' Through this single order, I propose to dispose of Writ Petitions Nos.2659 of 2004 and 2823 of 2004 as common questions of law and facts are involved in both the cases. With the concurrence of the learned counsel for the parties, both these writ petitions are treated as Pacca cases.
2. Brief facts of the case are that respondent T.M.A. Publicized in daily "Khabrain" dated 1-5-2004 the programme of auctioning of its various functions. The petitioner being interested in Item No.4 i.e. Publicity fee also joined the auction proceedings. The said proceedings are being challenged through the instant petition.
3. It is contended by the learned counsel for the petitioner that under rule 5(v) of the Punjab Local Government, (Auctioning of Collection Rights) Rules, 2003, it is the requirement that the reserve price should be mentioned in the public notice while it is not so in the said publication. It is further submitted that under rule 16, the earnest money at a rate of 2% is also to be collected on the basis of reserve price. It is further submitted that the calculation of reserve price is to be made on the basis of criteria laid down in rule 9. All these conditions have not been complied with; therefore, the auction could not have been simply conducted.
3A. It is next submitted that at the time of auction certain conditions were read out which were also in violation of the said Rules. Conditions Nos.8 and 35 are clearly in violation of rule 17(1) and (2) inasmuch as the respondents have not only demanded 1/4th of bid money at the time of close of bid but has also required the payment of entire auction money within a period of three months in three equal instalments.
4. It is finally argued that the contract was awarded to respondent No.3, who is an individual and is not competent under section 54(2) of the Punjab Local Government Ordinance, 2001 to have any contract of any of the functions of the Local Council. Relies on 2004 YLR 366.
5. Learned counsel for respondents Nos.1 and 2 contends that under section 54(2) of the Punjab Local Government Ordinance, 2001, although the contracts are directed to be given to public- private, public or private organization but there is no bar that such contract cannot be given to an individual. It is next submitted that the contracts involving one time recovery over a period of one year creates difficulties for the respondent/Local Council for recovery from the contractor, because after having recovered the said tax/fee, the contractor simply vanishes and the T.M.A. Is left with no remedy to recover the amount from him. It is further explained that such a recovery is not to be effected repeatedly over the period of entire year, therefore, for this reason the condition of payment of 1/4th of the total bid money at the time of auction and payment of entire bid money within three months in equal instalments was imposed in the statement of condition.
6. Learned counsel for respondent No.3 contends that he was registered as a contractor along with others through notification dated (sic) and had deposited a sum of Rs.12,000 for the said purposes, therefore, he is competent to compete and have the contract.
7. I have considered the arguments of the learned counsel for the parties.
8. The relevant rules for the purposes of determination of the instant case are reproduced for ready reference: PUNJAB LOCAL GOVERNMENT (AUCTIONING OF COLLECTION RIGHTS) RULES, 2003
5. Auction procedure.----(1) For the contract of awarding of collection rights of an income the following auction procedure shall be adopted:- (i)
(ii) --------------
(v) the public notice shall contain the minimum reserve price for auction and period of contract with rates and details.
(8) Reserve Price.---The reserve price for an income shall be the average of last preceding three years' Income of the respective Local Government: Provided that in case of an income introduced by a Local Government for the first time, the assessed and expected income as provided in the budget from that source shall be the reserve price for that income.
(16) Earnest money.----(1) Every contractor shall deposit in two per cent of reserve price of respective income as earnest money in the funds of Local Government for taking part in auction as contractor.
(17) Dues and deposits.----(1) After receipt of communication of acceptance of bid or offer from the Local Government the contractor shall immediately deposit one tenth of the amount of offer or bid in the funds of respective Local Government and enter into written agreement with the respective Local Government within three days.
(2) The remaining amount of offer or bid shall be paid by the contractor to the Local Government such equal monthly instalments that the whole amount be recovered at least one month earlier of the completion of contract.
(3) The instalments shall be paid by the contractor in advance by the fifth day of each month.
9. It is evident from the publication that no reserve price is mentioned in it, which is a condition precedent to be mentioned in a public notice, the mode of determination in reserve price is also provided by rule 9 and the earnest money according to rule 16 is also to be calculated on the basis of reserve price so determined' and is to be mentioned in the publication. Since very basis regarding reserve price is not available on record, therefore, the entire proceedings of auction conducted without this basis is of no legal consequence.
9A. Under rule 17 after the acceptance of bid only an amount of 10% can be recovered from the successful bidder and the rest of the amount is to be recovered in such monthly instalments that the whole amount is recovered at least one month before the end of the contract period. Apart from this, no other claim can be raised by the respondents, therefore, the claim of the respondents announced through the statement of condition at the time of auction regarding 1/4th deposit of the bid money is also illegal and without lawful authority. Further the condition imposed that the entire bid money has to be paid within three months in three equal instalments is also violative of the said rules.
10. There is no denying the fact that respondent No.3 is an individual. It has already been held by this Court in case reported as 2004 YLR 366 that the T.M.A. Cannot enter into a contract with an individual as required by section 54(2) of the Punjab Local Government Ordinance, 2001, therefore, acceptance of bid in his favour is also contrary to law declared by this Court. So far as the arguments of the learned counsel for respondent No.3 that no bar is contained under section 54(2) for awarding contract to an individual is concerned, suffice it to say that the legislation has used the word "organization". In the said section and the nature of such "organization" has also been specified as to public private, public or private. This specification totally excludes the possibility of awarding of contract to an individual.
11. The provisions of section 54(2) of the Punjab Local Government Ordinance 2001 is reproduced below for ready reference.
54. Functions and power of the Tehsil Municipal Administration.---(1) The function and powers of the Tehsil Municipal Administration shall be to:--
(2) The Tehsil Municipal Administration may:--
(a) assign or contract out, on such terms and conditions as are approved by the Tehsil Council and after inviting public objections any of its functions to any public-private, public or private organization.
11. For what has been stated above, this writ petition is allowed and it is declared that the advertisement appearing in daily "Khabrain" dated 1-5-2004 was an illegal publication so far as Item No.4, publicity fee, is concerned. As a result thereof, auction conducted and contract awarded to respondent No.3 is also illegal. However, it is left open for the respondent T.M.A. To- republicize and re-auction the said Item of publicity fee in accordance with law.
12. So far as the Writ Petition No.2823 of 2004 is concerned , the same is also disposed of with an observation that the petitioner of the said case is incompetent being an individual to obtain the contract in dispute. The respondent T.M.A. Is however, directed to refund the amount of earnest money received from respondent No.3 within one week.