services (Pvt.) Ltd. v. Trustees of Port of Karachi and others (PLD 2001 Karachi 30), after reviewing the case-law, the learned Single Judge of this Court summarized the duties of the administrative organ of the State and its functionaries as follows:-- (i) It is duty of the State which includes a Department of the Government or a Statutory Corporation to act fairly even while performing an administrative function. (ii) The functionary must not act in the unfair, arbitrary or in discriminatory manner while awarding contract to one party or the other. (iii) In a civilized country and specially in a democratic society a public functionary cannot lay down arbitrary and capricious standards for the choice of persons with whom alone it will deal. (iv) The discretionary power of the Government/ Department in the matter of grant of jobs, contracts, quotas, licences, etc. Must be based upon rational, relevant, reasonable and non- discriminatory standards and norms. (v) In case the Government/Department/Statutory Body acts arbitrarily, discriminately, with malice or in an unfair and unreasonable manner, the superior Cc arts would have the power to interfere, strike down the action and rectify the impropriety unless it is established that the departure from the standard or norm was not arbitrary but was based upon valid reasons acceptable in and by civilized democratic societies. I may point out that the position in Indian Jurisdiction is somewhat similar. The Supreme Court of India in Ramana Dayaram Shetty v. International Airport Authority of India (AIR 1979 SC 1628) has observed as follows:--- "It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or
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guaranteeing other forms of largess, the Government cannot act arbitrarily at its sweet will and like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norm, which is not arbitrary, irrational or irrelevant. The discretion of the Government in the matter of grant of largess including award of jobs, contracts, quotas, licences, etc., must be confined and structured by rational, relevant and non-discriminatory standard or norm and if the Government deviates from such standard or norm in any particular case or cases, the action of the Government would be liable to be struck down unless it can be shown by the Government that the departure was not arbitrary but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory." In Sterling Computers (Pvt.) Ltd. v. M & N Publication (Pvt.) Ltd. (AIR 1996 SC 51), the Indian Supreme Court while dilating upon the powers of judicial review in this area observed that the Court is primarily concerned with any infirmity in the decision-making process and that by way of judicial review the Court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State as the Court has inherent limitation on the scope of such enquiry, but at the same time the Court can examine whether the decision-making process was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution, guaranteeing fundamental rights and further observed as follows:-- "If the contract has been entered into without ignoring the procedure, which can be said to be basic in nature and after objective consideration of different options available taking into account the interest of the State and the public, then the Court cannot act as an appellate authority by substituting its opinion in respect…
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