1992 PLP 1519 (CLC)

Asad Ullah Siddiqui and Ch. Hamid‑ud‑Din for Respondent No.4. Maqbool Elahi Malik A.‑G. with Muhammad Rafi Siddiqui on Courts Call. Date of hearing: 20th July, 1991. This petition under Article 199 of the Constitution of the Islamic Republic of Pakistan, 1973, has been filed by Muhammad Ajmal petitioner, who claims to be the highest bidder in an auction held on 30th April, 1991, for leasing out the rights to collect export tax from the area falling within the jurisdiction of District Council, Jhang. According to the petitioner, this bid was accepted by the Chairman, Zila Council, Jhang (respondent No.2), in pursuance whereof he deposited the requisite amount, but respondent No.2, instead of honouring the agreement with the petitioner has awarded the contract to respondent No.4 without any lawful justification.

2. In the written statement filed by respondents Nos.l and 2, the facts of the petitioner's participation in the auction and his being the highest bidder have not been denied or disputed, but it has been vehemently asserted that the auction in favour of the petitioner was not confirmed but was rejected by the Chairman, whereafter the subsequent auction was held on 8th of May, 1991, in which respondent No.4 was the highest bidder at Rs.1,20,05,

000. This auction was approved by the Chairman, Zila Council, in pursuance whereof an agreement was executed between Zila Council and respondent No.4; who is, as such, entitled to run the contract. It is asserted that the documents filed with this petition showing that the auction in favour of the petitioner had been confirmed, are false and fabricated. It is contended that since the claim of the petitioner is based on forged and fabricated documents, he was not entitled to any relief in the discretionary jurisdiction of this Court. The last preliminary objection raised was that the disputed questions of fact cannot be resolved in the present proceedings.

3. It is to be noted that on 9‑6‑1991 Mr. Munir Ahmad Bhatti, Advocate, learned counsel for respondents Nos.l to 3, made a statement that his clients had no objection if the lease rights were ordered to be re‑auctioned. The learned Advocate‑General has also taken up the same position. This arrangement was, however, not accepted by respondent No.4, whose learned counsel stated that valuable rights in favour of respondent No.4 had been created on account of the acceptance of the bid, payment of the instalments and execution of the contract and he could not be deprived of these rights.

4. Qazi Mohy‑ud‑Din Khan, Advocate, learned counsel for the petitioner, apart from reiterating that the petitioner was the highest bidder, has argued that in law the power to accept or reject the bid vests in the Local Council and not the Chairman and as the bid of the petitioner was never put before the Zila Council, its rejection by the Chairman is meaningless and has no legal effect and consequently the rights could not have been reauctioned. (Reliance in this behalf has been placed on the Punjab Zila Council (Export Tax) Rules, 1990). Learned counsel next argued that the auction alleged to have been held on 8th May, 1991 is, in any case, illegal as it was without any prior notice, as required by the Punjab Local Councils (Lease) Rules, 1990, particularly Rule 4 whereof which provides that in case of re‑auction a notice of not less than fifteen days shall be given. The learned counsel emphasised that in the public notice issued on 26th April, 1991, although it was provided that if the auction could not be held on 30th April 1991, it shall be held on 6th of May and 8th of May, 1991; but as admittedly an auction was held on the 30th of April 1991, subsequent auctions could not have taken place., It was also urged that the second auction was not only violative of the Rules, but a sham transaction and was collusive and fraudulent. So far as the contract executed between respondents Nos.l and 4 was concerned, the learned counsel pointed out that it was violative of section 39 of the Punjab Local Government Ordinance, 1979 and the Punjab Local Council (Contract) Rules, 1980, according to which the Chairman can execute the contract the value of which does not exceed rupees three lacs.

5. In reply, Mr. M. Asadullah Siddiqui, Advocate, learned counsel representing respondent No.4, objected to the maintainability of the petition on the ground that the rights flowing out of a contract cannot be made the subject‑matter of a Constitutional Petition and further that the petitioner has equally efficacious remedy available in form of reference of the dispute to arbitration of the Commissioner, as provided in the terms and conditions of auction. It is also objected that so far as the second auction was concerned, the petitioner was merely a prospective bidder and had no locus standi to file the petition. Reliance was placed on Anjuman Araian v. Abdul Rashid and 5 others PLD 1973 Lah. 500 and Syed Muhammad v. Settlement and Rehabilitation Commissioner 1976 SCMR

61. As regards the power of the Chairman to approve the auction, the learned counsel contended that the power vesting in the Zila Council had been delegated to the Chairman by Resolution No.2 dated 7th of June, 1990. Mr. Siddiqui was of the view that in the presence of specific rules on the subject, namely, Punjab Zila Council (Export Tax) Rules, 1991, the Punjab Local Councils Lease) Rules, 1990 have no application, and as Rule 16(6) authorizes the Zila Council to auction the lease rights on such terms and conditions as it may think fit, the notice published on 26th of April, 1991 was sufficient and no separate notice was required for the auction held on 8th of June, 1991. It was emphasised that under the rules it is only the bid which has been accepted which has to be placed before the Zila Council and not a bid which has been rejected, and as such the bid of the petitioner was not required to be placed before the Zila Council.

6. In reply, the learned counsel for the petitioner has taken up the position that the Chairman in collusion with his officers has changed the entire record and the documents filed by the petitioner were genuine while the record produced by the respondents has been forged and fabricated. The learned counsel has emphasised that the petitioner has deposited the entire money due under the auction, which shows that the transaction was bona fide and the bid of the petitioner had been confirmed.

7. As already noticed, respondents 1 and 2 as also the learned Advocate General, Punjab, have taken up the position that the rights of lease may be ordered to be re‑auctioned. The learned counsel for the petitioner had also made such a statement. The petition has, however, been contested by respondent No.4.

8. As is obvious from the facts noted above, there is a serious factual controversy between the parties as to whether or not the bid of the petitioner was approved/confirmed by the Chairman. Both the parties have filed documents supporting their versions. However, it is not possible to resolve these disputed questions in the exercise of Constitutional jurisdiction. The case shall, therefore, proceed on the assumption that the bid in favour of the petitioner had not been approved by the Chairman and only the facts which are not in dispute shall be taken notice of.

9. The admitted position is that in pursuance of the public notice published on 26th of April, 1991 the auction of the rights to collect export tax was held on 30th of April, 1991, in which the petitioner gave the highest bid of Rs.1,10,05,

000. It is conceded in the written statement filed by respondents 1 and 2 that the auction .committee comprising three members had recommended that this auction be confirmed. It is also not disputed that no separate notice for the auction held on 28th of May, 1991 was issued. In that auction, according to the respondents, the bid of respondent No.4 was the highest, which was subsequently approved by the Chairman, in pursuance whereof an agreement was entered into between respondents Nos.l and 4 under the signatures of the Chairman.

10. Having taken notice of the admitted fact as given above, now the preliminary objections raised by the respondents as to the maintainability of this petition may be adverted to. The first objection is as regards the locus standi of the petitioner to file this petition. This objection has little merit in it. Admittedly, .the petitioner was the highest bidder in the auction held on 30th of April, 1991 and was, therefore, certainly entitled to have this bid put Up fort' confirmation before the competent authority. The petitioner has also objected to the second auction which allegedly took place on 8th of May 1991 and one of the grievance is that it was without any notice. That being so, the dictum of the Supreme Court in Arsalla Khan v. Bashir Ahmad Blour (PLD 1976 SC 581) holding that a person bidding at an auction for collection of octroi duty complaining of having received no notice of auction is an aggrieved person within the meaning of Article 199 of the Constitution and, therefore, his locus standi to file Constitutional petition, becomes fully attracted to the resent case.

11. The second objection of the learned counsel for the respondents that contractual rights cannot be enforced by a Constitutional petition is also without any merit. The petitioner in the present case is not seeking enforcement of a contract simpliciter, but has challenged the impugned C actions of respondent No.l as being without lawful authority being violative of the Punjab Local Government Ordinance, 1979 and the statutory rules framed thereunder. A similar contention was raised in Arsalla Khan's case (supra), but was repelled in the following words:‑‑ "Mr. Zafar was conscious that the appellant's case against this part of the impugned order was on a much weaker footing than the challenge to the direction for the rejection of the first respondent's bid. Learned counsel, therefore, submitted that as the first respondent's claim arose out of a breach of contract, the High Court had erred in holding that his writ petition was maintainable. In support of this submission learned counsel relied on this Court's judgments in Meraj Din v. Noor Muhammad and others, in Munshi Muhammad and another v. Faizanul Haq and another and in Babu Parvez Qureshi v. Settlement Commissioner, Multan & Bahawalpur Divisions, Multan and others. But the High Court had allowed the writ on the ground that the first respondent had relied on the breach of a statutory provision namely sub‑rule (1) of rule 225 and had also challenged the Government's order inter alia on the ground that it was ultra vires of sections 61, 62 and 63 of the said Ordinance. The question whether sub‑rule (1) of rule 225 is in force is not free from doubt, but in any case, the direction to lease the octroi rights to the appellant was a breach of a statutory provision, and as the first respondent's claim that this bid at auctions for octroi rights has not been challenged he was an aggrieved person within the meaning of Article 199 of the Constitution."

12. This brings me to the question as to whether the petitioner, in the circumstances of the case, can be said to have another, adequate remedy available to him in the form of reference to the Commissioner for arbitration. It is correct that clause 21 of the terms and conditions of the auction provides that in the event of any dispute between the parties the matter shall be referred to the Commissioner, but the applicability of this clause to the dispute in this petition is highly doubtful. On a true reading of the relevant clause, it appears that the disputes which can be taken before the Commissioner are mainly with regard to the receipt of the tax and allied matters relating thereto. The questions, however, which fall for determination in the present case are entirely different and to these disputes the arbitration clause cannot be extended.

13. Be that as it may, it is to be seen that the Chairman of the Zila Council against whom serious allegations of fraud and forgery have been levelled, happens to be a sitting Minister of the Punjab Government. The remedy for arbitration before the Commissioner cannot, therefore, be considered to be equally efficacious or adequate in the circumstances of the present case. Additionally, as the Zila Council has itself failed to invoke the arbitration clause, this Constitutional petition cannot be thrown out on this ground. (Refer Anjuman‑e‑Abmadiya v. D.C Sargodha PLD 1966 SC 639 and the Majlis‑i‑Intiazmia, Jamia Masjid Ghulam Muhammadabad Colony, Lyallpur v. Secretary to Govt. of W.P. Communication and Works Dept. Lahore PLD 1975 SC 355.

14. As regards the merits, the first question that arises is whether the power to approve/confirm the auction of the lease of export tax is vested in the Chairman or the Zila Council itself. This question does not present any difficulty in view of the clear mandate of rule 16 of the Punjab Zila Council F (Export Tax) Rules, 1991, sub‑rule (6) whereof provides that the Chairman shall submit the bid accepted at the auction to the Zila Council for its confirmation‑in the first meeting of the Zila Council held after its acceptance while sub‑rule (7) stipulates that if the Zila Coancil does not confirm the bid, it may decide that the lease of export tax shall again be put to auction under the rules.

15. The learned counsel for the respondents, however, contended that the power vested in the Council has been delegated to the Chairman of the Zila Council in terms of section 170 (2) of the Punjab Local Government Ordinance, 1979 which authorizes the Local Council to delegate any of its powers under the Ordinance or the rules to its Chairman or vice‑Chairman or a sub‑committee or any of its officers or members. Reliance in this connection was placed on resolution No.2 dated 7th June, 1990.

16. This contention of the learned counsel cannot be accepted for the simple reason that while the delegation is said to be of 7th June, 1990, the Zila Council (Export Tax) Rules vesting power of confirmation in the Zila Council itself were promulgated on 24th of April, 1990 and wore to take effect on 1st of July, 1990. Even otherwise, it is highly doubtful if this power could have been delegated to the Chairman when rule 16(6) contemplates that it is the Chairman who has to put the matter before the general house. From the tenor of this rule it is clear that it would be impermissible to delegate this power.

17. I am also unable to agree with the learned counsel for the respondent that the delegation of power through Resolution No.2 of 7th June, 1990 was general in nature and applicable to all contracts for all times to come. On a proper construction of the Resolution, it becomes obvious that it was confined to the contracts, business, property, works etc. for the year 1990‑91, which was the subject‑matter of discussion at F that time.

18. From the above, it emerges that power to accept/confirm or reject a bid vests in the Zila Council and not the Chairman himself. Admittedly, the bid of the petitioner was recommended for acceptance by the auction committee and as such should have been put up before the house for its confirmation. The Chairman alone had no jurisdiction to reject the same. That being so, without any decision on the first bid by the Zila Council itself, rights could not be auctioned for the second time on 8th of May, 1991. Be that as it may, the second auction in favour of respondent No.4 was admittedly not approved or confirmed by the Zila Council, but by the Chairman, which is clearly violative of the law. Consequently, no contract could be executed nor any rights stood conferred on respondent No.4 as a result of the subsequent auction.

19. Reverting now to the other aspect of the case, it is to be seen that there were two auctions which were held in this case: the first on 30th of April 1991 and the second on 8th May, 1991. The admitted position is that there was only one public notice for auction which was published in the daily "Pakistan" on 26th April, 1991, stipulating that in case no auction was held on 30th of April, 1991, the rights would be re‑auctioned on 6th of May and 8th of May, 1991. Even if the contention of the learned counsel for the respondent that this publication was a sufficient notice is accepted, even then, as per the terms of the notice itself, the auction held on ~ 8th May, 1991 cannot be upheld. According to the contents of the notice it was only if no auction was held on 30th April, 1991, that re‑auction was to take place on 6th and 8th of May, 1991. In the present case, however, "it is an admitted position that are auction was held on 30th of April, 1991 and the committee recommended that the petitioner's bid be accepted. That being so, it cannot be said that as no auction had taken place on 30th of Apri1,1991, the respondents were entitled to hold auction on 8th May, 1991 without any further notice. The learned counsel for the petitioner has placed on record the instructions issued by the Government of Punjab to. all Chairmen of Zila Councils dated 13th May, 1991, in which practice to hold auction for the second time in such like manner has been deprecated. As the second auction was clearly without any notice, it cannot be sustained.

20. Even otherwise, the auction held on 8th of May. 1991 was m violation of the Punjab Local Councils (Lease) Rules, 1990, rule 4 whereof provides that r for the conduct of auction a public notice in not less than one daily newspaper and at least seven days before the date fixed for the auction shall be given by the Local Council. Rule 4(5) provides that where a bid is rejected and the lease is again put to auction, the provisions of these rules shall apply to such re- auction. It is thus obvious that for the re‑auction held on 8th of May, 1991, a separate notice of not less than seven days was necessary which was admittedly not given.

21. Learned counsel for the respondents however, contended that the auction of the rights to collect export tax was governed by a separate set of rules, namely, Zila Council (Export Tax) Rules, 1991 and‑the Punjab Local Councils (Lease) Rules, 1990 have no applicability. It is true that the Punjab Zila Council (Export Tax) Rules, 1991 being more specific and later in time, shall have preference as against the Punjab Local Councils (Lease) Rules, H 1990, but that is correct only in the event of any inconsistency between the two rules. The Export Tax Rules did not repeal the provisions of the Lease Rules of 1990 and both have to be harmonised and read together. If a situation is not provided for or is nor covered by the Punjab Local Council (Export Tax) Rules, the provisions of the Lease Rules would become applicable. As. there is no parallel provision prescribing procedure for auction in the Rules of 1991, Rule 4 of the Punjab Local Councils (Lease) Rules, 1990 shall apply.

22. Mr. M. Asadullah Siddiqui, Advocate, learned counsel for respondent No.4, submitted that according to rule 16 of the Punjab Zila Council (Export Tax) Rules, 1991, a Zila Council is entitled to hold auction of the rights to collect export tax on such terms and conditions as it may determine and, therefore it could hold auction by prescribing the procedure, which it did in the notice of 26th April, 1991, to which no valid exception can be taken. This contention of the learned counsel is specious. According to rule 16 of the Export Tax Rules, the Local Council can lease out by public auction the I collection of the export tax on such terms and conditions as may be determined by the Zila Council. The expression "terms and conditions" cannot be construed so as to include in it the procedure for conducting the auction. It is clearly not open for the Local Council to prescribe a condition violative of the Punjab Local Councils (Lease) Rules, 1990. Can it be urged with any success that the Zila Council can hold auction without any public J notice, as required by the Punjab Local Governments Ordinance? Surely such an auction cannot be said to have been conducted in accordance with law.

23. As regards the contract executed in favour of respondent No.4, it is true that rule 4 of the Punjab Local Councils (Contract) Rules authorises the Chairman to execute all contracts on behalf of Zila Council, but according to K the proviso to the rule itself, read with Schedule‑I, if the value of the contract exceeds rupees three lacs, the contract can only be made by the Chairman with the prior approval of the Local Council. In the present case, there is no approval by the Zila Council forthcoming on the record with the result that the contract being violative of the rules has no legal validity in view of subsection, (2), of section 39 of the Punjab Local Government Ordinance, 1979.

24. So far as the relief. is concerned, it is to be seen that the counsel for the petitioner, respondent No.2, and the counsel for respondents 1 to 3 have stated before this Court that the rights may be ordered to be re‑auctioned. The learned Advocate‑General also made a statement to similar effect. This course of auction was not acceptable to the learned. counsel for respondent NoA But it has been held that the auction in his favour was violative of the rules and was illegal and thus not sustainable. So, in view of the circumstances of the case, the proper order which deserves to be passed is that the Zila Council shall proceed to re‑auction L the lease rights in question after due notice, in accordance with law. I order accordingly.

25. It may be stated that the petitioner has undertaken to make good the loss, if any, suffered by the Zila Council, as a result of the re- auction and has also undertaken to deposit rupees twenty lacs with the Zila Council within a period of three days from today.

26. For the foregoing reasons, W.P. No.5094 of 1991, filed by Zahoor Elahi challenging both the auctions as being illegal with the prayer that re‑auction of the rights be ordered, is also accepted.

27. There shall be no order as to costs. A.A./M‑3141/L Case remanded.