Al Wakeelo
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Petitioner: PAKISTAN INTERNATIONAL AIRLINES CORPORATION VS Respondent: Messrs HAZIR (PVT.) JUDGMENT
Court Name: Sindh High Court Judge(s): Syed Haider Ali Pirzada, Shoukat Hussain Zubedi Title:PAKISTAN INTERNATIONAL AIRLINES CORPORATION vs Messrs HAZIR (PVT.)
JUDGMENT
Reported As: PLD 1993 Karachi 190 Result: Order accordingly Judgment JUDGMENT ' SYED HAIDER ALI PIRZADA, J.--This is an appeal under section 3 of Law Reforms Ordinance, 1972 filed by the defendant No,1 and arises out of order dated 2-6-1992 passed by a learned Single Judge of this Court on an application under Order XXXIX, Rules 1 and 2, C.P.C. Filed by the plaintiff/respondent No,1 herein. On or about 15-12-1991 the suit was filed by the plaintiff/respondent No,1 against the appellant and thendent-No,2 praying for the following reliefs:- (a) a declaration that the contract for operating Fast Food Services Shop and Burger Shop cannot be awarded by defendant No,1 to defendant No,2 without inviting tenders to the general public and any contract awarded by defendant No,1 to defendant No,2 in violation of Rule 2.1 of Methods of Procurement as laid down in P.IA. Procurement Manual, Chapter 6 is illegal, bad and of no legal effect; (b) an injunction restraining the defendant No,1 or by or through or under any officers, servants, men, departments, from awarding contract of operating Fast Food Service Shop and Burger Shop to defendant No,2 or to any other person or persons; (c) costs; (d) such' further/other/additional relief or reliefs which this Hon'ble Court may deem fit and proper in the circumstances of the case. ' It is the case of the plaintiff/respondent No,1 that he is a catering contractor working with various organizations since the year 1964. The appellant is a corporate body constituted under Pakistan International Airlines Corporation Act, 1956. The respondent No,2 is a partnerhsip firm carrying on business at P.I.A. Staff Canteens & EDH contractor, Karachi Airport. The' plaintiff/respondent No,1 is a
---
## Page 2
prcqualified catering contractor. The appellant issued a notification inviting tenders from bidders for the purpose of running Fast Food Service Shop including Burger Shop. The plaintiff/respondent No,1 was one of those who offered tender and being the lowest bidder, was the recipient of the contract for the period 16-9-1990 to 15-9-1991 which was extended for a period of 90 days from 16- 9-1991 to 15-12-1991 at the existing rates, terms and conditions vide letter dated 22-10-1991. It is the case of the plaintiff/respondent No,1 that it had/has been operating fast food services shop including burger shop under the peculiar circumstances. It is the further case of the plaintiff/respondent No,1 that the contract will end on 15th December 1991 and as per rules and procedure, new tenders have not been issued by defendant No,1/appellant and as per normal rules, defendant No,1 should negotiate with the plaintiff/respondent No,1 for extension as the plaintiff is the first contractor. It is the further case of the plaintiff that they came to know that certain vested interests have hindered these negotiations and are now manoeuvring to hand over the Burger Shop without proper procedure and tender to defendant No,2/respondent No,2 for the period of five years. As per PIA Procurement Manual, Chapter 6 the defendant No,1/appellant is bound to invite tenders from the general public to bid as the main objectives of procurement are to obtain the required stores and services on the most economical price and at the proper time. It is the further case of the plaintiff/respondent No,1 that in the instant case the cost of indented requirement is much above Rs,5;00,000.00 as will be evident from the fact that during October 4990 and August, 1991 the plaintiff/respondent No,1 was paid against its bills by the defendant No,1/appellant the various amounts the details of which are given in para. 7 of the plaint. It is alleged that as such the defendant No,1/appellant is duty bound to call tenders so as to enable the plaintiff/resplendent No,1 to participate in the tender which is its vested right as being a prequalified catering contractor, else the defendant No,1/appellant should negotiate with the plaintiff/respondent No,1 for extension of the above contract as the plaintiff/respondent No,1 being the present contractor. The plaintiff/respondent No,', has learnt that the defendant No,1/appellant will be issuing letter of indent to defendant No,2 for operating Fast Food Services Shop and Burger Shop without calling tenders and in violation of Rule 2.1 of Methods of Procurement as provided in PIA Procurement Manual, Chapter 6. It is the further case of the respondent No,1 that the award of contract in unlawful manner will jeopardize the interest of the plaintiff/respondent No, as it has made huge investment in the shape of cutleries and furniture, utensils and cooking equipments etc. The plaintiff/respondent No,1 averred that by letter dated 5-12-1991 it requested the defendant No,1 /appellant that as per rules and procedure, new tenders have not been issued and as such under normal rules the contract period be extended but the respondent No,1 received no response. It is alleged that since no tender has been issued by the defendant No,1/appellant nor any response has been given to> the said letter of the plaintiff/respondent No,1, this clearly manifests that the defendant No,1/appellant is manoeuvring to hand over the Fast Food Services Shop and Burger Shop to defendant No,2 without following the proper procedure and prescribed rules of tender. Accordingly, such suit was filed making such prayers. On the same day the plaintiff/respondent No,1 filed an application for an ad interim injunction restraining the appellant from awarding contract of operating Fast Food Services Shop and Burger Shop to defendant No,2/respondent No,2 and/or any other person as the ,defendant No,1 is threatening to oust the plaintiff and award the contract to the defcdant No,2 without calling tenders in utter disregard of Rule 2.2 of Method of Procurement as laid down in PIA Procurement Manual, Chapter 6: ' The defendant No,1 contested the application by filing counter-affidavit. The defendant No,1 contended that the suit is misconceived and not maintainable as the plaintiff has no legal right, necessary to constitute a cause of action. The , appellant contended that it is due to introducing a new completely mechanized system of Fast Food Service in place of the old Burger Shop. This necessitated the selection of contractor who could supply not only foodstuff but also provide at
---
## Page 3
own cost necessary machines for the mechanized system of Fast Food Services. A committee comprising of the Director-General Services, as Chairman, Director Stores and Purchases, General Manager (Adm. Services), Manager Office Services and Canteens, President of S.S.A. And President of A.T.A.P. Was set up to invite qualified contractors to make presentation of their cases before such committee. Out of the contractors, M/s. Seagram, defendant No,2 and the plaintiff came forward. The plaintiff fully participated and made presentation of its case, submitting due quotations. The committee considered all the three contractors and "keeping in view the past performances and eight years' experience in PIA of respondent No,2 recommended that they may be granted contract to run the Fast Food Services". The proposal for approval was put up before the Managing Director through the General Manager (Adm. Services). The proposal was finally approved on 5-12-1991 and letter dated 8-12-1991 according to the contract for running PIA Fast Food Services was issued to defendant No,2. It is urged that the contract was thus awarded on 8-12-1991 before the present suit was filed and the plaintiff was aware of the fact. By letter dated 15-12-1991 the plaintiff was informed that the PIA Management had decided to discontinue with the existing Burger Shop facility. ' The respondent No,2 asserted that there are no mala fides involved and the contract was accorded on merit. The respondent No,2 pleaded that pursuant to the aforesaid letter from the PIA, they have entered into an agreement involving the purchase of locally manufactured machinery which has also been delivered through part-payments, are still due. ' The case of the plaintiff/respondent No,1 before the learned Single Judge was as follows:-- (1) The PIA officials entertained and have manifested mala fides in the purported grant of the disputed contract involving favour to the respondent No,2 and inequitable treatment to others including the plaintiff. (2) In such exercise, rules and procedures have been thrown over-board. No tenders were invited, as was the obligation under the rules. (3) Plaintiff is being deprived of livelihood upon being discriminated against. (4) Plaintiffs performance, which was never in doubt throughout 1991 has been tempered up now and for mala fide reasons alone. (5) Denial of invitation to make offers extended. (6) It was only in routine that the plaintiff was required to submit a profit, which it did. Quotations were subsequently taken. (7) Not a single letter was addressed or issued, such conduct least benefiting a public body operating under a statute. (8) No committee was constituted that the plaintiff knows of. No hearing was accorded. (9) Every thing was done to fit defendant No,1 in a preconceived and stage-managed scheme of things. (10) According to the contract filed by defendants thems elves, the contract was to be for three years but was inexplicitly granted instead to the defendant No,2/respondent No,2 for five years. (11) As regards the expense for providing necessary machinery and equipment, the plaintiff itself, avowedly, is equally ready and willing to do the needful. ' On this basis, the learned Single Judge found that all these are arguable issues and may go to establish what technically is termed as prima facie case. ' The learned Single Judge then considered the following questions:-- (1) Whether there are any rules, binding on the PIA, which they have failed to observe and adhere to. Alternatively or in addition, whether any rules of practice have been violated? (2) Whether any mala fides have manifested themselves? (3) Whether the plaintiff has no cause of action? (4) Whether this suit is infructuous, contract in favour of the respondent No,2 having been finalized and substantially acted upon?
---
## Page 4
' Mr. Saeed A. Shaikh, learned counsel for the appellant raised the following contentions before the learned Single Judge as well as before us: (1) That the rules do in fact exist but have neither been framed by the competent authority, contemplated by Pakistan International Airlines Corporation Act, 1956 (hereinafter referred to as the Act) nor notified as is postulated under the same Statute. His contention is that these rules are not statutory rules and are neither binding nor can be given effect to. These rules, according to him, are internal instructions to be followed by the PIA management for the procurement of PIA stores and do not confer any right to entitlement on an outsider. (2) The nature of the contract was such that even in terms of the said rules, no tenders need have been called for. (3) Prequalified contractors, including the plaintiff, were considered and award was made in favour of most deserving namely the defendant No,2. ' The learned Single Judge did not determine the first question. However, he observed that if these rules have even been for internal management only, same do not lose applicability and have to be followed if not by all concerned at least by the PIA itself. He further observed as follows:-- "The P.I.A.C. Ordinance of 1955 clearly envisages rule-making powers. Some Rules have been framed (PLD 1956 Central Statutes 278) but those do not apply here. If due Regulations are wanting, who is responsible? Surely not those who come to deal with the P.IA. The Manual in question obviously is calculated to forestall arbitrariness and to provide checks and balances to ensure fair play in the conduct of affairs of a public body. In consonance, it appears to be altogether irrelevant that the regulations therein do or do not qualify under statute. If not so qualified, the only result should be that such, without express or implied consent, would not bind third parties and strangers. Yet, in so far as the PIA functionaries are concerned it would be pure equivocation to urge that the instructions do not bind them. What then are they for? Obviously, even if such are only for internal guidance and instructions it is no apology for those who are expected to draw upon them to say that they failed to implement them solely because the regulations did not qualify under statute. A degree of estoppel, since evolved, applies to such matters. Besides, law abhors unbridled power. Checks and balances are a definitive norm of all civilized conduct. They must be discovered. If not readily discoverable, they have to be evolved, if not invented." ' He further observed that according to defendant PIA itself, as regards the contracts for the Executive Dining Hall and Canteens, "binding including the plaintiff." This assumes that public tenders in such cases were not invokable and, therefore, the foregoing except its were resorted to and tenders were invited from the approved contractors. If such was normal for the Executive Dining Hall and Canteens, it is obvious that no different could have been the approach to the instant contract. In that, impliedly, no such tenders were invited there is a patent deviation from established procedure. How and why it came about is not explained. Even if the referred instructions are found to bind nobody, admittedly, there is a normal procedure and such implicitly was not followed, lending strength to the allegations that extraneous factors were involved. Whether or not that was so, shall remain a question to be examined, a circumstance in no way detracting from the arguable case, required by law to be made out from the side of the plaintiff. ' He observed that there are no minutes of any proceedings. It was a proposal of Cafe-D-Pak. He further observed that others were allowed fresh contracts but the plaintiff respondent No,1 was refused. He observed that at this stage, no conclusive finding as to mala fides and want of hearing can be arrived at. He observed that the plaintiff has a cause of action for bringing the suit. He also observed that the defendant No,2/respondent No,2, ex facie has not been able, satisfactorily, to establish that it had entered into commitments for the performance of its alleged contract prior to the filing of the suit. In that view of the matter, he came to the conclusion that "the plaintiff has established a prima facie case, balance of convenience also lies in favour of the plaintiff to
---
## Page 5
continue the existing state of things. Further, in the event interim relief is not granted, the plaintiff would be out for at least five years and thus would be exposed to irreparable loss". ' We have set out in details the arguments made before us. In our opinion, it is neither necessary nor proper at this stage to come to the final decision regarding the merits of the case. We are not hearing the suit. We are not finally deciding the rights of the parties. Further, in view of the fact that prayer of interim order has been confined only in respect of prayer (b), we are only to decide whether any interim order pending final decision in the suit should be passed restraining the appellant/defendant No,1 from awarding contract of operating Fast Food Services Shop and Burger Shop to defendant No,2/respondent No,2 or to any other person or persons. We are merely to hold at this stage whether a prima facie case for such an interim order has been made out or not and it is not for us to finally decide the rights of the parties at this stage. We are also to consider the question of balance of convenience that is whether Order XXXIX of the C.P.C. Should be invoked in this case in favour of the plaintiff or not. The equitable remedy by way of an injunction whether mandatory or interlocutory in nature is discretionary in nature and is never granted as a A matter of course. Lord Diplock's speech in the American Cyanamid Company v. Ethieon Ltd (1975) 1 All ER 504 = (1975) 2 WLR 316 = 1975 AC 396) lays down certain guidelines for the grant of interlocutory injunctions. According to these guidelines the plaintif must first satisfy the Court that there is a serious issue to decide and if the defendants were not restrained and the plaintiff won the action, damages at common law would be inadequate compensation for the plaintiffs loss. Once satisfied of these matters, the Court will then consider whether balance of convenience lies in favour of granting the injunction or not, that is, whether justice would be served by an order of injunction. The great value of the Cyanamid case lies in its treatment of interlocutory injunction as an aid to doing justice when it comes to the question whether or not to maintain the status quo until the trial, cannot be governed by rules. What should be borne in mind in addition to the test phrased by Lord Diplock, is his reminder that at this stage the Court does not and cannot judge the merits of the parties' respective cases and that any decision on justice will be ..Taken in a stage of uncertainty about the parties' rights. It would seem to follow from this C that if there is uncertainty, the Court should be doubly reluctant to issue an injunction, the effect of which is to settle the parties' rights once for all (see in this context 1984 All ER Annual Review pages 217-218). ' In order to, however, appreciate the true scope and effect of Lord Diplock's speech in Cyanamid case ((1975)1 All ER 504), it would be worthwhile to recapitulate the law as it stood prior to the decision in Cyanamid case. The House of Lords in the case of J.T. Start Ford & Sons Ltd. v. Lindley, reported in 1965 AC 26 = (1964) 2 WLR 1002 = (1964) 2 All ER 209 (CA)) laid down that in the matter of grant of an interlocutory injunction, the plaintiff had to show a strong prima facie case, that is, his rights had been infringed. He was then required to show that damages would not be an adequate remedy, if he succeeded in the trial and that the balance of convenience favoured the grant. In the case of Hubbard and another v. Vosper and another ((1972)1 All ER 1023), Lord Denning M.R. Said at page 1029 as under:-- "In considering whether to grant an interlocutory injunction, the right course for -a Judge is to look at the whole case. He must have regard not only to the strength of the claim but also to the strength of the defence, and then decide what is best to be done. Sometimes it is best to grant an injunction so as to maintain the status quo until the trial. At other times it is best not to impose a restraint on the defendant but leave him free to go ahead. For instance, in Fraser v. Evans (1969)1 All ER 8, although the plaintiff owned the copyright, we did not grant an injunction, because the defendant might have a defence of fair dealing. The remedy by interlocutory injunction is so useful that it should be kept flexible and discretionary. It must not be made the subject of strict rules." ' So, too, Megaw, LI. Said at pages 1030 and 1031 which is as follows:-
---
## Page 6
"It must be looked at on the whole of the case; the existence of the right and of any defences that are asserted in relation to the admitted existence of that right. In addition, one has to take into account the evidence of the alleged breach, the facts relating to the alleged breach, and even then there is no firm and invariable criterion which can be laid down on the basis of the prospects of success in the action because frquently one has to consider also the balance of convenience, as well as status quo. One can readily imagine a case in which the plaintiff appears to have a 75 per cent. Chance of establishing his claim, but in which the damage to the defendant from the granting of the interlocutory injunction, if the 25 per cent. Defence proved to be right, would be so great compared with the triviality of the damage to the plaintiff if he is refused the injunction, that an interlocutory injunction should be refused. To my mind it is impossible and unworkable to lay down different standards in relation to different issues which fall to be considered in an application for an interlocutory injunction. Each case must be decided on a basis of fairness, justice and common sense in relation to the whole of the issues of fact and law which are relevant to the particular case." ' Similar view has also been expressed in the case of Evans Marshall & Co. Ltd v. Verlola S.A. ((19731 All ER 992). In other words, the House of Lords held that an interlocutory injunction would not be granted unless the plaintiff could show that it was more likely than not that he would succeed in obtaining a final injunction at the trial. ' It is at this juncture, however, the precise effect of Lord Diplock's speech in Cyanamid case ought to be considered. Lord Diplock observed as follows:-- the governing principle is that the Court should first consider whether if the plaintiff were to succeed at the trial in establishing his right to a permanent injunction he would be adequately compensated by an award of damages for the loss he would have sustained as a result of the defendant's continuing to do what was sought to be enjoined between the time of the application and the time of the trial. If damages in the measure recoverable at common law would be adequate remedy and the defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted, however strong the plaintiffs claim appeared to be at that stage. If, on the other hand, damages would not provide an adequate remedy for the plaintiff in the event of his succeeding at the trial, the Court should then consider whether, on the contrary hypothesis that the defendant were to succeed at the trial in establishing his right to do that which was sought to be enjoined, he would be adequately compensated under the plaintiffs undertaking as to damages for the loss he would have sustained by being prevented from doing so between the time of the application and the time of the trial. If damages in the measure recoverable under such an undertaking would be an adequate remedy and the plaintiff would be in a financial position to pay them, there would be no reason this ground to refuse an interlocutory injunction." ' Lord Diplock, however, went on to say further:-- "It is where there is doubt as to the adequacy of the respective remedies in damages available to either party or to both, that the question of balance of convenience arises. It would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them. These will vary from case to case." ' Similar view has also been expressed by the House of Lords in the case of Dimsley & Sons Ltd v. National Union of Journalists reported as ((1984)1 All ER 751). ' It is therefore apparent that the question of damages has not really been ignored or been said to be of trifling value. In Marghub Siddiqi v. Hamid Ahmad Khan and 2 others (1974 SCMR 519), their Lordships of the Supreme Court have emphasized the need in a case for grant of temporary injunction of the consideration of the question of balance of convenience or irreparable loss and
---
## Page 7
observed that an injunction is not to be granted only on the basis that a prima facie case exists but it is incumbent upon the Cot to take into account the other questions. ' On the state of law as discussed above it is, therefore, to be seen whether the intelocutory injunction granted by the learned Single Judge ought to be set aside in the facts under consideration. ' The first submission of Mr. Saeed A. Shaikh is that PIA Rules contained in Procurment Manual are administrative instructions for the guidance of the officers of the appellant and have no statutory force. Mr. Saeed A. Shaikh placed strong reliance on the cases of G.J. Fernandex v. The State of Mysore and others (AIR 1967 SC 1753), C.K. Achutan v. The State of Kerala and others (AIR 1959 SC 490), Fawwad & Fareen Enterprise Ltd. v. Director of Industries, Government of Sindh, Karachi and others (PLD 1983 Karachi 340), S.M. Pandit and others etc. v. The State of Gujarat and others etc. (AIR 1972 SC 252), M. Muzaffar-ud-Din Industries Ltd. v. The Chief Settlement and Rehabilitation Commissioner, Lahore and another (1968 SCMR 1136), Shameer v. Board of Revenue etc. (1981 SCMR 604) and Fawwad and Freen Enterprises Ltd v. The Director of Industries, Government of Sindh, Karachi and others (PLD 1983 SC 268) to support this contention and…
Read the unabridged text and precedent citation network on Al Wakeelo Legal Research Platform.