1998 PLP 1656 (CLC)

3. In support of the petition Mr. Muhammad Yousuf Leghari raised the following contentions:‑‑‑ (i) That the petitioner's bid being admittedly the highest could not be rejected without assigning any reason. (ii) That the bid submitted by the petitioner was admittedly the highest and the contract could not be awarded to the respondent No.4 without rejecting his bid after hearing him. (iii) That after having decided to issue a public notice requiring the petitioner to deposit the security amount. The respondents could not legally award the contract to any other person without waiting till the expiry of the time granted to the petitioner for depositing the required amount. (iv) That in any case the contract was required to be re‑auctioned in terms of the public notice and the confirmation of the bid submitted by the respondent No.2 was illegally and mala fide particularly as a great deal of loss to public exchequre was caused by accepting the same. (v) That in any event the offer of the respondent No.4 which was for an amount less than the reserved price/Government rate was not liable to be accepted and such acceptance reflects mala fide.

4. Mr. Partab Rai, learned counsel for the respondent No.2 contended that the petitioner himself was a defaulter and did not furnish requisite security deposit which he was under the law required to deposit within seven days of the acceptance of his bid. He neither approached the Committee nor could be otherwise contacted and in view of his own default is not entitled to relief under the discretionary jurisdiction of this Court. With respect to the contention that the contract was awarded without following the terms of the public notice the facts were admitted but the learned counsel contended that before the time granted to the petitioner to make the deposit expired or before a fresh auction could be held the Government chose to confirm the offer of the respondent No.4 which the Town Committee was required to accept.

5. Mr. Ghulam Rasool Qureshi, learned counsel for the respondents Nos. l and 3 argued that by having failed to disburse the amount of security deposit within the time stipulated in the rules the petitioner himself defaulted and was not entitled to any relief. He nevertheless frankly conceded that he was not prepared to defend the action of the Government in dealing directly with the respondent No.4 as such course is not contemplated by the rules and that in any event he is not prepared to defend the action whereby a bid for such a low amount was accepted.

6. Mr. Jhamat Jethanand, learned counsel for the respondent undertook to bear the main burden of defending the impugned action and urged as follows:‑‑‑ (i ) That the petitioner was not a serious bidder after having made an irrational bid he disappeared from the scene and never bothered to disburse the amount of security. He was set up to damage the interest of serious octroi contractors by making an unrealistic bid. (ii) That six attempts to auction the contract had failed and only in the 7th attempt a farcical bid was made by the petitioner who thereafter, disappeared from the scene. The period during which most of the octroi was collected through sugar mill in Khoski was fast expiring and in the circumstances the Provincial Government had no option but to accept the offer made by the respondent No.4 which was reasonable and well above the original official bid/reserve price of Rs.24,00,000. (iii) That bids were required to be confirmed by the Provincial Government and the Government had the power to award the contract even otherwise than by way of public auction. (iv) That the petitioner being a defaulter himself and having not come to Court with clean hands is not entitled to discretionary relief under Article 199 of the Constitution. (v) That in any event the contract period having almost expired it is not possible to grant the relief claimed by the petitioner. (vi) That the petitioner has sought enforcement of contractual obligations which cannot be enforced under the Constitutional jurisdiction conferred by Article 199.

7. We have carefully considered the arguments addressed at the bar and examined the applicable law as well as the case‑law cited by the counsel for the parties. It is indeed correct that the petitioner upon the acceptance of his bid at the auction was required to deposit a sum equal to 5 % of the bid amount in terms of the relevant rules. Learned counsel for the respondents are correct that the petitioner failed to do so he could not claim that the contract cannot be awarded to anybody else without notice to him. The petitioner has not been able to substantiate the contention that he attempted to deposit the amount but it was not accepted.

8. The matter, however, does not end here. The respondent No.2 in their own wisdom decided to grant one more opportunity to the petitioner to deposit the amount and further decided that in the event of his failure the contract would be re‑auctioned pursuant to the aforesaid decision a public notice prepared on 26‑7‑1997 was caused to be published in the press on 4‑8‑1997. Such decision having been taken and implemented through the public notice the respondent No.2 were bound to wait till 7‑8‑1998 to enable the petitioner to make the deposit, and in the event of his failure, proceed with re‑auction on the dates specified in the notice. Having committed to act in a particular manner which was undisputedly lawful they had no authority to follow any other method of awarding the contract prior to the dates mentioned in the notice. We regret to find considerable force in Mr. Muhammad Yousuf Leghari's contention that the whole exercise was mala fide. While on one hand a notice requiring the petitioner to deposit the amount up to 7‑8‑1997 and to the public at large to participate in the re‑auction on three dates in August, 1997 was issued, on the other, the contract was awarded to the respondent No.4 on 29‑7‑1997. Moreover, it is evident from the record that the respondent No.2 had already received offer from M/s. Manjhi Khan &'Company for Rs.28,50,

000. Yet they chose to award the contract to the respondent No.4 for a lesser amount i.e., Rs.27,00,

000. Therefore, there can be no escape from the conclusion that the action was patently mala fide, whereby irrespective of the question of petitioner's right, loss was caused to the public exchequer.

9. Mr. Partab Rai, learned counsel for respondent No.2, however, contended that respondent No.2 was bound to follow the directions of the respondents Nos. l and 3 which is the controlling authority and there was no improper conduct on the part of its officers. It is necessary to examine the correct legal position as to the powers of the Government in the context of awarding and confirming contracts for collection of octroi granted by Local Councils. Section 45(1) of the Sindh Local Government Ordinance enables a Council to enter and perform all such acts and it may consider necessary or expedient in order to carry into effect the provisions and purposes of the Ordinances. Subsection (2) stipulates that contracts made by or on behalf of a Council shall be in writing expressed to be made in the name of the Council. Subsection (3) provides that subject to the rules, contracts be entered into after inviting competitive tenders or quotations. Subsection (4) reads as under:‑‑‑ "(4) All contracts for transfer by grant, sale mortgage, lease or otherwise of immovable property or any interest and right thereto or disposal or sale of immovable property or for leasing out rights to collect taxes shall, subject to the rules be entered into after inviting offers in an open auction. Provided that if the highest bid is not accepted by the council, approval in writing of Government shall be obtained, and Government shall, in its order give reasons for not accepting the highest bid: Provided further that a council may with the approval of Government enter into a contract without inviting offers in auction. "

10. It may be mentioned that the underlined portion of section 45(4) was inserted through the Sindh Local Government (Second Amendment) Act (Act II) of 1992. It is unmistakenly clear from the above that the Government has no role whatsoever if the contract is made with the highest bidder on the basis of comparative bids in an open auction. Such contract does not even need the approval of the Government. An approval would be necessary only if for some reasons the highest bid is not accepted.

11. We may mention here that the administrative guidelines relating to octroi contract, copies whereof were placed before us seem to indicate that approval is obtained in all cases. However, in view of the explicit language of the statute, we hold that such stipulation in guidelines or even in rules would be ultra vires the parent statute and of no legal effect. Accordingly we would hold that when the council finds no reason to reject the offer of the highest bidder it should straightaway award the contract without seeking Government approval.

12. Mr. Jhamat Jethanand attempted to argue that the contract was validly awarded by the Government in view of the second proviso to the abovequoted section 45(4). We regret we find his contention plainly untenable. A bare reading of the aforesaid proviso shows that it only enables the Council to enter into a contract without inviting offers but in case it chooses to do so it is required to seek the approval of the Government. In the instant case, however, the council in fact chose to enter into the contract through a public auction. On the other hand it was the officers of the Government who imposed their own will in forcing a contract upon the council. The council in fact only rendered a command performance. The Additional Chief Secretary to the Government arrogated himself powers which the law does not confer upon the Government. Admittedly even if we ignore the petitioner's case the council expected offers higher than Rs.28,50,000 and that is why it decided to re‑auction the contract. In fact somebody at the relevant time was willing to pay the aforesaid amount, yet when the respondent No.4 approached officers of the Government the said officers, without even bothering to make necessary enquiries from the council, 1 proceeded to oblige him at the expense of public exchequer. We are, therefore, clearly of the opinion that the order of the Additional Chief Secretary was not only a lawful but also mala fide. Even if ‑ the power to award such contract existed, it had to be exercised in public interest. Apparently relevant information about a higher offer available was not even sought. When the counsel decided to carry out this command performance in Violation of its own decision and did not even bring facts to the notice of the Government, causing loss to public revenues, its action was equally mala fide.

13. We find no‑ force in Mr. Partab Rai's contention that the petition is barred by laches. It has been authoritatively laid down by the Supreme Court in Pakistan Post Office v. Settlement Commissioner (1987 SCMR 1119) that the defence of laches can be taken only when certain rights have matured in favour of the respondent. Obviously no rights can be claimed on the basis of an order which is both without jurisdiction and mala fide.

14. Mr. Jethanand referred to a number of judgments in support of his contention that the petitioner's grievance was founded upon a contract and this Court does not exercise Constitutional jurisdiction for enforcement of contractual obligation. It is not necessary to refer to these judgments because we are in agreement with the aforesaid principle of law. Nevertheless, it is equally well‑settled that even in matters of contracts/public authorities must act honestly, fairly and in the public interest. This obligation is created not by a contract but is a duty ordained by law. Such duty can always be enforced through Article 199 of the Constitution. If authority is needed we may refer to the recent Supreme Court decision in the case of Shoukat Hayat v. Pakistan Railways (PLD 1997 SC 342) and two D.B. judgments of this Court in Abdullah & Co. v. Province of Sindh (1992 MLD 293) and Pacific Multinational (Pvt.) Ltd. v. Province of Sindh (PLD 1992 Karachi 292). As such we do not find any force in this contention.

15. The last question to be decided is what relief can be awarded to the petitioner. Indeed the contract period is to expire on 30‑6‑1998 this year and therefore, he cannot be put into the position of the respondent No.4. He has not claimed any monetary compensation nor is it possible for us to determine the quantum of losses that he might have sustained. We are also unable to say that whether he actually sustained any loss on account of the contract being awarded to the respondent No.4. We, therefore, confined ourselves to a declaration that the so‑called confirmation of the, offer of the respondent No.4 on the part of respondents Nos. l and 3 was patently mala fide and without jurisdiction and the consequent award of the contract in his favour by the respondent No.2 was also without lawful authority. The petitioner may approach a Civil Court for recovery of compensation if so advised. The petition is allowed in the above terms. A copy of this judgment may be sent to the Chief Secretary to Government of Sindh for initiating appropriate disciplinary action against the persons involved in the aforesaid transaction. A.A./A‑219/K Order accordingly