Tender

2023 MLD 674 ISLAMABAD Judicial Precedent

R. 48Qanun-e-Shahadat (10 of 1984), Art. 114TenderRedressal of grievanceTerms and conditions of procurement proceedingsEstoppel, principle ofApplicabilityFailure to raise any objection

Petitioner company after having lost the tender, assailed procurement process on the plea of defective terms and conditions

Validity

Once petitioner had chosen to participate in contest subject to certain terms and conditions, it could not seek to have the contest annulled after it was found to have lost in an evaluation carried out in accordance with the terms and conditions prescribed for such contest

Petitioner submitted its bid without challenging terms and conditions of bidding documents under R. 48(2) of Public Procurement Rules, 2004 and was consequently estopped from challenging such terms and conditions of the tender after evaluation of the bid, once it was declared pursuant to such evaluation that the petitioner was not the successful bidder

Petitioner failed to establish that the manner in which its bid was evaluated, pursuant to terms of the tender, was discriminatory or suffered from illegality

High Court declined to interfere in procurement proceedings

Constitutional petition was dismissed, in circumstances.

2022 PLD 628 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

Bank guaranteeEn-cashment ofPrincipleAppellant company executed Bank Guarantee in favour of respondent AuthorityGrievance of appellant was that en-cashing of Bank guarantee was in direct contradiction of provisions of tenderValidityBank Guarantee was an independent/autonomous contract between Bank and CustomerBank authorities were to construe it independent of principle/primary contract

Bank Guarantee furnished by the Bank contained undertaking and had imposed absolute obligations on the Bank to pay the amount, irrespective of any dispute between the parties to the principle contract

Absolute obligation existed upon the Banker to comply with terms as enumerated in Bank Guarantee and to pay amount stipulated therein

Bank could not be prevented by the party at whose instance Guarantee was issued, from honoring the credit guaranteed

Respondent Authority vide a letter conveyed to the Bank about intentional failure/alleged violation of appellant/bidder, as per tender-document clauses during validity of bid with the request to en-cash Bank Guarantee

Bank issuing Guarantee was not concerned with underlying contract between the parties as obligations arising under the Bank Guarantee were independent of the obligations arising out of specific contract between parties

Division Bench of High Court declined to interfere in the matter

Intra Court Appeal was dismissed in circumstances.

2022 CLD 1035 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

Bank guaranteeEncashment ofPrincipleAppellant company executed Bank Guarantee in favour of respondent AuthorityGrievance of appellant was that en-cashing of Bank guarantee was in direct contradiction of provisions of tenderValidityBank Guarantee was an independent/autonomous contract between Bank and CustomerBank authorities were to construe it independent of principle/primary contract

Bank Guarantee furnished by the Bank contained undertaking and had imposed absolute obligations on the Bank to pay the amount, irrespective of any dispute between the parties to the principle contract

Absolute obligation existed upon the Banker to comply with terms as enumerated in Bank Guarantee and to pay amount stipulated therein

Bank could not be prevented by the party at whose instance Guarantee was issued, from honouring the credit guaranteed

Respondent Authority vide a letter conveyed to the Bank about intentional failure/alleged violation of appellant/bidder, as per tender-document clauses during validity of bid with the request to en-cash Bank Guarantee

Bank issuing Guarantee was not concerned with underlying contract between the parties as obligations arising under the Bank Guarantee were independent of the obligations arising out of specific contract between parties

Division Bench of High Court declined to interfere in the matter

Intra Court Appeal was dismissed, in circumstances.

2019 CLC 1128 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

Rr. 25, 27 & 31(2)TenderRe-advertisement of tenderSecond bidding documentChange in evaluation criteriaMis-procurement

In terms of R. 25 of the Punjab Procurement Rules, 2014 ('the Rules'), it was incumbent upon the procuring agency to provide a specific qualification and bid evaluation criteria, which was further supplemented by R. 31(2) of the said Rules which categorically provided that failure to provide unambiguous evaluation criteria in the bidding documents would amount to mis-procurement

Further as per R. 27 of the Rules, the procuring agency may require the bidders to furnish a bid security not exceeding five percent of the estimated price i.e. the price of procurement estimated by the procuring agency before initiation of the process of procurement, but the same had not been done in the present case

Factual controversy was involved in the present case as to whether compliance of R. 27 had been treated as mandatory by the relevant Government department on previous occasions

In the first instance, such controversy was required to be dilated upon by the relevant Secretary of the concerned Government department

High Court transmitted a copy of present petition along with its annexures to the relevant Secretary, with the direction to treat it as further representation and decide the same afresh strictly in accordance with law, after hearing petitioner and all concerned, through a well-reasoned speaking order, and not to disturb the contract already awarded to one of the respondents, fate of which shall be subject to the final decision of the Secretary

Constitutional petition was allowed accordingly.

2019 PLD 400 KARACHI-HIGH-COURT-SINDH Judicial Precedent

R. 24TenderBid documents, submission ofProof

Plea of relevant Development Authority ('Authority')/Procuring Agency that though representatives of the plaintiff attended the bidding proceedings but no tenders were submitted on its behalf

Held, that the Authority had itself placed on record photographs of the bidding proceedings which clearly reflected that various boxes of tenders out of the total of (7) seven were kept opened, as according to them there were more tenders than could be accommodated in the boxes

Once it had come on record that majority of tender boxes were kept opened, the onus then shifted on the Authority to disprove the contention of the plaintiff who had filed all tender documents along with Pay Orders of earnest money and therefore, it was difficult to presume at present stage of the proceedings that the plaintiff never participated

If the boxes were kept open, it was, possible that tenders/bids of any participant could be lost or intentionally misplaced

In such a situation it was the responsibility of the Authority to ensure that all participants were allowed to submit their bids properly, and since the boxes were kept open even before opening of the bids, at least an acknowledgment should have been given

Case record also showed that after filing of present suit and issuance of notices, the Authority itself wrote a letter to the Bank from where the plaintiff's Pay Orders were prepared, and the reply placed on record affirmed that Pay Orders were prepared from the account of plaintiff in favour of the Authority

Tenders were received and opened on 17-9-2018 but the evaluation report based on the minutes of meeting and proceedings dated 17-09-2018, was prepared on 3-10-2018

Admittedly the bid boxes were kept open, thus, there was every possibility of misplacing the bids / tenders of the plaintiff and others, whether mistakenly or even intentionally

For present purposes, it could be safely said that the plaintiff did participate in the proceedings and filed and submitted its bids and the Authority had not been able to discharge its burden to such effect.

2019 PLD 400 KARACHI-HIGH-COURT-SINDH Judicial Precedent

Rr. 31 & 32Specific Relief Act (I of 1877), Ss. 39, 42 & 54TenderDispute over bidsSuit for declaration, injunction and cancellation of documents filed by unsuccessful bidder/plaintiffAlternate remedy in form of Grievance Redressal Committee not availed

Plea of relevant Development Authority ('Authority')/ Procuring Agency that the plaintiff (bidder) should have approached the Grievance Redressal Committee provided under R. 31 & 32 of the Sindh Public Procurement Rules, 2010 ('the Rules') instead of filing present suit

Held, that time and again the Authority was confronted as to when and in what manner, the Grievance Redressal Committee was constituted, who were its members and how it was notified; but despite assurance on several dates, Court was never apprised regarding such formation of Committee

No material had been placed on record as to whether any such Committee was ever constituted

Even otherwise, the plaintiff could not be non-suited on the ground that an alternate remedy was available

Courts were duty bound to ensure that relevant laws were adhered to strictly, to exhibit transparency

Transaction involving public money must be made in a transparent manner for the satisfaction of the people who were the virtual owners of the national exchequer which was being invested in such projects

Plaintiff could not be non-suited on the ground of not availing alternate remedy.

2019 PLD 400 KARACHI-HIGH-COURT-SINDH Judicial Precedent

S. 27TenderBid amounts quoted in paisas considered by the Procuring AgencyMala fides, favoritism and lack of transparencyRe-advertisement of tenders

Guidelines/Regulation for Procurement of Works was amended and the amended Regulation provided that in case a procuring agency received a bid, which was more than 30% below the Engineer's Estimate or Composite Schedule Rates (CSR), the procuring agency could reject that particular bid(s) or float tenders afresh, if deemed appropriate

Relevant Development Authority ('Authority') explained the amended Regulation further by stating that in all works various bidders filed their bids and only such bidders were considered who met the threshold of 30%, and thereafter, the lowest of these bidders in numerical value of 30% below were short listed and the first lowest was awarded the tender(s)

Table of bidders who met the below 30% criteria showed that in fact the first two out of four bids were of the same amount except in paisas

First and second bid had a difference of only 44 paisas, whereas, the third had a difference of 94 paisas from the successful first lowest bidder, and the last and the fourth had a difference of Rs.897.80 from the first lowest bid

Authority had considered 9 digits after decimal while calculating the percentage

Presently according to the State Bank of Pakistan, the minimum currency denomination in the country was 1(one) Rupee, whereas paisa was not practically in circulation and was always deemed to be either rounded up or rounded down

In such circumstances it was beyond comprehension as to how a bid was quoted in paisas and so also accepted by the Authority

Secondly, it was a mathematical rule that anything which was over and above 0.5 was to be rounded up and anything below 0.5 was to be rounded down

In the present case, calculations had been taken up to 9 (nine) digits after decimal, so as to make the bid not to be more than 30% of the Engineer's Estimate, whereas, in reality, the first four lowest bids were all to be treated as 30% and not 29.99999999%

Majority of bidders gave their bids which were extremely near to the Engineer's Estimate, which appeared to be a well-planned and organized attempt to oust genuine bidders and give the blue-eyed a clear and open field to play with the mechanism of 30% and the Engineer's Estimate

Procurement Agency i.e. the Authority fell in error in calculating the first lowest bid and awarding the tender on the basis of considering 8 or 9 digits after the decimal so as to make it below 30%, whereas, in reality it was supposed to be equal to 30%

Such conduct on the part of the Authority/Procurement Agency did not reflect any fairness or transparency and the entire process was tainted with mala fide and favoritism and appeared to be an attempt against the public interest

Since there were more than one bidders whose bids fell within 30% or up to 30%, the only way out was to cancel all tenders and call it afresh as provided in the amended Regulation

High Court directed that the award of (seven) Tenders covered by the present suit was hereby set-aside; that the Authority/Procurement Agency shall re-advertise the tender and while doing so, it shall clearly notify in the advertisement a proper procedure for receiving of Tenders and issuance of proper and due acknowledgment; that the Engineer's Estimate in respect of all (seven) Tenders should be made afresh so as to bring the said Estimate nearer to realistic values instead of the existing exaggerated estimate, and that while invoking (if at all needed) the amended Regulations for Procurement of Works, only such bids shall be considered which were nearest to the rupee, and any bid quoted in paisas shall not be considered.

2019 YLR 725 HIGH-COURT-AZAD-KASHMIR Judicial Precedent

Bid, cancellation ofAudi alteram partem, principle ofApplicabilityPetitioner was declared successful bidder but same was cancelled due to violation of terms and conditionsContention of petitioner was that respondents without affording opportunity of hearing had cancelled the bidValidityPetitioner participated in the bidding process and he was declared lowest bidderBid was approved by the competent authorityPetitioner had furnished performance guarantee within timeCancellation of bid through impugned order was bad in law

Petitioner was not at fault for re-appropriation of funds by the department as he had completed his obligation by submitting his performance guarantee within time

Acceptance of bid could not be recalled by the authorities, in circumstances

Authorities, after issuance of acceptance letter, could not take plea with regard to higher bid's cost

Bidder, in circumstances, was entitled to equitable relief of writ jurisdiction

Impugned order had been passed against the principles of audi alteram partem, and valuable rights had been created in favour of petitioner

Impugned order passed by the authorities was set aside having no legal effect

High Court directed the authorities to issue formal work order and execute contract forthwith in favour of petitioner by accepting his bid

Writ petition was allowed, in circumstances.

2018 CLD 48 ISLAMABAD Judicial Precedent

Judicial reviewScopeAdministrative action

Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides

Terms of invitation to tender are not open to judicial scrutiny and Court cannot whittle down terms of tender unless they are wholly arbitrary, discriminatory or actuated by malice.

2018 PLD 150 ISLAMABAD Judicial Precedent

Judicial reviewScopeAdministrative action

Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides

Terms of invitation to tender are not open to judicial scrutiny and Court cannot whittle down terms of tender unless they are wholly arbitrary, discriminatory or actuated by malice.

2017 PLD 111 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

Preconditions or qualificationsPermissibility

For tenders certain preconditions or qualifications could be laid down to ensure that the contractor had the capacity and the resources to successfully execute the works

Fair and transparent process was necessary to ensure that the contract was awarded to a credible party.

2017 PLD 111 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

Acceptance of tender and award of contractScopeTerms and conditions of tender set by the GovernmentJudicial scrutinyScope

High Court did not sit as a court of appeal in relation to the terms and conditions of tender but merely reviewed the manner in which the decision was made

Terms of the invitation to tender could not be open to judicial scrutiny because the invitation to tender was in the realm of a contract

Normally, decision to accept the tender or award the contract was reached through a process of negotiation and deliberations through several tiers

More often than not, such decisions were made qualitatively by experts and the government was free to settle the terms of the contract with the parties

In such cases, if the terms and conditions of the contract were not suited to a party, they need not participate in the tender process or accept the contract

State could fix its own terms of invitation to tender and those terms were generally not open to judicial scrutiny

Court could examine the decision making process and interfere if it was found tainted with mala fides or was arbitrary.

2017 YLR 74 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

Foreign and local bidders

Clause of tender that after acceptance of bids if taxes or duties on goods to be supplied were increased then respondent-company would not be liable to pay the increased amount so charged from the supplier

Terms and conditions of tender

Free on board (FOB) contract

FOR terms

Financial proposal submitted by the petitioner-bidder being conditional

Refusal of petitioner-bidder to withdraw said condition

Non-evaluation of bid submitted by the petitioner-bidder

Scope

Contention of petitioner-bidder was that clause of tender with regard to increase in taxes or duties was applicable only on the local manufactures which was discriminatory

Validity

Impugned clause could not be made applicable to the foreign bidders who were liable to pay any duty after delivery in FOB contracts

Respondent-company had not acted malafidely or in unfair and non-transparent manner in introducing clause to local manufacturers only

Duties and taxes, in case of foreign bidders, were to be paid by those bidders in their own country of manufacture

Respondent-company would not be burdened in case costs, duties and taxes in their own country were increased during supply of goods but same had to be paid by foreign supplier itself

Respondent-company had to receive the finished goods at the fixed rate on FOB basis from foreign supplier and on FOR basis from local supplier

Impugned clause was also applicable to foreign bidders

No undue benefit had been given to the foreign bidders in circumstances

Petitioner-bidder was aware with regard to FOR terms of bid while submitting its financial as well as technical bids

Petitioner-bidder's technical proposal was accepted in absence of any reservation on terms and conditions of bid documents

No mala fide and illegality on the part of respondent-company had been pointed out by the petitioner-bidder

Petitioner-bidder had been participating in many other steel line pipes for the last decades where similar clause was inserted

Conduct of petitioner-bidder had become self contradictory

Impugned clause was neither discriminatory nor applicable to FOB contracts of foreign bidders

Constitutional petition was dismissed in circumstances.

2017 CLC 1783 KARACHI-HIGH-COURT-SINDH Judicial Precedent

Non-issuance of acceptance of tender documents by authoritiesSuit for damagesClaim for risk sale of goodsScope

Plaintiff could succeed to claim risk sale if there was an enforceable agreement between the parties and same had been breached by the authorities

No contract existed between the parties and claim of risk sale was not tenable

Nothing was on record that plaintiff took measures to mitigate its losses before arranging or manufacturing the requisite goods for authorities

Plaintiff should have addressed a notice or other type of communication to defendants with regard to the fact that it was about to make preparation or commence production of subject goods in order to supply them to the authorities

Intention of the parties could be determined either through covenants or by their conduct when such conduct was not objected by either of the contracting parties

Plaintiff had knowledge that a contracting obligation did not exist in the present case

Contracts awarded under tender inquiries should have definite time lines and prescribed set of rules regulating the award of tender

Such factors were missing in the present case

Plaintiff was not entitled for any damages

Suit was dismissed in circumstances.

2017 MLD 1485 KARACHI-HIGH-COURT-SINDH Judicial Precedent

Allegation of malpractice in awarding bidPrayer for inquiryScopeContract had been awarded by the authorities after completing all the required formalities of bidRespondents being lowest bidders had accepted the bid and project was about to be completed

Petitioner who had not participated in tender proceedings had approached the court to challenge tender proceedings after lapse of more than three years

No corrupt practice had been pointed out by the petitioner

Mere words had been alleged without any substantial proof

Constitutional petition was dismissed in circumstances.

2013 YLR 1396 PESHAWAR-HIGH-COURT Judicial Precedent

Venue of receiving/submissions of bidding documentsChange of such venue by authority through an "office order"Validity

Once an advertisement and representation made to public at large by executive authority, then terms mentioned therein could not be changed to disadvantage of prospective bidder through an "office order", otherwise same would be illegal and without lawful authority.

2013 CLD 1144 KARACHI-HIGH-COURT-SINDH Judicial Precedent

Procurement of services through biding

Duty of public functionaries/procuring agencies, stated.

2013 MLD 1670 KARACHI-HIGH-COURT-SINDH Judicial Precedent

Procurement of services through biding

Duty of public functionaries/producing agencies, stated.

2012 SCMR 1222 SUPREME-COURT Judicial Precedent

S.5Revocation of offer before acceptanceScopeTenderRight to forfeit bid securityScopeBid (offer) made for tender with deposit of bid securityValidity period of bidCondition that bid security would be forfeited if bid withdrawn (revoked) during its validity periodWithdrawal of bid within its validity period when it had not been acceptedBid security could be forfeited, in circumstances

Provincial authorities (appellant), in the present case, invited tenders from interested persons for appointment as agent for collection of toll at a bridge

'M' (respondent) was one of the bidders and under the terms and conditions of the bid, deposited Rs. 2 million as bid security

As per terms and conditions of the bid, 'M' agreed to keep the bid/ offer open for acceptance for up to 90 days; agreed that the bid security would be forfeited should 'M' withdraw or modify its bid during the validity period of 90 days, and also agreed that 'M' would be bound by the communication of acceptance of the bid dispatched within the period of 90 days

­Letter of acceptance was issued to 'M', which letter stated that security amount and first instalment had to be deposited within 21 days of the receipt of the acceptance letter, but 'M' failed to do the same

Provincial authorities cancelled and withdrew the letter of acceptance issued to 'M' and forfeited its bid security of Rs. 2 million

'M' filed constitutional petition before the High Court with the contention that before receipt of letter of acceptance, it had sent a letter to the Provincial authorities informing them that 'M' was not interested in the work, therefore, the amount of bid security should be refunded

Constitutional petition was allowed by the High Court, letter of acceptance issued by the Provincial authorities was quashed and it was directed to refund the bid security amount of Rs. 2 million to 'M'

Validity

Although 'M' had sent its letter withdrawing the bid (offer) before receipt of the acceptance letter, but 'M' had agreed to keep the bid open for acceptance for up to 90 days

'M' had also agreed that it would be bound by the communication of acceptance of the bid dispatched within the said period of 90 days, therefore, 'M' could not have withdrawn the bid before the expiry of the period of 90 days

Admittedly the acceptance of 'M' bid was communicated to it within the period of 90 days, therefore, 'M' was bound by the said acceptance of the bid, despite its withdrawal

'M' had also agreed that the full value of the bid security would be forfeited, should it withdraw or modify its bid/offer, and since 'M' withdrew its bid/offer in violation of the agreement, the full value of the bid security was liable to be forfeited

Although under the Contract Act, 1872, a proposal/offer could be revoked at any time before its acceptance was complete as against the proposer/offeror, but 'M' in the present case was bound by the agreement to keep the bid/offer open for acceptance for up to 90 days, and he was liable to suffer the consequences if he did not do the same

Under the cover of S.5 of the Contract Act, 1872, 'M' could not escape from the obligations and liabilities of the agreement

High Court was not justified in quashing the acceptance letter of the Provincial authorities and directing them to refund the bid security to 'M'

Appeal was allowed and impugned order of the High Court was set aside.

2003 CLC 568 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

TenderRaising of bid through negotiationValidityPetitioner having participated in bid was not highest bidderAuthority decided to negotiate with participants including the petitioner

Petitioner had joined negotiation but his offer was not accepted being conditional and also on lesser rate than respondents

Authority had not acted against interest of public exchequer, but had tried their best to get lifting of wheat on highest rate

Contention raised by petitioner that he was highest bidder and was ready to pay highest rates than respondents was not established on record

Record showed that contract concluded between Authority and respondents had partly been acted upon

-Contract could not be set aside on suspicion alone, unless illegalities or malpractices were apparent from record

Respondents had given undertaking that they would pay over and above the rates settled in negotiation -Wheat, if not lifted, might be wasted in rainy se-,on, which could cause huge loss to the public exchequer

High Court declined to interfere in contract already awarded to respondents for lifting of wheat

Constitution of Pakistan (1973), Art. 199.

2003 CLD 153 KARACHI-HIGH-COURT-SINDH Judicial Precedent

TenderInviting fresh tender

Bidder had no right and/or authority to question wisdom of authority inviting fresh tender/bid/offer.

1994 PLD 315 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

Highest bidHighest bidder had got a right that his bid be properly considered by the public functionaries

Petitioner being the highest bidder although had got no vested right that his highest bid be accepted yet arbitrary rejection of his bid without properly considering his documents would give him a cause of action

Where a method was prescribed to do a thing it must be done in that way and not otherwise

Authority itself having chalked out a method of doing a thing in a particular way, any deviation from that would give cause of grievance to affected person

Letters of specified dates rejecting petitioner's highest bid were declared to have been passed without lawful authority and of no legal effect

Case was remitted to Authority for disposal in accordance with law

Constitution of Pakistan (1973), Art. 199.

1957 PLD 826 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

Tender

Contractor's tenders to execute work-Received after time-Whether necessarily to be rejected.