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Petitioner: Xiamen Golden Dragon Bus Company Ltd & Another VS Respondent: Sindh Infrastructure Development Comp. Ltd & Ors
Court Name: Sindh High Court Judge(s): Syed Hassan Azhar Rizvi Title:Xiamen Golden Dragon Bus Company Ltd & Another vs Sindh
Infrastructure Development Comp. Ltd & Ors Case No.: Suit No.1995 of 2020 Date of Judgment:2021-01-28 Reported As: 2021 SHC 466 Result: Application dismissed Judgment SYED HASAN AZHAR RIZVI J. By this order I intend to dispose of following CMAs:- (1) CMA No.14426/2020 filed by the plaintif f under Order 39 Rules 1 and 2 CPC to suspend the operation of Impugned Bid Evaluation Report dated 13.11.2020 and restrain the Defendant No.1 and 2, from awarding and / or implementing the contract in favour of the defendant No.4 i.e. Zhontong Bus Holding Company Limited, China in respect of the Tender No.TS 424844, in relation to Supply of Goods and Performance of Services for the Bus Rapid Transit System of the Orange and Green Lines. (2) CMA No.14938/2020 filed by the defendant No.1 under Order 39 Rule 4 read with section 151 CPC to discharge / set-aside / modify the ex-parte ad-interim injunctive order dated 14.12.2020, passed on the injunction application of the plaintif fs. (3) CMA No.14964/2020 filed by the defendant No.4 under Order 39 Rule 4 read with Section 151 CPC to discharge / vacate / set-aside / modify / amend the ad-interim order dated 14.12.2 020 passed by this Court on the Plaintif f's application bearing CMA NO.14426/2020. 2. Vide order dated 14.12.2020 on the application of the plaintif fs bearing CMA No.14426/2020 while issuing notices, the defendants were restrained from awarding / implementing contract subject matter of this suit in favour of the Defendant No.4, till the next date of hearing. However , on 18.12.2020 on the applications under Order XXXIX Rule 4 read with Section 151 CPC filed on behalf of defendants No.1 and 4 bearing CMA No.14938/2020 and CMA No.14964/2020, the defendants were allowed to proceed further as per contract already awarded to the defendant No.4. For the sake of convenience, relevant Portion of aforementioned order is being reproduced hereunder:- "The submissions made by the learned counsel for the defendants No.1 and 4 and the documents i.e. letter dated 11.12.2020 of awarding the contract to defendant No.4 and the order of the Hon'ble Supreme Court as referred to above were not brought to the notice of this Court at the time of obtaining the injunctive order dated 14.12.2020.
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Issue notice to the plaintiff and the remai ning defendants for 11.01.2021 when this matter is already fixed. In view of the above submissions made by the learned counsel for the defendants No.1 and 4 and the directions given by the Hon'ble Supreme Court, as referred to above, the defendants are allowed to proceed further as per contract already awarded to the defendant No.4. 3. Brief facts of the case in nutshell as narrated in the plaint are that the Plaintif f No.1 is a juristic person organized under the laws of the Peoples Republic of China and having a place of business at Lahore Pakistan whereas the Plaintif f No.2 is a local agent of the plaintif f No.1. Defendant No.1 is an instrum entality of the Government of Pakistan in that the majority of its shares and the majority of the members of its Board of Directors are the nominees of the Federal Government. Defendant No.2 is responsible for the overall management of the business of the defendant No.1. Defendant No.3 is a committee formed under Rule 48(1) of the Public Procurement Rules, 2004 by the defendant No.1. Defendant No.4 is a juristic person organized under the laws of Peoples Republic of China and operating in Pakistan also. On 22 June, 2020 the defendant No.1 vide advertisement on its website sought request for proposal (the "RFP") alongwith the Instructions to Bidder ("ITB") in relation to Tender No.TS 424844, inviting bids in relation to Supply of Goods and Performance of Services for the Bus Rapid Transit System of the Orange and Green Lines (the "Project") from the respective bidders. Defendant No.1 conducted an international competitive bidding process for inviting bids under Single Stage - Two Envelop procedures. Procedure in accordance with ITB No.4.5 the bidders were required to examine the requirements of the RFP and ITBs and to submit a complete bid comprising of all the documents prescribed in ITB. ITB 13.5 reads as under:- "13.5 Any Bid not accompanied by a compliant Big Security (as exclusively determined by the Employer) shall be rejected by the Employer as non-respon sive and a Bidder shall not be allowed to submit Bid Security at a later stage" (emphasis added) 4. Pursuant to ITBs No.13.1 and 13.2, the prospective bidders were required to submit bid security in the form of Form 3 equivalent to two percent (2%) of the bid price:- "13.1 The Bidder shall furnish, as part of its Bid, a Bid Security equivalent to two (2) percent of the Supply Price (the "Bid Security"). 13.2 The Bid Security shall be an irrevocable, unconditional and an-demand bank guarantee in the form attached as Bidding Form F3, having a Minimum Credit Rating at all times, acceptable to the Employer" 5. Further , the prescribed Bidder Form 3 (form of Bank Guarantee), in turn, provided that a demand / call on the bid security is valid / honored by the guarantor if it is sent through an authenticated SWIFT instructions by the defendant No.1' s bank to the bank of the defaulting bidder:- ".... a Demand shall only be honored by us [the Guarantor]; (i) in the case of a written Demand, if it is made by and bears the signature of an authorized officer or other representative of the Employer; or (ii) in the case of a Demand transmitted through SWIFT , if it is transmitted through authenticated SWIFT instructions by the Employer 's bank (i.e. National Bank of Paksitan) (emphasis added)". 6. ITB No.13.6 specifically required the bidders to submit original bid security with the bids with the defendant No.1 and ITBs No.15.1, 15.2 and 16.2, generally , required the bidders to submit bid documents in original. ITB No.13.6 reads as follows:- "13.6 Any Bid not accompanied by a Bid Security , which is, in the sole discretion of the Employer , substantially compliant with the requirements of these Bidding Documents, shall be rejected by the Employer as non-responsive, Bidders are required to submit with their original proposals the original Bid Security . The Employer shall reject a Bid if a photocopy of original Bid Security is attached with the Technical Proposal and such Bid shall not be further examined." 7. Further , the Pre-Bid meeting was held on 07 July 2020 in response to the queries raised by the prospective bidders, including the plaintif f, the defendant No.1 extended the bid submission deadline initially to 12 August 2020 and subsequently further extended it to 20 August 2020 in terms of the advertisement. As per Pre-Bid meeting' s minutes, the defendant No.1 relaxed the condition of notarization and attestation by Pakistan Embassy / Consulate of the bid security in the case the bid security was issued outside Pakistan in response to the request of the prospective bidders. Plaintif fs and defendant No.4 submitted their respective bids with the defendant No.1. Plaintif f
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submitted its bid security in the shape of a guarantee from Bank of China Ltd., Fujian Branch, China, through original SWIFT message duly authenticated and endorsed by advising the bank namely Standard Chartered Bank, Lahore. Copy of the bid security submitted by the plaintif f is enclosed as annexures "F/1 and F/2" with the plaint. 8. The case of the plaintif f is that on 09.09.2020 the defendant No.5 vide its letter enclosed as annexure "G" with the plaint for the first time attached the original bank guarantee issued by China Construction Bank Corporation on behalf of the defendant No.4 (in the form of SWIFT instructions) and authenticated / advised the same. Case of the plaintif f as pleaded in the plaint of the plaintif f is that the original authenticate d bid security on behalf of the defendant No.4 was submitted after expiry of the extended bid submission deadline of 20 August, 2020. On 14 October 2020 the defendant No.1 declared the plaintif fs and defendant No.4 as technically responsive vide letter enclosed as annexure "H" with the plaint. On 16 October , 2020 the defendant No.1 opened the financial proposals of the bids submitted by the bidders including the plaintif f and the defendant No.4. Case of the plaintif f is that the defendant No.4 submitted photocopy of the bid security with the defendant No.1 in the form of unauthenticated SWIFT transmission. Plaintif fs by several letters communicated with the defendant No.1 protested for the submission of the photocopy with the bid and submission of original bid security after the extended bid submission deadline was violative of ITBs as well as applicable laws. Copies of the plaintif fs' letters to the defendant No.1 are enclosed as annexures "I/1 to I/3" with the plaint. Defendant No.1 responded to the plaintif fs' letters on 26 October 2020, copy thereof is enclosed as annexure "J" with the plaint. Plaintif f communicated the violations through letter dated 04 November , 2020 and 16 November , 2020 to the defendant No.6 and requested to intervene in the matter . Defendant No.6 called report / comments from the defendant No.1 in terms of Rule 16(1) of the Public Procurement Rules, 2004. Defendant No.1 on 13 November , 2020 announced / made public the Bid Evaluation Report (the Impugned Bid Evaluation Report") on the approval of the defendant No.2 and the defendant No.1 evaluated the defendant No.4' s bid as the lowest evaluated bid. Copy of Impugned Bid Evaluation Report is enclosed as annexure "M" with the plaint. On 19.11.2020 through letter plaintif f requested the defendant No.1 to confirm constitution of the defendant No.3 in terms of Rule 48(1) of the Public Procurement Rules. On 24.11.2020 the plaintif f filed a complaint with the defendant No.3. On 27.11.2020 Notification for constitution of Grievance Redressal Committee / defendant No.3 issued. On 30.11.2020 the defendant No.1 communicated the plaintif f hearing of the complaint on 03.12.2020. Plaintif f objected to the constitution of the defendant No.3 on the ground that it should not consist of the same persons i.e. members of the defendant No.2, who had already ruled against the plaintif f. On 10.12.2020 the defendant No.3 decided the complaint with the following observations:- "Finally , in view of the above arguments, GRC hereby decides that the complaint lodged by M/s. Xiamen Golden Dragon is devoid of any merit. The management is accordingly directed to conclude the procurement process under provisions of the Public Procurement Rules, 2004". 9. I have heard learned counsel for the parties and perused the material available on record coupled with case laws cited by the learned counsels with their assistance. 10. Learned counsel for the plaintif f submitted that the evaluation of the incomplete bid of the defendant No.4 by the defendant No.1 and the receipt of original authenticated bid security of the defendant No.4 after the extended bid submission deadline by the defendan ts No.1 and 2 and the impugned Bid Evaluation Report are mala fide and without jurisdiction. Per learned counsel for the plaintif f, the impugned actions and the impugned Bid Evaluation Report are palpably unjust, without lawful authority and jurisdiction, illegal, void ab-initio and violative of, inter alia, Articles 4, 10A, and 25 of the Constitutio n of Islamic Republic of Pakistan as well as violative of Rules 4, 20, 21, 28(2), 30, 31 and 38 of the Public Procurement Rules, Clauses 13.2, 13.5, 13.6, 13.10, 16.6, 18.1, 18.2 and 22.3 of ITB are unfair an non-transparent. Per learned counsel, the defendants violated even the ICC Uniform Rules for Demand Guarantees (URDG 758). Learned counsel for the plaintif f urged that the defendant No.4' s bid was not accompanied the original bid security and that the original and authenticated bid security was submitted after the extended bid submission deadline amounted to hiding of damaging information rendering the evaluation process non-transparent and unfair . Learned counsel for the plaintif f has referred to Clause 13.6 of ITB, which requires submission of original bid security by a bidder . He also placed reliance upon Clauses 18.2 and 13.5 of ITB read with Rule 28(2) of the Public Procurement Rules envisages rejection of bid by the procuring agency if not submitted
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within the prescribed bid submission deadline. Learned counsel for the plaintif f contended that the NBP provided original authenticated security to the defendant No.1 on September 9, 2020 whereas the extended submission deadline was August 20, 2020. Per learned counsel for the plaintif f, the defendant No.4's bid is liable to be rejected. Learned counsel for the plaintif f further contended that the defendant No.1 being public sector entity is failed to act fairly and justly and impugned actions of the defendant No.1 are malafide and without jurisdiction. Per learned counsel, Rule 48 of the Public Procurement Rules 2004 is beyond the scope of its parent Statute and the said rule is ultra vires and is liable to be declared as such by this Court. Per learned counsel, remedy under Rule 48 is inefficacious and illusory in nature as the same persons responsible for accepting the defendant No.4' s bid were appointed to review the plaintif f's grievanc e. Per learned counsel for the plaintif f, as no appellate forum or court has been specified or designated against its decision therefore, present suit is only appropriate remedy . Learned counsel for the plaintif f has placed reliance upon the case of Otsuka Pakistan Limited Vs. Province of Sindh 2020 MLD 185 (Sindh), Gemalto Middle East FZ-LLC Vs. FoP 2020 CLD 151 (Islamabad), M. Ayub and brothers Vs. CDA PLD 2011 Lahore 16 and Suo Moto Case No.5 of 2010 reported in PLD 2010 Supreme Court 731. 2012 CLD 1734 , 2016 PLD Sind 479, 2014 YLR 1366 , 1974 SCMR 356 and PLD 2017 Lahore 802 . 11. Learned counsel for the defendant No.1 submitted that admittedly out of all the bidders, the plaintif f secured the lowest marks in the technical evaluation and is an unsuccessful bidder . He further submits that the plaintif f has a history of supplying dangerous / defective buses and has referred the incidents that have taken place on the Peshawar BRT Project where several buses caught fire and the passengers had to be evacuated under distress. He further submitted that the Peshawar BRT Project is under NAB investigation. Learned counsel for the defendant No.1 further submitted that the plaintif f's bid is approximately PKR 25 Crores (Rupees Two Hundred Fifty millions) higher than the bid of the Lowest Evaluated Bidder i.e., the defendant No.4, who is already declared successful. Learned counsel for the defendant No.1 stated that the Bid Bond submitted by the plaintif f was not in conformity with the format prescribed by the defendant No.1. The prescribed format required a letter from the Guarantor Bank directly to the Employer (defendant No.1) whereas the plaintif f only submitted an advice from a Bank in Pakistan. Per learned counsel for the defendant No.1 the plaintif f's own bid would thus be construed as non-responsive and therefore, the case of the plaintif f must fail. Learned counsel for the defendant No.1 then argued that Ghulam Ali Khan learned counsel for the defendant No.5 / NBP was present before this Court and he confirmed at the time of his arguments that the National Bank of Pakistan received SWIFT instructions/message on 11.08.2020 from the Chinese Bank of the of the defendant No.4 the Successful Bidder . Learned counsel for the defendant No.1 urged that there is no allegation from the plaint iff of any technical or financial impropriety or financial irregularity or any allegation of corruption in the process. Hence, the case law cited by the learned counsel for the plaintif f is distinguishable and not applicable in the present case. Learned counsel for the defendant No.1 has referred to an order dated 29.12.2020 passed by the Honourable Supreme Court of Pakistan whereby the Court directed the defendant No.1 to complete and operationalize the project by June, 2021. Per learned counsel for the defendant No.1 aforesaid order was in continuation of an earlier order passed by the Honour able Supreme Court of Pakistan wherein the defendant No.1 undertook to complete entire mass transit project by March, 2021. The Honourable Supreme Court of Pakistan recorded in the orders, as referred to above, that no further time shall be granted. Per learned counsel for the defendant No.1, the defendant No.1 has executed legally binding supply contracts with the defendant No.4, it has received Performa nce Bond (amounting to 10%) from the defendant No.4, the L/C has been established with the approval of the State Bank of Pakistan and the advance payment has been released as well. Per learned counsel for the defendant No.1, the defendant No.1 acted impartially , neither nexus with the plaintif f nor with the defendant No.4/successful bidder with whom defendant No.1 has alrea dy executed binding bus supply contracts for Green and Orange Lines on 24.12.2020. Per learned counsel, the defendant No.1 has chosen a party that is technically superior to the plaintif f whose bid is cheaper by approximately 25 crore rupees (Rupees Two Hundred Fifty millions). Learned counsel for the defendant No.1 urged that defendant No.1 has wholly followed Rule 4 (Principles of Procurement) and Rule 2(1)(h) of the Public Procurement Rules, 2004. Per learned counsel for the defendant No.1, the defendant No.1 has adopted the procurement process based on the foregoing principles and more importantly the interest of the national exchequer has been fully protected. He further
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contended that as per Rule 30 of the PPRA Rules, 2004 all bids submitted to the employer were evaluated, where after in terms of Rule 31 the employer was permitted to seek clarification from the bidders that do not change the substance of the bid. In terms of Rule 34, the employer shall announce the results of the bid evaluation in the form of a report at least 10 days prior to the award of the contract. Learned counsel has referred to pre-bid meeting dated 23.07.2020 on the request of the prospective bidders, the foregoing requirement was waived in the following terms:- "Where the bid security is issued by a foreign bank outside Pakistan, then both the instrument and the issuing bank are required to meet the acceptable international credit rating (as defined in the RFP document) and where the bid security is issued via swift, then the same may be submitted (alongwith the bid) without requiring the same to be notarized, and/ or attested. 12. Learned counsel for the defendant No.1 submitted that the bid bond of the defendant No.4 as part of its financial proposal opened on 16.10.2020 was duly stamped by the guarantor bank and the text was identical to the prescribed form F3. Furthermore, the bid bond submitted by the defendant No.4 through SWIFT message clearly reflected that it was issued on 10.08.2020 and received by the NBP / defendant No.5 on 11.08.2020 as is unambiguously clear from each and every relevant document those are already placed before this Court. Learned counsel for the defendant No.1 has placed reliance upon the case of the Pakistan Gasport Vs. Sui Sourthern Gas Company Ltd (PLD 2016 Sindh 207), the case of M/s. Kuwait National Real Estate Company (Pvt)., Ltd., Vs. M/s. Educational Excellent Ltd., an another (2020 SCMR 171), the case of A.M. Construction Company (Pvt) Ltd., Vs. National Highway Authority (2017 CLD 178). 13. Learned counsel for the defendant No.4 submitted that the defendant No.4 is a leading business manufacturer hailing from China with total assets valued at RMB 12 billion and is an expert in the industry of bus manufacturing for the post 40 years. Per learned counsel, the defendant No.4 has been dedicated to the research of safety , energy saving, and new energy technolog ies of buses with more than 100 patents and has obtained more than 50 domestic and international award. It introduced advance European bus manufactur ing technology and developed a series of buses leading the Chinese bus industry by cover highway buses, public buses, tourist buses, school buses, RV, including 5.5m light buses to 18m luxury buses, 13 series and 260 models in total. Learned counsel for the defendant No.4 further submitted that the recent development and promotion of the Mass Transit System in Pakistan, the defendant No.4 has venture d into the Pakistani market to offer its expertise and quality products and has also partnered with a renowned automobile and parts manufacturers Al Haj Group of Companies. Per learned counsel, the defendant No.4 participated in the subject tender , floated by the defendant No.1 to procure supply of goods and performance of services for the Bus Rapid Transit System of Orange and Green Lines in Karachi. Per learned counsel for the defendant No.4, the defendant No.4 submitted their technical and financial proposals well before the closing date and in compliance of the defendant No.1' s instructions the defendant No.4' s financial proposal was accompanied by a Notice of the Letter of Guarantee / Standby Letter of Credit, undercover of which was a SWIFT message dated 10.08.202 0 transmitted by China Construction Bank Corporation to the defendant No.1' s designated bank i.e. national bank of Pakistan. The SWIFT message clearly establishing that a Bank Guarantee had been executed on 10.08.2020 by the defendant No.4 in favour of the defendant No.1 through China Bank for the sum of USD 600,000/- payable on sight and immediately upon receipt of the defendant No.1' s first written demand. Per learned counsel for the defendant No.4, the defendant No.4 submitted valid bid security under the terms of the ITB read with the clarification / response provided by the defendant No.1, which was applicable to all the bidding parties equally , including the plaintif f. However , after a thorough due process, the defendant No.1 has found the defendant No.4' s bid (including the Bid Security) to be responsive to the Tender and no deficiencies have been pointed out. Per learned counsel for the defendant No.4, the SWIFT message is an electronically generated mode of communication between banks and financial institutions which does not necessarily have an original or copied form. It is in an electronic form and considered to be valid document having legal recognition under the "Electronic Transaction Ordinance, 2002". Learned counsel for the defendant No.4 urged that SWIFT message transmitted by China Bank to the NBP wherein it is clearly mentioned that date of issue and execution of the Bank Guarantee is 10 August, 2020. Per learned counsel, the NBP letter dated 09th September , 2020 itself is
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not a Bank Guarantee and neither was the SWIFT message subject to NBP sending any such letter . Learned counsel for the defendant No.4 urged that even in the bid security SWIFT message date and time of the message is mentioned at the top left side as 11.08.2020 at 05:31:41 and endorsement seal of the NBP Swift Centre is of 11.08.2020. Subject SWIFT message was generated from China on 10.08.2020 to the NBP / defendant No.5. That document is enclosed alongwith letter of NBP dated September 09, 2020 as annexure "I" at page-71 1 alongwith affidavit in support of CMA No.14964/20 20. Learned counsel for the defendant No.4 contended that the plaintif f filed complaint before the defendant No.3 malafidely without having any basis . Per learned counsel for the defendant No.4, present suit has become infructuous and the cause of action is no longer alive after decision of the defendant No.3 GRC dated 1 1.10.2020 and subsequent Notification of Award of Contract dated 1 1.12.2020. 14. Learned counsel for the defendant No.5 / NBP stated that the swift message was issued and generated on 10.08.2020 in respect of the bid bond of the defendant No.4 was received to the National Bank of Pakistan / defendant No.5 on 1 1.08.2020. 15. First of all I would like to make my observation on the main and technical points of the matter . Learned counsel for the plaintif f has argued that the defendant No.1 has shown undue haste by awarding the contract to the defendant No.4 on 14.12.2020. In terms of Rule 48(2) a bidder may file a complai nt with the Grievance Redressal Committee within fifteen (15) days' time of the announcement of the evaluation report. Moreover , Rule 48(4) provides that mere filing of the complaint shall not warrant a suspension of procurement process. However , in interest of fairness and transparency , the Grievance Redressal Committee passed a stay order on filing of the complaint. Therefore, in order to…
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