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Petitioner: Messrs NOORANI TRADERS, KARACHI through Managing Partner VS Respondent: PAKISTAN JUDGMENT
Court Name: Sindh High Court Judge(s): Sarmad Jalal Osmany, Faiz Muhammad Qureshi Title:Messrs NOORANI TRADERS, KARACHI through Managing Partner vs PAKISTAN
JUDGMENT
Reported As: PLD 2002 Karachi 83 Result: Case remanded Judgment JUDGMENT SARMAD JALAL OSMANY, J.---This High Court Appeal impugns the order passed by a learned Single Judge of this Court in Suit No,439 of 2001 whereby C.M.A. No,2688 of 2001 filed by the plaintiff appellant under Order 39, Rules 1 and 2, C.P.C. Was dismissed and directions were issued to the defendant/respondent to give the right of matching the highest bid as regards fresh bidding for the collection of 'Cargo throughput charges' at Quaid-e-Azam International Airport, Karachi. The brief facts as set out in the Memo. Are that the appellant had been awarded a contract for a period of three years with effect from 3-7-2000 to 2-7-2003 by the respondent for collecting Cargo throughput charges at Quaid-e-Azam International Airport. The said contract was in the nature of a licence as readily apparent from a copy of the Agreement tiled as Annexure C/2 to the appeal. During the currency of the contract, the respondent issued a letter dated 26th January, 2001 to the appellant (Annexure 'D') proposing that pursuant to a meeting held between the parties on 24th January, 2001 it had been decided that Cargo throughput charges should be collected on 2% of the Airfreight at IATA rates as opposed to collection of such charges at 2% of the Airway Bill viz. Non- IATA rates. Consequently, the comments of the appellant were invited on such proposal, the reasoning for which was that imposition of IATA rates would result in enhancement of revenue for both parties. Such proposal was responded to by the appellant vide their letter dated 20-2-2001, a copy of which has been filed as Annexure F/1 to the memo. Of appeal wherein three alternative counter-proposals were offered. It is the case of the appellant that the aforementioned letter was never replied to by the respondent in view of which again on 16-3-2001 a reminder was issued by the appellant, a copy of such reminder has been filed as Annexure F/2 to the appeal. Thereafter
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some negotiations were held between the parties which are reflected in the appellant's letter to the respondent dated 22-3-2001, a copy of which has been filed as Annexure F/3 wherein the appellant offered to increase the licence fee from Rs,5.1 million to Rs,7.1 million per month. It is the case of the appellant that without considering any of these proposals the licence agreement was unilaterally terminated vide letter dated 31-3-2001, a copy of which has been filed as Annexure 'G' to the appeal. It is the appellant's further case that the said unilateral termination was arbitrary, malicious and a colorable exercise of authority and resorted to only in order to favour another Contractor viz. M/s. Tasneem Hussain Naqvi. An example of such mala fide conduct is contained in para.4 of the appeal wherein it has been averred that the previous Contractor for Karachi Airport viz. From 3-5- 1999 to 2-5-2000 who was again M/s. Tasneem Hussain Naqvi was collecting Cargo throughput charges at the actual freight rates for which he was paying a fee of Rs,7.I million per month. However,during the currency of M/s. Naqvi's Agreement IATA rates/tariff was imposed with no corresponding escalation or enhancement of the licence fee. Similarly, it has been averred in the said para. That in July, 1999 M/s. Naqvi was collecting Cargo throughput charges from all the major Airports at actual freight rates when it was decided to revert to IATA rates and again M/s. Naqvi was not required to enhance monthly licence fee. It has also been alleged in para. 7 of the appeal that the appellant had offered to pay Rs,3.2 million as monthly licence fee for Lahore Airport which was twice that of what M/s. Naqvi was paying but the said offer was not accepted, In view of the foregoing facts and circumstances, it has been specifically pleaded by the appellant that the impugned cancellation of the licence Agreement in question is violative of section 24-A of the General Clauses Act, 1897 (hereinafter referred as the said Act), whereby when under any enactment a power to make any order or give any direction is conferred on any Authority, office or person, such power shall be exercised reasonably, fairly, justly and for the advancement of the purposes of the enactment. So also such order or direction issued by the aforementioned persons shall be accompanied with reasons for the same and a copy of the said order has also to be supplied to the person who is effected prejudicially thereto. Consequently, it has been prayed that the impugned order where injunctive relief has been refused be set aside and the respondent be directed to allow the appellant to complete contractual period as envisaged in the licence Agreement. An application being C.M.A. No,1542 of 2001 has also been filed by the appellant praying for interim relief restraining the respondent, its servants and officers from committing any breach of the licence Agreement between the parties. In the counter-affidavit to such application, the respondent's main objection is that a licensee cannot seek specific performance of a licence Agreement and to that extent also no injunction or declaration can be granted in terms of section 42 of the Specific Relief Act and hence the remedy, if any, which is available to the appellant is by way of damages alone. The respondent has fully supported the impugned order and has particularly pleaded in the counter-affidavit that the rights of the appellant are adequately catered for since it can always match the highest bid which may be received in response to the invitation for fresh tenders for Quaid-e-Azarn International Airport. As regards the application of section 24-A of the said Act, respondent's reply is that whereas a public functionary is required to act fairly, justly and reasonably, however with respect to commercial transactions he/it is to be treated like any ordinary person and the sanctity of the contract embodied in such transaction is to be upheld. As the respondent has acted fairly and justly in accordance with the terms of the licence Agreement unilaterally subscribed to by both the parties consequently, the provisions of section 24-A of the said Act would not be applicable in the circumstances of the case. In this regard it has also been denied by the respondent that any breach of the said agreement has been committed by it inasmuch as clause 6 of the Agreement provides for the unilateral
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enhancement/revision by the respondent of the licence fee. However, the respondent had acted bonafidely and reasonably by inviting suggestions from the appellant before resorting to such a measure as a result of which negotiations were held between the parties which, however, remained unfruitful and consequently. Respondent was left with no alternative but to cancel the licence Agreement and invite fresh bids. Such cancellation, per the respondent, was again in consonance with clause 8 of the Agreement since it could always to do so in the public interest which is demonstratively the case as reversion to IATA rates would result in enhancement of revenue which is definitely in the public interest as well as in the interest of the appellant. This is not a disputed question as the appellant had itself offered to increase the monthly licence fee from Rs,5.1 million to 7.1 million and then finally to Rs,8 million. In the foregoing circumstances, it has been pleaded that grant of interim relief would gravely prejudice the respondent as it would not only result in loss of revenue for the Government but delay in the tendering process whereas no inconvenience would be faced by the appellant if the relief is refused since it has been given the right to participate in the fresh tenders per the impugned order and also to match the highest bid. In support of the appeal as well as the interlocutory application, Mr.Rasheed A. Rizvi has laid great emphasis on the proposition that per section 24-A of the General Clauses Act a public servant/functionary should act reasonably, bonafidely and fairly which is not the case in the present matter. As an instance of such unreasonableness, unfairness and lack of bona fides, learned counsel has referred to the letter dated 26th January, 2001 (Annexure 'D') addressed to the appellant by the respondent proposing enhancement of licence fee in respect of which three letters were written by the appellant viz. Annexures F/1, F/2 and F/3 containing its proposals none of which had been replied to by the respondent but on the other hand the licence Agreement was unilaterally terminated vide Annexure 'G' viz. Letter dated 31st March, 2001. This course of action, per learned counsel, was inspired by the respondent's patronage of their favourite so-called 'blue- eyed contractor' M/s. Tanveer Hussian Naqvi who was their contractor at all other major Airports of the country. In this connection, learned counsel has referred to paras, 8, 9 and 13 of the plaint in Suit No,439/01 where such allegations have been made to the effect that even at Karachi Airport for the previous contract for the period from 3-5-1999 till 2-5-2000 M/s. Naqvi was the contractor at actual freight rate at a monthly fee of Rs,7,1 million. However, during the currency of that Agreement in the month of July, 1999 the respondent substituted the actual freight rates for IATA rates but no corresponding escalation was demanded as regards the licence fee. Again as a stop-gap arrangement M/s. Naqvi was allowed to collect at the actual freight rate and their licence fee was reduced from 7.1 to 5.1 million. Similarly, when M/s. Naqvi was the contractor for all the Airports at actual freight rates, on 16th July, 1999 a circular was issued converting the collection to IATA rates which was again superseded by another circular dated 24th April, 2000 reverting back to non-IATA rates. All this was done per learned counsel solely in order to benefit M/s. Naqvi. Consequently, the decision of the respondent to revert to IATA rate in the case of the appellant has, therefore, been attacked on the ground of being arbitrary, discriminatory, capricious and a mala fide and colorable exercise of power. In support of his contentions learned counsel has relied upon the cases of Messrs Pacific Multinational (Pvt.) Limited v. I.-G. Police, Sindh PLD 1992 Kar. 283; Shaukat Ali and others v. Government of Pakistan through Chairman, Ministry of Railways and others PLD 1997 SC 342 and Messrs Airport Support Services v. Airport Manager, Quaid-e-Azam International Airport, Karachi and others 1998 SCM R 2268. As regards the specific performance of a licence Agreement, learned counsel has submitted that in appropriate cases where mala fide have been alleged and prima facie established, this could be granted and in this connection he has relied upon the case of Verral v. Great Yarmouth Borough Council (1980) 1 AER 839. He has further relied upon para. 530 of
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Halsbury's Law of England (IVth Edition,Volume IX). Finally learned counsel has relied upon Shaheen Pak Container Services (Pvt.) Limited v. Trustees of the Port of Karachi PLD 2001 Kar. 30 in connection with clause 24-A of the said Act. As regards the issue of temporary injunction etc. Learned counsel has relied upon: Waqar Hussain v. NRL 1993 CLC 2497; Hanifa Bai v. Muhammad Musa PLD 1998 Kar. 234 and Balgamwala Oil Mills v. Shakarchi Trading A.G. PLD 1990 Kar.1. In reply, Mr. Mushtaq A. Memon, learned counsel for the respondent has vehemently denied that there is any discrimination or malice vis-a-vis the appellant as alleged. So also learned counsel has fully supported the impugned termination notice as being in accordance with the bargain between the parties and hence not a capricious or arbitrary exercise of power. As regards the issue of various rates on which Cargo throughput charges were being collected by the respondent's contractors learned counsel has placed on record a Note Sheet from the respondent's record dated 4th December (sic) entitled 'M-2' containing a history of the various decisions of the respondent in this respect (which was in response to our query). Learned counsel has explained that as per the Note Sheet 'M-2' pursuant to the establishment of the Civil Aviation Authority in 1984 non-IATA rates were implemented viz. Based on actual freight charges. However, in view of objections put forward by the various licensees in 1999 it was decided to impose IATA rates which were uniform and irrespective of charges specified on the Airway Bill. Consequently, a letter to this effect was issued on 16th July, 1999. In response to this letter complaints started pouring in from various quarters as to the levy of IATA rates which were in most cases higher than actual rates mentioned in the Airway Bill and a request was made to revert to the original non-IATA rates. Again responding to such complaints it was decided vide letter dated 24th April, 2000 to revert to non- IATA rates. At that time M/s. Tasneem Hussain Naqvi who was the respondent's contractor at Lahore, Islamabad, Peshawar and Quetta Airports raised an objection as his contract contemplated IATA rates and reversion to non-IATA rates would result in substantial loss of revenue to him. In fact, M/s. Naqvi filed a writ petition before the learned Lahore High Court against respondent's decision to revert to non-IATA rates which was finally disposed of on 3-11-2000 with the direction to the petitioner to approach the respondent and seek a resolution of the dispute. In response to this order passed by the Lahore High Court a meeting was held on 28-11-2000 between the parties whereby it was decided vide memo. Dated 14th December, 2000 that M/s. Tasneem Hussain Naqvi should continue to charge IATA rates whereas the rate may be negotiated with the sitting licensee at Karachi viz. Appellant since their Agreement was on a non-IATA rate. This, according to the learned counsel, was the background of the respondent's proposal to the appellant to revert to IATA rates as contained in its letter dated 26-1-2001 viz. Annexure E-1 to the appeal. As regards Annexures F/1, F/2 and F/3 to the appeal which were the appellant's response to such proposal learned counsel has submitted that all these were considered by the respondent but none of them being acceptable to them, consequently they decided to cancel the licence Agreement which prerogative they could even otherwise legally exercise in terms thereof. Learned counsel has, therefore, firmly contended that it was incorrect to suggest that M/s. Naqvi was the so-called blue-eyed contractor of the respondent particularly in view of paras.3 and 4 of the plaint itself whereby Mis. Naqvi's lower bid was rejected and the appellant's higher bid was accepted. In view of the foregoing facts and circumstances learned counsel has submitted that no instance of mala fide or discriminatory 'action has been demonstrated by the appellant which would require interference by this Court. In support of this proposition learned counsel has cited Federation of Pakistan v. Saeed Ahmed PLD 1974 SC 151. Next, learned counsel has averred to the licence Agreement itself which in plain words provides as per clause 1 thereof that the appellant is a mere licensee without any other rights viz. That of a lessee and/or that thesaid licence would not create any easement or other interest except as
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explicitly stated in the Agreement. In this connection learned counsel hascited section 52 of the Easements Act which defines a licence to be an arrangement where one person grants to another, or to a definite number of other persons, a right to do, or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful, and such right does not amount to an easement or an interest in the property. Further, per section 60 of the said Act a licence can also be revoked by the grantor unless it is coupled with a transfer of property and such transfer is in force or the licensee, acting upon the licence, has executed a work of a permanent character and incurred expenses in the execution. Finally sections 63 and 64 provide that where a licence is revoked, the licensee is only entitled for reasonable time to leave the property affected thereby and his only remedy is to recover compensation/damages where the licensee is affected without any fault of his own. In view of the foregoing provisions, learned counsel has submitted that as per the law itself and the circumstances of the case, the respondents were well within their rights to revoke the licence Agreement as no transfer of property was envisaged thereby and nor had the appellant executed any works of a permanent nature of character in the property of the respondent. In fact per learned counsel, the suit being for specific performance of the Agreement between the parties coupled with a declaration as to the plaintiff's character and legal right was not itself maintainable in terms of sections 12, 21, 42 and 56 of the Specific Relief Act. In this regard, learned counsel has referred to the case of M.A. Nasir v. Chairman, Pakistan Eastern Railways PLD 1965 SC 83; Muhammad Yaqoob v. Health Officer, MCH 1973 SCM R 184; Royal Foreign Currency v. CAA 1998 CLC 374; Zaidis' Enterprises v. CAA PLD 1999 Kar. 181 and the unreported judgment in Suit No,1060 of 1999 passed by this Court. However, learned counsel has conceded that section 60 of the Easements Act viz. Where any works of a permanent nature have been executed by the licensee or is coupled with transfer of property, a suit for declaration and injunction would be maintainable. Nevertheless, as in the present circumstances section 60 of the said Act is not applicable at all inasmuch as this has been neither pleaded by the appellant nor is evident from the facts of the matter to that extent the suit would not be maintainable. Dilating further upon this aspect of the case learned counsel has submitted that section 21 of the Specific Relief Act provides for circumstances when a contract cannot be enforced and thus as the instant contract falls squarely in the categories itemized by the said section, the suit was not maintainable, particularly as damages would be adequate relief. Learned counsel has also referred to section 42 of the Specific Relief Act which contemplates a legal character or right to property which is a precondition before a litigant could approach the Court of Law for relief. As a licence does not create any legal character or any right to property there would be no question of maintainability of a suit for enforcement of such licence barring the circumstances referred to in section 60 of the Easements Act. As regards section 24-A of the General Clauses Act, learned counsel has submitted that this only applies where any authority is empowered to make any order under any law. In the present case per learned counsel no law is involved as such since the respondent is acting as an individual body and the licence agreement was freely entered into between both the parties. Further it has been submitted that the General Clauses Act only applies where a particular law is inapplicable and since in the present case the rights and obligations in between the parties were controlled by the Easements Act, consequently section 24-A of the General Clauses Act would have no bearing in the circumstances of the case. In sum learned counsel's argument is that the rights of the respondent under the Easements Act cannot be taken away by the application of the General Clauses Act. For this proposition learned counsel has cited: Neimat Ali Gorayea v. Jaffer Abbas 1996 SCMR 827 and Syed Matloob Hussain v. Brooke Bond Pak. Ltd. 1992 SCM R 227. Learned counsel has emphasized that his arguments regarding non-applicability of section 24-A are in the alternate,
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since as already submitted by him, the appellant has failed to demonstrate any visible mala fide or arbitrary action on the respondents' part. As regards Shaukat Ali and Airport Support Services cases (supra) learned counsel has distinguished both of them on the factual aspects since there was a violation of statutory obligations which is not present in the facts of the matter. Similarly learned counsel has distinguished the case of Venal v. Great Yarmouth Borough Council (supra) on the ground that there again fundamental rights were involved viz. Holding of a public meeting in the licensed premises and consequently the rectification of such licence was struck down in the circumstances of the case. As to the law pertaining to the grant of temporary injunction learned counsel has submitted that the appellant has not been able to set up any prima facie case as no visible malicious motive have been established as far as the conduct of the respondent is concerned. Secondly as money would be adequate compensation in the circumstances, to that extent also it cannot be in the interest of justice to issue a temporary injunction and finally the balance of convenience was also not in favour of issuing such injunction since in fact it would be the respondent who would suffer if such injunction were issued as the exercise has been undertaken for the enhancement of Government Revenue which is definitely in the public interest. In support of these propositions learned counsel has cited: Data Textile Ltd. v. Karachi Stock Exchange 1999 M LD 108; Shahzadi Baber v. Hina Housing Project 1994 CLC 1601; OGDC v. Shujauddin Ahmed PLD 1970 Kar. 332 and the unreported Judgment of this Court in Suit No,1060 of 1999 and H.C.A. No,356 of 2000. In reply Mr. Rashid A. Rizvi, learned counsel for the appellant, has submitted that in para. 8 of the plaint it has been specifically pleaded thatM/s. Tasneem Hussain Naqvi was awarded the contract for collecting Cargo charges from 3-5-1999 to 2-5-2000 on non-IATA rate for Rs,7.5 million per month but during the currency of their agreement he was allowed the conversion to IATA rates without increase in the licence fee. This was in accordance with para.2 of the Internal Memo. Entitled M.2. Similarly as per Annexure E/1 of the appeal again M/s. Tasneem Hussain Naqvi was allowed to continue .From 2-5-2000 to 3-7-2000 viz. For the interim period till completion of the tender process at non-IATA rate and his fee was reduced to Rs,5.1 Million. This was again in accordance with para.4 of M.2. In the circumstances learned counsel has seriously questioned the bona fides of the respondent since when in 1999 IATA Rate were applied why did not M/s. Tasneem Hussain Naqvi enhance his licence fee and again in 2000 when non IATA Rate were implemented why was M/s. Tasneem Hussain Naqvi allowed to reduce his fee? Per the learned counsel since these allegations have been made by the appellant and not denied by the respondent at all this is sufficient evidence of mala fides and consequently in the circumstances of the case the appellant should be allowed to continue with the licence Agreement. Learned counsel has further submitted that no exception can be made as regards applicability of section 24-A of the General Clauses Act and as much is clear from the cases handed down by the Honourable Supreme Court viz. Airport Support Services' case and Shoukat Ali's case (supra). For the foregoing reasons learned counsel has prayed that the order of the learned Single Judge be set aside and this appeal be granted. With their consent we have heard learned counsel finally. And have gone through the file as well as the cases cited before us. Our conclusions are as follows with which we propose to dispose of this appeal. It would be seen that the controversy between the parties is that on the one hand, the appellant has disputed the cancellation of the Licence Agreement being an alleged arbitrary, mala fide and discriminatory exercise whereas on the other hand, the respondent has denied this claiming the right to cancel the Agreement in terms of powers derived from the Agreement itself as well as being in the public interest. The legal position regarding the rights and obligations of a licensee is
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well-settled inasmuch as a licence does not contemplate a transfer of interest in property and it is purely a permissible right which is at the behest of the grantor. This position is in contradistinction to a lease whereby there is a transfer of interest and an exclusive right to possession is granted. This would therefore mean that a licensee holds the licensed property purely at the behest of the grantor which can at any stage be revoked in which event the licensee's only namely would be a suit for damages, as specific performance or other equitable relief would not be permissible in…
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