Contractual liability

When a contract is entered into between the State or its instrumentality and a private party, the parties' relationship is no longer governed by Constitutional provisions but by terms of the contract

When State or its instrumentality, purporting to act within the field allotted to it under terms and conditions of a contract, performs an act, the rights and obligations of parties would be ordinarily governed by terms and conditions of the contract

Mere fact that one of the parties to such a contract is the State or its instrumentality does not make a contract amenable to Constitutional jurisdiction.

Appellant / customer filed suit to recover finance amount from insurance company on account of damages caused to pledged goods due to flood whereas respondent / bank filed suit for recovery of finance facility

Trial Court decreed suit filed by respondent / bank while dismissed that of appellant / customer

Validity

As per insurance policy if any difference had arisen as to amount of loss or damage, such difference was to be referred to decision of an arbitrator to be appointed in writing by parties in difference

Appellant / customer instead of invoking arbitration clause filed suit which was otherwise barred under S.12 of Specific Relief Act, 1877 and Ss. 32 & 33 of Arbitration Act, 1940

Suit filed by respondent / bank was verified on oath and supported by all necessary documents including statements of account, loan application, agreement of loan, undertaking by appellant / customer, power of attorney, mutation for mortgage property and other relevant documents which were duly signed / attested as required under the law

Suit was covered within the definition of S. 9(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001

Respondent / bank complied with the requirements of Ss. 9(2) & (3) of Financial Institutions (Recovery of Finances) Ordinance, 2001

High Court declined to interfere in judgments and decrees passed by Banking Court as there was no misreading or non-reading of evidence nor there were glaring illegalities or irregularities

Appeal was dismissed, in circumstances.

On a consideration of respective cases of parties and documents laid before it, Trial Court refused injunction; the Lower Appellate Court should not have interfered with the exercise of discretion unless such exercise was found to be palpably incorrect or untenable

General assertion in plaint was regarding a substantial investment made by respondent / plaintiff for the purposes of Agreement

This would be imperiled if the arrangements thereby put in place were to be discontinued

No details were set out as to the nature of such investment in the form of plant and machinery beyond a generalized reference to installation of compressors, generators, pipe lines and civil works, etc. and the same did not entirely represent a sunk cost

This aspect was within the contemplation of respondent / plaintiff when entering into initial Agreement and should have been borne in mind at the time of executing Addendum

Order passed by Lower Appellate Court reflected a flawed approach on its part

Lower Appellate Court failed to properly consider and apply the principles laid down by Superior Courts relating to temporary injunctions, hence committed material irregularity in exercise of jurisdiction

High Court set aside interim injunction issued by Lower Appellate Court

Revision was allowed, in circumstances.

Petitioner company assailed execution of work assigned to respondent company on the basis of contract existing between petitioner company and respondent authorities

Validity

When an alternative and equally efficacious remedy is open to a litigant, he should be required to pursue that remedy and not invoke Constitutional jurisdiction of High Court for issuance of a writ

Where there exists an arbitration agreement, parties are required to get their disputes arising out of the contract adjudicated by domestic forum created by them

Existence of arbitration clauses in contract between petitioner company and respondent authorities left no option to High Court but to point the parties in the direction of arbitration

Constitutional petition was dismissed in circumstances.

Appellant was successful bidder who submitted bid security but due to non-filing of performance security, respondent / authority forfeited its bid security

Validity

Principle of judicial review cannot be denied so far as exercise of contractual powers of government bodies are concerned but it is intended to prevent arbitrariness or favouritism and is exercised in the larger public interest or if it is brought to the notice of the Court that in the matter of award of a contract power has been exercised for any collateral purpose

Government undertakings and statutory bodies should have free hand while framing terms and conditions of tender and Courts ought not to interfere with the same unless there is material on the record to demonstrate that they are arbitrary, discriminatory, mala fide or actuated by bias

Court cannot interfere with terms and conditions of a tender because it feels that some other term in the tender would have been fair, wiser or logical

Courts should normally not interfere in the contractual matters in exercise of powers of judicial review and it can only be exercised in case it is satisfied that the process adopted was mala fide or made to favour someone or the process adopted or decision made is so arbitrary that no man of ordinary prudence could have reached

There was no arbitrariness, favouritism or exercise of power for any collateral purpose by respondent / National Highway Authority in annulling bidding process and forfeiting bid security furnished by appellant / bidder

It was appellant's / bidder's obligation to submit its bid in conformity with the requirements of bidding document ITB (Instructions to Bidders)

Respondent / authority did not commit any illegality by not entertaining appellant's / bidder's belated request to treat its financial bid as Rs.260,772,272/- instead of Rs.4,082,400,000/

If Division Bench of High Court were to hold otherwise, it would amount to rewriting the terms of bidding documents

Annulment of award and forfeiture of bid security furnished by appellant / bidder was done by National Highway Authority in conformity with the requirements of relevant clauses of ITB

High Court declined to interfere in judgment passed by Judge in Chambers of High Court in exercise of constitutional jurisdiction

Intra Court Appeal was dismissed in, circumstances.

Petitioners / allottees were aggrieved of adjustment of amount deposited by their predecessor-in-interest for one plot towards balance payment of other allotted plot

Validity

High Court, in exercise of its Constitutional jurisdiction, can go into questions of fact capable of being decided on the basis of documents on record and do not involve recording of evidence

When questions of fact of complex nature are raised, which may for their determination require oral evidence to be taken, and on that account High Court is of the view that the dispute may not appropriately be tried in constitutional petition, High Court may decline to entertain such petition

Capital Development Authority, instead of acceding to request of predecessor-in-interest of petitioners to refund entire amount deposited for two plots, had adjusted balance amount payable by predecessor-in-interest of petitioners for other plot from the amount that he had deposited

If C.D.A. had acceded to request of predecessor-in-interest of petitioners to refund amount deposited by him for other plot, his legal heirs would have had no legal foundation to seek allotment of either of the plots

High Court declared that predecessor-in-interest of petitioners had acquired ownership rights with respect to one plot on account of adjustment of liability for remaining 60% amount for other plot from the payment that had already been made by predecessor-in-interest of petitioners

High Court directed C.D.A. to issue allotment letter for one plot to petitioners after payment of all outstanding fees and taxes

Constitutional petition was allowed accordingly.

Petitioners were engaged in carrying out business of recovering tolls, levies, entry fee, etc. on behalf of government agencies

Petitioners participated in open auctions and were awarded bids for collection of royalty rights

Authorities issued demand notices to petitioners seeking clearance of their dues

Validity

Tax collected on lease, right to collect tolls, etc. was final tax liability

If any tax was collected from a person on lease of right to collect tax, the same was final determination of tax liability of that person and that person was neither entitled for any refund on tax so collected nor was required to pay any additional tax collected in such behalf

Matter required threshing out fact with regard to contract entered between the parties

Interpretation of S.236-A or 161 of Income Tax Ordinance, 2001 was not involved

Civil suits could be filed by parties against each other for the existence of liability or its enforcement/specific performance arising from the terms of the contract entered in between the parties

High Court declined to interfere in the matter

Constitutional petition was disposed of accordingly.

Respondents/plaintiffs assailed letter issued by defendant Pakistan Housing Authority (PHA) raising extra demand towards final consideration amount of houses in question

Trial Court decreed the suit in favour of respondents / plaintiffs and directed defendant / Authority to hand over possession to respondents / plaintiffs without payment of extra money

Validity

Relationship between appellant / PHA and respondents / plaintiffs was contractual in nature

Provisions of brochure issued by PHA and terms and conditions attached with application forms were of binding contractual force on the parties

Court could not alter terms of contract or rewrite contract or create a new contract between the parties

Contract was to be read as a whole and not be dissected

Terms of contract were to be construed strictly without altering nature of the contract

Respondents / plaintiffs were put on notice that prices quoted in brochure were tentative and were liable to be revised

Respondents / plaintiffs applied for apartments under the Project, entered contractual realm and could not then make a grievance of revised rates

Appellant / PHA had a responsibility to act fairly and reasonably while fixing price for sale of apartments belonging to it

Direction given by Trial Court to appellant / PHA to give possession of apartments to respondents / plaintiffs without demanding additional cost had effect of directing PHA to sell them at a price that could result in a loss to it

Demand of appellant / Authority was not something contrary to contract between parties and was envisaged by terms and conditions of the brochure

High Court set aside judgment and decree passed by Trial Court

Appeal was allowed, in circumstances.

Petitioner Bank did not repatriate funds involved in Letter of Credit opened by importer as documents presented by seller Bank abroad were discrepant

Complaint before Banking Mohtasib was decided against petitioner Bank

Validity

Discrepancies in documents were duly noted by petitioner Bank and despite the same the seller authorized Bank to deal further in the matter and make buyer accept the documents

Controversy germinating after tendering documents by seller was spelt out from letter written by Bank to seller

Seller gave consent on email to Bank for release of documents to buyer despite the discrepancies

Such consent and eventual release of documents by issuing Bank to importer/buyer transcended matter beyond the scope of Letter of Credit

Mandate of issuing Bank was to make payment to seller through petitioner Bank upon tendering documents as per the mandate

High Court set aside order passed by Banking Mohtasib as the same suffered from error of law and remanded the matter for decision afresh on the complaint filed against petitioner Bank

Constitutional petition was allowed accordingly.

Where relationship between petitioner and State or its instrumentality is based on a contract, a direction for payment of money in exercise of Constitutional jurisdiction must be in highly exceptional circumstances and that too when the case does not entail any disputed questions of fact which required recording of evidence and where documents on record show that liability of State or its instrumentality is expressly or impliedly admitted

Where State or its instrumentality disputes petitioner's claim, parties must be left to resolve their disputes in accordance with dispute resolution mechanism in the contract or through a suit before Court of plenary jurisdiction.

Petitioner company completed a contract with respondents and sought recovery of its outstanding dues in foreign currency as well as in Pakistani Rupees

Plea raised by respondents was that amount would be paid on receipt of payment from another government entity

Validity

Another government entity had no privity of contract with petitioner nor petitioner privy to any arrangement between respondents and another government entity

No provision existed in the contract which would make discharge of respondents' obligation to make payment to petitioner contingent on the receipt of payment from another government entity

Unjustified for respondents to make discharge of its admitted contractual liability to petitioner subject to payment of amount due from another government entity

No disputed or controversial question of fact was on record which required recording of evidence

High Court directed respondents to pay the amount due to petitioner as the same had been admitted

Constitutional petition was allowed, in circumstances.

Pertinent issue was not simpliciter of availability of alternate remedy but assumption of jurisdiction when dispute squarely fell within the scope of an arbitral mechanism and per se had qualified as an arbitrable dispute

High Court declined to embark upon an exercise to adjudicate upon, determine and decide disputes by substituting dispute resolution mechanism

Constitutional petition was dismissed in circumstances.

Such rights were governed only by the terms of contract and no writ or order could be issued under Art.199 of the Constitution

Jurisdiction of High Court under Art.199 of the Constitution could not be invoked, even if liability was admitted by both parties

Constitutional petition was dismissed, in circumstances.

Dispute was with regard to recovery of demurrages claimed by respondent/shipping company due to delayed discharge of cargo

Appellant/oil company was aggrieved of making award rule of the Court

Validity

Held, there was a requirement to invoke force majeure clause as in view of directives and policy guidelines, subject cargo was declared off-specification by independent Government Surveyor viz HDIP, and cargo could not have been unloaded by appellant/oil company

Appellant/oil company took mitigating steps by continuously corresponding and coordinating with concerned parties including respondent/shipping company and controlling authorities of government for resolution of dispute

Cargo was discharged, once request of appellant/oil company to grant one time waiver was approved and communicated by government authorities

Correspondence from appellant/oil company highlighted the fact that cargo was contaminated and deteriorated during voyage

Respondent/shipping company experienced somewhat similar situation in respect of other consignments of appellant/oil company, which were subject matter of other proceedings

Division Bench of High Court set aside award to pay demurrages and monetary claim of respondent/shipping company was rejected

Intra Court Appeal was allowed, in circumstances.

Company of petitioners entered into an agreement with respondents for developing a Private Housing Scheme but the project could not be completed

National Accountability Bureau initiated criminal investigation and arrested petitioners

Petitioners, during custody, submitted their affidavits to settle payments of claimants

Validity

High Court had tried to strike balance between company of petitioners and respondent and NAB with paramount consideration of attempting to safe guard interest of allottees

High Court directed Chairman NAB to pend any inquiry/investigation into the matter whilst petitioners and respondent would give effect to their obligations and responsibilities under their respective affidavits/compromise agreements, whereby allottees would be refunded their monies in full and all other liabilities of the project were to be settled

High Court directed Chairman NAB to supervise and facilitate the company and respondent in giving effect to their respective affidavits/settlements agreements with a view to safe guarding interests of allottees and ensuring that all allottees were repaid in full and other liabilities of the project were repaid within the shortest period of time

High Court directed Prison authorities to release petitioners from custody so that their affidavits/settlement agreements could be given effect to

Petitioners were released, in circumstances.

Accused were not owners of the land but had agreement to sell with owners of the land and parties were already engaged in civil litigation

Trial Court did not discuss whether a contractual liability could possibly be equated with cheating public-at-large and such was a legal infirmity in the judgment passed by the Trial Court

High Court, in exercise of Constitutional jurisdiction, suspended sentence awarded to accused persons

Bail was allowed in circumstances.

Contractual liability could not be resolved through writ jurisdiction.

Proper agreement was executed with specifications of vehicles to be supplied and there was a clause provided regarding any dispute and arbitration proceedings

No allegation was levelled of any mala fide of government department nor petitioner disputed flaws so pointed out by Technical Committee/Inspection Teams, in their presence

Such contractual rights and obligations were to be enforced through courts of ordinary jurisdiction

High Court in exercising its Constitutional jurisdiction loathed to interfere in matters arising out of contractual obligations

Normal remedy under law was a suit for enforcement of contractual rights and obligations specially in the circumstances when there was a report of technical mechanical nature

High Court, in such situation, could not substitute its finding with that of technical/mechanical report of expert

Routine contractual disputes between private parties and public functionaries were not open to scrutiny under Constitutional jurisdiction specially under circumstances when there was no allegation of ill-will or mala fide of public functionaries

Only contracts carrying element of public interest, concluded by functionaries of State had to be just, fair, transparent, reasonable

Contracts tainted with mala fide were to be in certain cases, could be adjudicated and entertained in Constitutional jurisdiction

If in every contractual matter, giving rise to enforcement of contractual obligations or a dispute which could be redressed through remedy available under the law, Constitutional petitions were entertained, then the same would defeat the very purpose of law under which competent courts were established and vested with jurisdiction under the law

Petition was dismissed in circumstances.

Criminal breach of trust, cheating by personation, cheating and dishonestly including delivery of property, common intention

Bail, refusal of

Contractual liability

X-ray machine was found missing from a Medical Centre

By virtue of an agreement accused party was responsible for smooth running of the Centre, maintenance of Laboratories, out-patient department and for overall security of equipments

Accused contended that since the department had provided a chowkidar for the Centre, accused were not responsible for the security of the Center and the agreement mentioned by the complainant was forged

Held, that despite the fact that accused disputed the execution of the agreement, but the veracity of such claim at present stage specially when the case was still under investigation would involve deep appreciation of evidence, which was not permissible at bail stage

Prima facie, reasonable grounds existed to connect the accused with the offence, therefore accused could neither take shelter under pendency of civil suit on the subject and other technicalities nor can they could claim the bail as of right in offences which were admittedly non-bailable

Bail was denied.

Cheque in question was issued by appellant in the backdrop of settlement arrived at between parties in terms of agreement in a criminal case registered under S. 489-F, P.P.C.

Ex-officio Justice of Peace passed a direction for registration of FIR against appellant as cheque issued by him was dishonoured

Order passed by Ex-officio Justice of Peace was maintained by Single Judge of High Court

Validity

Cheque in question was given in terms of agreement and it was not issued to create any liability as alleged in application for registration of case

Dishonour of such cheque did not make out offence under S. 489-F, P.P.C.

Just to settle disputes with father of appellant, respondent moved frivolous application by way of concealing real facts and by doing so it was axiomatic that respondent did not approach court with clean hands

Respondent knocked the doors of Ex-officio Justice of Peace with mala fide intention and with ulterior motive in order to involve appellant in criminal proceedings to resolve some private vengeance

Division Bench of High Court set aside the orders passed by Single Judge High Court and that of Ex-officio Justice of Peace

Intra court appeal was allowed in circumstances.

Petitioners were government contractors and sought release of amount by authorities in respect of various contractual works undertaken by them on behalf of authorities

Plea raised by the authorities was that claim of petitioners was disputed as work assigned to them was not completed

Validity

Disputed claims of petitioners could not be entertained as the same related to some contractual obligation

Government departments were required to be fair and responsive to all contractual obligations

High Court observed that authorities would consider claim of petitioners strictly in accordance with law and would ensure that outstanding amount would be paid to petitioners within a reasonable time

High Court directed that efforts should be made to get all subject public works completed within stipulated period as per original scheme and the costs so determined to avoid any revision of scheme i.e., enhancement of cost, so that there would be no loss to public revenue on such account

Petition was dismissed in circumstances.

Present writ petition was incompetent which was dismissed in circumstances, however contractors would be free to file suit for their claims against the government if law allowed so.