1993 PLP 1112 (MLD)

Mr. Ch. M. Iqbal learned counsel for the petitioner referred to the terms and conditions of the contract (copy Annexure `H') and argued that aforesaid terms and conditions of the contract had culminated into a legal contract after deposit of bid money by the petitioner. Learned counsel for the petitioner referred to the provisions contained in section 45 of the Sindh Local Government Ordinance, 1979 (hereafter to be mentioned as the Ordinance) and argued that it was statutory duty of the Mayor to report the matter to the K.M.C. Council, about the highest bid having been given by the petitioner. It was also argued that the Mayor had no power or authority to pre‑empt rejection of petitioner's highest bid by the Council or to decline handing over of a contract to the highest bidder. It was next argued that if the K.M.C. Council had not accepted petitioner's highest bid it had to obtain approval in writing of the Government of Sindh for non‑acceptance of the highest bid. Reference was made to subsection (8) of section 51 of the Ordinance about communication of Council's decisions to the Government of Sindh. Reference was also made to Sindh Councils‑(Contract) Rules, 1980. In support learned counsel for the petitioner cited the cases of: (i) M/s. Abdullah & Co v. The Province of Sindh and others 1992 MLD 293. (ii) Commissioner of Income Tax, Central Zone "C" v. M/s. Muhammad Amin ‑ Muhammad Bashir Limited 1990 PTD 151. (iii) Ubaidullah and another v. Municipal Committee, Chiniot and another 1992 MLD

135. Mr. M. Yasin Kayani learned counsel for the respondents argued that the terms and conditions mentioned in the Annexure `H' Cannot be enforced against statutory provisions contained in the Ordinance. It was further argued that mere fact that the petitioner was adjudged to be the highest bidder, did not entitle him to claim enforcement of the contract for which the bids were invited. That the highest bid cannot circumvent the power of competent authority to accept or reject such bid. It was next argued that the highest bid given by the petitioner had no legal sanctity unless it was approved by the K.M.C. Council. K.M.C. Council was said to have been delegated the powers exercisable by the Sindh Government under section 45(4) of the Ordinance. In support learned counsel for the respondents cited the cases of: (i) Munshi Muhammad and‑another v. Faizanul Haq and another 1971 SCMR 533. (ii) Rahmat Ali and others v. The Revenue Board West Pakistan, Lahore and another 1973 SCMR 342. (iii) Moinuddin v. Negotiating Committee for Disinvestment of AKMIDC Units, Muzaffarabad and others PLD 1987 SC (AJ&K) 99. (iv) Fawwad & Fareen Enterprises Limited v. Director of Industries Government of Sindh, Karachi and others PLD 1983 Kar. 340. (v) Karachi Municipal Corporation v. Moosa M. Adam and others PLD 1972 Kar. 571. (vi) Dr. Fazal Din v. Municipal Committee, Lyallpur PLD 1956 Lah. 916. (vii) Dr. Azeem Shad v. Municipal Committee, Multan PLD 1968 Lah. 1419. Admittedly petitioner participated in the public auction held on 24‑9‑1991 and gave highest bid for being given contract for collection of fee on the cattle imported for sale at cattle `Piri' Landhi and at cattle `Piri' Malir for the year 1991‑92 (1‑10‑1991 to 30‑6‑1992). It is also an admitted position that the petitioner was adjudged as the highest bidder by the authority conducting the auction. Till then the petitioner was not clothed with any right in subject‑matter of the contract, as held in the case of Munshi Muhammad and another 1971 SCMR

533. In the instant case there was something more than mere acceptance of the highest bid. The petitioner was called upon to deposit bid money and other ancillary amounts in pursuance of being adjudged as highest bidder and in anticipation of final approval of his bid. In consequence of such direction the petitioner deposited with bankers of the K.M.C. Rs.2,00,000 on 25‑9‑1991 and Rs.3,50,000 on 30‑9‑1991. He also deposited in account of the K.M.C. on 30‑9‑1991 Rs.16,500 as advance income‑tax. Photo copies of the receipts evidencing said payments having been made by the petitioner, have been filed in the case and their authenticity has not been challenged. Cumulative effect of all these facts is that the petitioner acquired a legal and a vested right for his bid being considered for approval by the K.M.C. Council and not to be guillotined under verbal orders of the Mayor. The only duty of the Mayor was to report the matter to the K.M.C. Council in terms of clause A (b) of subsection (2) of section 45 of the Ordinance. This was to be done after execution of the contract. In other words the petitioner had legal right to insist for execution of the agreement before his bid was approved by the K.M.C. Council. Admittedly the bid was neither approved nor disapproved by the' K.M.C. Council. It was not mentioned in the counter‑affidavit filed on behalf of the respondents if the bid given by the petitioner was at all reported to the K.M.C. Council in terms of clause (b) of subsection (2) of section 45 of the Ordinance. Had the highest bid given by the petitioner been not accepted by the K.M.C. Council, the matter would have been reported to the Government of Sindh within ten days as per section 51(8) of the Ordinance and approval of the Sindh Government would have been obtained as per the proviso below subsection (4) of section 45 of the Ordinance. Neither the matter was reported to the Government of Sindh nor approval of that Government was obtained. Even if the K.M.C. Council was delegated the powers exercisable by the Government of; Sindh under section 45(4) of the Ordinance, the reasons for not accepting the highest bid, were required to be given. It is open to question if the powers exercisable by the Government of Sindh under section 45(4) of the Ordinance, can be exercised by the K.M.C. Council for the purposes of compliance with the proviso below subsection (4) of section 45 of the Ordinance, because in terms of said proviso K.M.C. Council and the Government are two different functionaries with different powers. An anomalous position would be created if K.M.C. Council, which is not competent to reject highest bid without approval of the Provincial Government, is expected to give approval to its own act of refusing to accept the highest bid. Clause (b) of subsection (2) of section 45 of the Ordinance created statutory obligation for the Mayor to report to the K.M.C. Council the fact about the highest bid given by the petitioner after execution of the B contract. As against this, the Mayor had no power to issue an order orally or in writing to the effect that the contract in question cannot be handed over to the petitioner. The authorities cited on behalf of the respondents do not cover a case of this nature where Constitutional provisions have been invoked to challenge action of the Mayor to be illegal, unlawful etc. In the case of Munshi Muhammad and another 1971 SCMR 533 it was held that bidders at auction of plots were not clothed with any right in auctioned properties, when terms and conditions of the auction recited that highest bids offered at auction were subject to approval of Additional Settlement Commissioner concerned, who may or may not accept bids without assigning any reasons. In said case highest bids offered at the auction, were not approved and the entire plot of land was transferred to an allottee. In the case of Rahmat Ali and others 1973 SCMR 342 there was auction of State land and one of the conditions of auction was that it was within the discretion of the revenue authorities to confirm or not to confirm the auction and the revenue authorities did not confirm the auction of the land to the highest bidder. In the circumstances it was held that the persons giving highest bid, did not acquire any valid title to the property, so as to give them right to invoke writ jurisdiction. In the case of Moinuddin PLD 1987 SC (AJ&K) 99 the Government of the State of Azad Jammu and Kashmir appointed a Negotiating Committee to finalise the sale of certain industrial units. Said Committee put those industrial units to auction and invited bids for their sale. Such sale or transfer was subject to approval of the said Government. In the circumstances it was held that if a bid for the sale of property is subject to prior approval of the Government, the highest bid, per se, would not create any contractual right for sale of the property to such a bidder, unless such a bid is approved by the Government. In the case of Fawwad & Fareen Enterprises Limited, PLD 1983 Kar. 340 the Director of Industries etc. Government of Sindh invited quotations for supply of certain drugs but reserved right of accepting the full or part quantity offered and did not pledge to accept the lowest or any tender. In the context of the facts it was held by a D.B. of this Court that by giving the lowest bid which was not accepted, the bidders acquired no legal or vested right to the grant of the contract, in view of reservation of right by the authorities not to accept the lowest or any other tender. In the case of Karachi Municipal Corporation PLD 1972 Kar. 571, it was held that the trend of authority is clear, consistent and uniform that the formalities prescribed in Municipal Legislation with regard to the execution of contracts by Municipalities are mandatory and there can be no estoppel against them. In the same case it was further held that in order to protect the public interest, to check corruption and to ensure the purity of the democratic process, the Legislature has always imposed drastic controls on the powers of the employees of Municipalities. In the case of Dr. Fazal Din PLD 1956 Lah. 916 the view taken was that a lease of property reserving a yearly rent or for more than one year can be effected only by means of a registered instrument and bearing seal of the Municipal Committee. In the case of Dr. Azeem Shad PLD 1968 Lah. 1419 the Chairman of a Municipal Committee invited tenders for leasing out certain premises and then accepted the highest offer and ordered delivery of possession to the bidder of the highest offer. Before communication of such order to the bidder, the Chairman revoked the acceptance. In the circumstances it was held that there was no legal basis for the proposition that communication of acceptance is to be deemed in a case where acceptance is not communicated due to the negligence of promisee or his employees or agents. . In none of the cases cited on behalf of the respondents the bidder was asked to make certain payment in pursuance of acceptance of his bid. In the cited cases the bidders had not yet become vested with any legal or vested right. It is to be conceded that the statutory and executive authorities have locus poenitentiae to recall an order, only if no effective step has been taken in C implementation thereof. Learned counsel for the respondents could not cite any provision of law by which the Mayor can pass order of the nature passed by him in the instant case. In the circumstances this petition requires to be accepted and the impugned order is declared to be illegal and of no legal effect. The Mayor K.M.C. is required to perform his statutory duty as cast upon him by the provisions contained in section 45 of the Ordinance. There would be no order as to cost. A.A./Q‑315/K Petition accepted.