' MUNIB AKHTAR, J.---The petitioners are stevedores and engaged in the business of providing stevedoring services, for which purpose they have licenses to operate at Karachi Port at Port Bin Qasim. The respondent No,2 (hereinafter referred to as "TCP") is a user of such services, especially in connection with the import of bulk cargo such as sugar, urea and other commodities. The grievance of the petitioners is that they have been shut out from providing stevedoring services to TCP at Gwadar Port on account, inter alia, of a violation of the relevant applicable statutory rules and a concession agreement that has been entered into between the respondent No,4 (the Gwadar Port Authority, hereinafter referred to as "GPA") and the respondent No,3 (hereinafter referred to as "PSA Gwadar"). Their grievance arises in the following circumstances.
2. According to Mr. Khalid Jawed Khan, learned counsel for the petitioners, the Federal Government was keenly interested in developing a modern, state of art port and all associated facilities at Gwadar. For such purpose, the use of the expertise of international port operators was considered appropriate. It appears that at one time the development of the port at Gwadar could have been done with the assistance of the port operator of Dubai port, but eventually the matter was entrusted to the Singapore port operator. Learned counsel submitted that in order to properly develop the port at Gwadar, a federal law was enacted, being the Gwadar Port Authority Ordinance, 2002 (hereinafter referred to as the "GPA Ordinance") and GPA (the aforesaid respondent No, 4) is the statutory authority created by, under and for purposes of the aforesaid law. It appears that the Singapore port operator established a special purpose vehicle for purposes of the Gwadar Port, and an entity by the name of PSA Gwadar Pte Limited was incorporated under the laws of Singapore. This entity entered into a concession agreement with GPA on or about 6-2- 2007. In terms of this concession agreement, the concession-holder (i,e,, the aforesaid PSA Gwadar Pte Limited) was granted a concession to build and develop various port facilities (including multi- purpose and container terminals) at Gwadar Port on BOT (i,e, Build, Operate and Transfer) basis.
The concession is to run for 40 years, and for present purposes it is sufficient to note that in terms thereof the concession holder is to develop and provide various port facilities to GPA for which the concession has been granted, being the Terminal and Marine Services and Free Zone Services as specified in the concession agreement. In connection with the services to be provided, Article 4.1.1 of the concession agreement needs special attention since, as will presently become clear, its proper understanding and appreciation is crucial for a determination of the issues raised in this petition. This article is as follows (emphasis supplied):- "4.1.1. The Concession-holder shall have the exclusive right and obligation to provide coordinated port services within the Concession Area in terms of this Agreement (e.g. Stevedoring, shore- handling, consolidation, warehouse, ship-handling and services related and incidental thereto) without causing physical hindrance in the other activities of the Port or other port concession holders. Provided however that GPA shall have the right to develop in future dedicated facilities for the handling of any cargo not expressly allowed to the Concession-holder under the Agreement."
' Reference must also be made to Article 4.1.2 which, in material part states as follows:-- "4.1.2. The Concession-holder shall, during the period of the. Concession, have an exclusive right and obligation to provide the following services in the Concession Area: ' 4.1.2.5. Cargo handling, loading and unloading...."
' The Respondent No,3 (i,e,, PSA Gwadar) is a subsidiary of PSA Gwadar Pte Limited to which the relevant portion of the concession agreement, including the clauses aforesaid, have been novated in the manner further described below.
3. Learned counsel for the petitioners submitted that after the development of the facilities at Gwadar port in terms of the concession agreement, being some time in 2008, TCP was interested in importing urea as bulk cargo at Gwadar port. For this purpose, it had a meeting with PSA Gwadar seeking the terms and conditions on which unloading facilities would be provided at Gwadar. The latter, by means of its letter dated 5-12-2008, made the necessary information available, and also indicated therein the royalty payment that would be applicable to stevedores employed by TCP to unload the cargo at Gwadar for TCP. Learned counsel submitted that this communication clearly indicated that there was no problem with third party stevedores providing such services to TCP at Gwadar Port. Learned counsel submitted that subsequent thereto, TCP needed to make further bulk cargo imports at Gwardar. For that purpose, by means of its letter dated 3-7-2009, PSA, Gwadar quoted a rate of Rs,815 per Metric Ton. It appears that this quotation was in connection with a public notice advertised by TCP on 9-7-2009, in which TCP invited bids for providing of stevedoring services and import handling of urea in bulk at Karachi Port, Port Bin Qasim and Gwadar Port.
Learned counsel submitted that as a result of bids received by TCP, two bidders namely, Waqar and Company and Portstar Enterprises (neither of which is presently a petitioner) were awarded contracts for providing stevedoring services at Gwadar Port for a period of one year from 31-7- 2009. According to learned counsel, during the subsistence of this contract TCP tried to unlawfully award a contract for such services to PSA Gwadar, as a result of which the aforesaid two parties were constrained to file a petition in this Court, being CP 122 of 2010, in which certain interim relief was granted to them and TCP was restrained from acting in a manner in violation of their contractual rights. Learned counsel submitted that it was abundantly clear that third party stevedores could, and did, operate at Gwadar, providing the necessary services to TCP.
4. Learned counsel further submitted that (and this is common ground between the parties) that TCP as a "procuring agency" within the meaning of the Public Procurement Regulatory Authority Ordinance, 2002 (hereinafter referred to as the "2002 Ordinance"). Certain rules, being the Public Procurement Rules, 2004 (hereinafter referred to as the "2004 Rules") have been framed under the 2002 Ordinance and we will have occasion to examine the relevant provisions of the 2004 Rules at some detail later in this judgment. At present, it is sufficient to note that the general rule laid down in the 2004 Rules is that a procuring agency is required to procure goods and services as needed by it by means of open bidding. However, Rule 42 permits the procuring agency to procure the goods and services through some alternative means provided that the conditions laid down therein are fulfilled. Learned counsel submitted that TCP was attempting to take shelter behind Rule 42 to obtain stevedoring services at Gwadar directly from PSA Gwadar without going through the process of open bidding, thus shutting out the petitioners from providing such services. He submitted, for reasons examined below, that TCP could not lawfully do so, and its recourse to Rule 42 was as flagrant breach of the mandatory applicable provisions of the 2004 Rules.
5. Learned counsel submitted that on 7-7-2010, TCP floated an international tender for the immediate emergency import of around 100,000 Metric Tons of urea, to be delivered C & F Karachi Port, Port Bin Qasim and Gwadar Port. (It may be noted that eventually, the actual amount being imported is around 145,000 metric tonns.) The petitioners, apprehending that they would be shut out from participating in providing stevedoring services at Gwadar Port, filed the present petition on 13-7-2010. It appears that subsequent to the floatation of the international tender as aforesaid, TCP, by means of public advertisement dated 28-7-2010 sought applications from experienced stevedores for their pre-qualification for providing stevedoring and import handling facilities for urea to be imported at Karachi, Bin Qasim and Gwadar. However, this public notice was followed shortly by a corrigendum published on 30-7-2010 in terms of which all references to Gwadar Port were excluded from the aforesaid notice of 28-7-2010. Learned counsel for the petitioners submitted that in fact the intention was always to import all of the 100,000 Metric Tons of Urea at Gwadar Port and the references to the other two ports was merely an eye wash. It was all part of a plan to unduly and unlawfully favour PSA Gwadar by diverting, at huge and unnecessary expense to the national exchequer, TCP's imports of bulk cargo to Gwadar. He submitted this was made absolutely clear with the publication of the so-called corrigendum as a result of which all third party stevedores (including the petitioners) stood excluded from participating in any manner in the provision of stevedoring services at Gwadar Port. Thus, according to him the entire exercise was blatantly unlawful and undertaken solely to benefit one party alone, namely PSA. Gwadar. It appears from the pleadings of the parties as placed on the record that on or about 14-4-2010, TCP had already entered into an agreement with PSA Gwadar for providing of stevedoring services by the latter to TCP at Gwadar Port for a period of one year for the importation of urea in bulk. It appears that TCP entered into this Direct contract with PSA Gwadar pursuant to Rule 42(c)(ii) of the 2004 Rules (considered in detail below) on the ground that because of the exclusivity clauses of the concession agreement between GPA and the concession-holder, it was only PSA Gwadar that could provide stevedoring services at Gwadar Port, and since there was only one supplier of such services at the aforesaid port, TCP could enter into a direct contract with it under Rule 42. Learned counsel submitted that in this way an elaborate plan had been hatched to give an illegal advantage and benefit to PSA Gwadar, and both TCP and PSA Gwadar had acted with material illegality to deprive the petitioners of their right to participate in providing stevedoring services to TCP.
6. Learned counsel submitted that the illegal acts of TCP and PSA Gwadar were based squarely on the exclusivity provisions of the concession agreement including, in particular, Articles 4.4.1 and 4.1.2 already reproduced herein above. Learned counsel submitted that such an exclusive arrangement, whereby, inter alia, only PSA Gwadar could provide stevedoring services, was contrary to law, being a contravention of section 13(2)(j) of the GPA Ordinance and also the relevant provisions of the Competition Commission Ordinance, 2010. ("Competition Ordinance"). He submitted further that in the facts and circumstances of the present case, TCP was not entitled to take shelter behind Rule 42 and that it was required to obtain stevedoring services by means of open bidding as laid down and specified in the 2004 Rules. Finally, learned counsel also challenged the exclusivity provisions of the concession agreement as being violative of Article 18 of the Constitution having deprived the petitioners from exercising their fundamental right of pursuing their lawful occupation. He summed up his case by reiterating that the entire exercise of diverting TCP's bulk cargo imports to Gwadar, thus enabling PSA Gwadar alone to provide all the relevant port services, including stevedoring services, was blatantly unlawful and contrary to law and that the petitioners were entitled to appropriate declaratory and injunctive relief from this Court. Learned counsel for the petitioners relied on certain case law in support of his submissions, which is considered herein below.
7. Mr. Anwar Mansoor Khan, learned counsel appearing for PSA Gwadar opened the case from the respondents' side, and vehemently, opposed the petition and grant of any relief to the petitioners.
He submitted firstly that the petition itself was not maintainable since the subject matter admittedly lay at Gwadar Port which was beyond the territorial jurisdiction of this Court and hence the petition under Article 199 of the Constitution was not maintainable. He further submitted that the petition was pre-mature and in the nature of a fishing expedition seeking only to disrupt the affairs and business of TCP and PSA Gwadar and obtain an unlawful and unjustified advantage and benefit for the petitioners to which they were not entitled. It was also submitted that the grievance raised by the petitioners was essentially contractual in nature since their challenge was to the concession agreement between GPA and the concession-holder, and the agreement dated 14-4-2010 between TCP and PSA Gwadar. He submitted that contractual, disputes could not be agitated in Article 199 proceedings. Learned counsel also contended that the petition was hit by laches.
8. Apart from the foregoing preliminary objections, learned counsel also vehemently opposed the petition on the merits. Insofar as the concession agreement was concerned, he emphasized two points. Firstly, he submitted that the concession granted to the concession-holder was not for the whole of Gwadar Port but rather was limited only to a portion (and according to learned counsel, a small part) of Gwadar Port. According to him, Gwadar Port, as per its master plan, was spread over approximately 50 kms, and the concession area was no more than around 4 km. He submitted a plan which showed the area demarcated for the purposes of the concession and submitted that GPA was fully entitled to develop the remaining part of Gwadar Port, either itself or through other concessions in such manner as it deemed appropriate, and provide such facilities there as were considered expedient. He submitted that the concession-holder did not even have any right of first refusal with regard to other facilities at, and further development of, Gwadar Port. His second point was that in terms of the concession agreement, the concession-holder had to make a substantial investment in order to fulfil its obligations for the construction and provision of the requisite port facilities and in this regard he submitted that the concession-holder had already made an investment of US $ 40,000,000 (USD Forty million). He submitted that it was entirely in line with such projects, i,e,, those built on BOT basis that in order to enable the concession-holder to recoup its investment, it should be granted exclusive rights for the operation of the facilities required to be constructed and developed by it. His case therefore, was that the concession agreement was entirely unexceptionable in its terms and conditions and that its exclusivity provisions went no further than was required for the facilities required to be developed and operated by the concession-holder in order to enable it to fulfil its obligation under the said agreement. Learned counsel strongly denied any wrongdoing or illegality on the part of PSA Gwadar in any manner as contended by the petitioners. He submitted that GPA had full authority under the GPA Ordinance to enter into the concession agreement. He submitted that it was the right of concession-holder/PSA Gwadar whether they chose to allow any person to use their facilities to provide services to importers and shippers or whether they chose to provide such facilities themselves. Thus according to him, it was at PSA Gwadar's will and discretion whether, having previously allowed TCP appointed, third party stevedores to provide stevedoring services at its port facilities, it was to continue doing so in future or provide such services itself. Because it wanted now to provide such services itself, it had entered into the agreement dated 14-4-2010 with TCP. There was no illegality in regard to this agreement, and according to him the said agreement was but a natural consequence of the concession agreement itself. He submitted that TCP was fully entitled to enter into this agreement in terms of Rule 42 of the 2004 Rules. He denied that there was any violation of the Competition Ordinance or of Article 18 of the Constitution as argued by the learned counsel for the petitioners. He also relied on certain case law in support of his submissions, which is further considered herein below.
9. Mr. Mazhar Jafri, learned counsel for TCP adopted the arguments of learned counsel for PSA Gwadar and reiterated that the contract entered into between TCP and the former was fully covered by Rule 42. He submitted that TCP was perfectly entitled to choose which port was best suited at any given time for the importation of bulk cargo by it. Since PSA Gwadar was the only provider of stevedoring services at Gwadar, TCP had no option but to enter into a direct contract with it in terms of Rule 42 of the 2004 Rules.
10. Mr. Hasan Akbar, learned counsel for GPA also supported the arguments/submissions advanced by learned counsel for the other respondents. He submitted that GPA had full authority and power to enter into the concession agreement. According to him, GPA benefited greatly from this agreement, as it was entitled to royalties equal to 9% of the revenues of the concession-holder. He also stated that in order to develop Gwadar Port further, GPA had called for expressions of interest from concerned parties for the grant of other concessions for the construction of more port facilities at Gwadar. He submitted that unfortunately given the prevailing situation in the country no one had responded to such calls for expressions of interest.
11. Mr. Mian Khan Malik, learned DAG, adopted and supported the submissions of other learned counsel for the respondents and prayed that the petition be dismissed.
12. In reply to the preliminary objections taken by learned counsel for PSA Gwadar, learned counsel for the petitioners submitted that the head offices of both TCP and PSA Gwadar were located at Karachi, the agreement dated 14-4-2010 between them (which according to the petitioners was violative of the 2004 Rules) was also entered into at Karachi and the 100,000 metric tons of urea to be imported by TCP, which were the immediate cause for the filing of the petition, could, as per the public notice, be imported either at Karachi Port or Port Bin Qasim which were within the territorial jurisdiction of this Court. Thus, according to him, a petition under Article 199 was maintainable before this Court. On the second preliminary objection, i,e,, that the petition was premature and in the nature of a fishing expedition, learned counsel for the petitioners submitted that the relief sought in the petition and the averments made therein clearly indicated that TCP and PSA Gwadar were bent upon acting in an unlawful manner, thus depriving the petitioners of their right to participate in the bidding process for providing stevedoring services to TCP, not merely for the 100,000 metric tons of urea immediately being imported, but for future imports as well and hence this preliminary objection was also without merit. He submitted that it was well established that, in appropriate circumstances, the High Court could even consider a dispute essentially contractual in nature, and that the case at hand clearly fell into that category. He also denied that the petition was hit by laches, as according to him, the petition had been filed as soon as it became clear that third party stevedores were being unlawfully shut out of providing stevedoring services to TCP at Gwadar.
13. We have considered the submissions made by learned counsel for the parties, examined the record and relevant statutory provisions with their assistance and perused the case law cited by them.
14. We first take up the preliminary objection raised by learned counsel for PSA Gwadar regarding the lack of territorial jurisdiction of this Court under Article 199. Learned counsel on both sides referred to various decisions, with learned counsel for the petitioners relying on Trading Corporation of Pakistan (Pvt) Ltd. v. Pakistan Agro Forestry Corporation (Pvt) Ltd. And'another 2000 SCMR 1703, Syed Muhammad Anwar Iqbal v. Bangladesh Shipping Corporation 1991 CLC 473 (Kar) and Ibrahim Fibres Limited v. Federation of Pakistan and others PLD 2009 Karachi 154, while learned counsel for PSA Gwadar cited AlIblagh Ltd. v. The Copyright Board, Karachi 1985 SCMR 758, Deputy Managing Director National Bank of Pakistan V. Ataul Huq PLD 1965 SC 201, Sandalbar Enterprises (Pvt.) Ltd. v. Central Board of Revenue and others PLD 1997 SC 334, Hafiz Hamdullah v. Saifullah Khan PLD 2007 SC 52 and Nawabzada Muhammad Shahabuddin v. Chairman, Federal Land Commission 1996 CLC 539 (Lah.). It shall not be necessary to consider each of the cases cited in this regard in detail, since the recent decision of this Court in the Ibrahim Fibres case, cited by learned counsel for the petitioners considers in exhaustive detail all the previous case law on subject. As is clear from this decision, a A petition under Article 199 is always maintainable if the person or authority, by whose act the petitioner is aggrieved, is within the territorial limits of the High Court concerned or is otherwise amenable to its jurisdiction. In the present case, the central question is whether there has been a violation of the 2004 Rules by TCP and whether the concession agreement between the concession-holder and GPA is without lawful authority. The relevant part of the concession agreement has been novated in favour of PSA Gwadar. Since both PSA Gwadar and TCP are within the territorial limits of this Court and are otherwise amenable to its jurisdiction, the petition is maintainable here. The mere fact that the actual physical acts, which would result from the illegalities allegedly B committed by the aforesaid two respondents, would occur at Gwadar Port, is not a determinative factor. Furthermore, it is also possible that in a given situation, more than one High Court may have jurisdiction under Article 199 just as, in a suit, more than one civil court may have jurisdiction over the matter, in which case it is open to the aggrieved party or the plaintiff, as the case may be, to choose the court in which proceedings are to be initiated. For these reasons we repel the first preliminary objection regarding the maintainability of the present petition.
15. As regards the second objection, we are satisfied that on the facts as alleged in the petition and the pleadings as filed in Court, the petition is not premature since the grievance of the petitioners is directly linked to the providing of stevedoring services for, inter alia, the 100,000 metric tons of urea that were being imported by TCP at the time of the institution of the petition. The fact that some of the relevant facts came to light or developed subsequent to the institution of the petition does not in any manner make the petition itself premature. Learned counsel for PSA Gwadar placed reliance on Sh. Ajaz Rasool v. Vice Chancellor Karachi University and others 1999 CLC 1942, but that was a case of a petition being filed only on the issuance of a show-cause notice, an altogether different point. In any case, it should also be kept in mind that the law recognizes the concept of quia timet actions, and although we do not find it necessary to decide whether the present petition falls in this category, the point we wish to stress is that a party may be aggrieved (sic) as much by as impending illegality as an illegality that has actually occurred. Therefore, the second preliminary objection is also repelled.
16. On the objection regarding the nature of the dispute being essentially contractual in nature, and hence not amenable to Article 199 proceedings, learned counsel for PSA Gwadar cited Airport Support Services v. Airport Manager, Quaid-e-Azarn International Airport and others 1998 SCMR 2268 and Signage Security System (Pvt.) Ltd. v. Capital Development Authority and others 2010 CLC 567 (Lah), while learned counsel for the petitioners relied on Shamim Khan v. Pakistan Defence Officers Housing Authority 1999 YLR 410 (Kar.). In our opinion, this objection is not sustainable, and the reason is apparent from the Airport Support Services case itself where the Supreme Court (citing a number of authorities) has observed as .Follows:-- "It has consistently been held that while routine contractual disputes between private parties and public functionaries are not open to scrutiny under the Constitutional jurisdiction, breaches of such contracts, which do not entail inquiry into or examination of minute or controversial questions of fact, if committed by Government, semi-Government or Local Authorities or like controversies if involving dereliction of obligations, flowing from a statute, rules or instructions can adequately be addressed for relief under that jurisdiction. Further a contract, carrying elements of public interest, concluded by functionaries of the State, has to be just, fair, transparent, reasonable and free of any taint of mala fides, all such aspects remaining open for judicial review. The rule is founded on the premises that public functionaries, deriving authority from or under law, are obligated to act justly, fairly equitably, reasonably, without any element of discrimination and squarely within the parameters of law, as applicable in a given situation. Deviations, if of substance, can be corrected through appropriate orders, under Article 199 of the Constitution. In such behalf even, where a contract, pure and simple, is involved, provided always that public element presents itself and the dispute does not entail evidentiary facts of a disputed nature, redress may be provided." (pg 2276- 77)
' The allegations made by the petitioners with regard to the two contracts they challenge are of exactly the nature as described by the Supreme Court.
17. The objection as regards laches is, in our opinion, equally without merit. The point sought to be advanced by learned counsel for PSA Gwadar was that the concession agreement had been entered into in 2007, and if the petitioners now sought to challenge it, they were hit by laches. He cited Member (S&R)/Chief the Settlement Commissioner and another v. Syed Ashfaque Ali and others PLD 2003 SC 132 and Jawad Mir Muhammadi and others v. Haroon Mirza and others PLD 2007 SC 472. However, in our view, the stand taken by learned counsel for the petitioners is that the question of laches has to be considered in the light and context of grievance or legal wrong alleged, or legal right claimed (as the case may be) by the petitioner. Here, the petitioners' case is their alleged unlawful exclusion from participating in providing stevedoring services at Gwadar, an issue that arose only in 2010 and more specifically, with the importation of 100,000 metric tons of urea as bulk cargo by TCP in July, 2010. Therefore, the petition is not hit by laches.
18. We turn now to examine the case on its merits. The first point that needs to be considered is the concession agreement itself, some of the salient features of which have already been noted above.
To briefly recapitulate, the concession agreement is an agreement between GPA and PSA Gwadar Pte Ltd. In terms whereof the latter has been given a 40 years concession to develop port facilities as agreed upon under the agreement at Gwadar Port. The scheme of the agreement requires the concession-holder to develop these facilities and provide the services required of it through three locally incorporated subsidiaries to each of which the relevant portion of the concession agreement is to be novated in terms of separate agreements to be entered into between GPA and the subsidiaries. PSA Gwadar is one such subsidiary and has been incorporated specifically to provide the terminal operating services set forth in Articles 1 to 4 and 7 of the concession agreement. As already noted above, the present petition is concerned with the exclusive obligations and rights of the concession holder to provide services in terms of Articles 4.1.1 and 4.1.2.
We are informed that these provisions stand novated to PSA Gwadar.
19. Insofar as the concession agreement is concerned, we find great force in the two points emphasized by learned counsel for PSA Gwadar, namely that the concession area does not extend over the whole of Gwadar Port, but is limited only to a specified portion thereof, and that the facilities being developed by PSA Gwadar in the concession area are on BOT basis, and it is quite common in such like contracts for the concession-holder to be granted exclusive rights in order to enable him to recoup his investment over the concession period. Learned counsel for petitioners did not controvert that the concession area does not extend to the whole of Gwadar Port, but is limited only to a portion thereof. However, as noted, above, he took serious exception to the provisions for exclusivity, especially as contained in Articles 4.1.1 and 4.1.2 and contended that the same were violative of law and Article 18 of the Constitution. However, before considering the submissions of learned counsel for the parties as regards this aspect of the matter, it will first be expedient to consider the 2004 Rules and the alleged violation of the same by TCP.
20. As noted above, it is common ground between the parties that TCP is a "procuring agency" within the meaning of section 2(j) of the 2002 Ordinance. Section 2(1) of the said Ordinance defines "public procurement" as meaning the acquisition of goods, services or the construction of any works, and Rule 3 of the 2004 Rules provides that the said Rules shall apply to all procurements made by all procuring agencies of the Federal Government whether within or outside Pakistan. The fundamental principle in terms of, and subject to, which procurements are to be made is stated in Rule 4, which is as follows:-- "4. Principles of procurements.---Procuring agencies, while engaging in procurements, shall ensure that the procurements are conducted in a fair and transparent manner, the object of procurement brings value for money to the agency and the procurement process is efficient and economical."
Reference must also be made to Rule 8, which is as follows'-- "8. Procurement planning.---Within One year of commencement of these Rules, all procuring agencies shall devise a mechanism, for planning in detail for all proposed procurements with the .Object of realistically determining the requirements of the procuring agency, within its available resources, delivery time or completion date and benefits that are likely to accrue to the procuring agency in future."
' It will be seen that Rule 4, in fact, merely puts in statutory form the basic principles enunciated in a number of judgments of the superior courts, namely that any procurement by a public agency must be done in a fair, open and transparent manner and that any discretion that the public agency may have in this regard cannot be exercised in an arbitrary or capricious manner, but must be carefully and properly regulated and modulated in accordance with law.. With this need in mind, Rule 20 of the 2004 Rules has laid down the principal method of procurement as follows:-- "20. Principal method of procurement.---Save, as otherwise provided hereinafter, the procuring agencies shall use open competitive bidding as the principal method of procurement for the procurement of goods, services and works."
' Thus, unless there is any express or specific provision to the contrary either in the 2004 Rules, or the matter is otherwise exempted under section 21 of the 2002 Ordinance, all procurements of goods and services made by a procuring agency must be by means of open competitive bidding.
The reason is simple. Open competitive bidding is invariably the best method for ensuring the guiding principles laid down in Rule 4 are adhered to, and the objectives therein stated are achieved in K practice. The services in question in the present case are the stevedoring services required by TCP for unloading the bulk cargo imported by it and hence, unless there is some express exception to the contrary, it is incumbent on TCP to procure such services by means of open competitive bidding. Insofar as Karachi Port and Port Bin Qasim are concerned, there does not appear to be any issue in this regard. As already seen, TCP in fact invited applications for the pre-qualification of experienced, stevedores by means of the public notice dated 28-7-2010. It may be noted that the pre-qualification process itself is also provided for in the 2004 Rules in Rules 15 and 16. The issue therefore is only with regard to stevedoring services at Gwadar Port and, as noted above, TOP has' taken recourse to Rule 42 for such services. The question therefore, is whether this Rule is applicable or not in the facts and circumstances of the present case. Rule 42 provides that a procuring agency may utilize certain alternative methods of procurement of goods, services and works (i,e,, other than open competitive bidding) and then sets forth four different types of methods which may be permissible. We are only concerned with one such method, that contained in clause (c) which deals with direct contracting. Insofar as a presently relevant, therefore, Rule 42 provides as follows:-- "42. Alternative methods of procurements.---A procuring agency may utilize the following alternative methods of procurement of goods, services and works, namely:--
(c) direct contracting.---A procuring agency shall only engage in direct contracting if the following conditions exist, namely:--
(i) the procurement concerns the acquisition of spare parts or supplementary services from original manufacturer or supplier: ' Provided that the same are not available from alternative sources;
(ii) only one manufacturer or supplier exists for the required procurement: ' Provided that the procuring agencies shall specify the appropriate fora, which may authorize procurement of proprietary object after due diligence; and
(iii) where a change of supplier would oblige the procuring agency to acquire material having different technical specifications or characteristics and would result in incompatibility or disproportionate technical difficulties in operation and maintenance: ' Provided that the contract or contracts do not exceed three years in duration;
(v) repeal orders not exceeding fifteen per cent of the original procurement;
(v) in case of an emergency: ' Provided that the procuring agencies shall specify appropriate fora vested with necessary authority to declare an emergency; and
(vi) when the price of goods, services or works is fixed by Government or any other authority agency of body duly authorized by the Government, on its behalf; and
(vii) for purchase of motor vehicle from local original manufacturers or their authorized agents at manufacturer's price."
'The first point to be noted in respect of the alternative method of direct contracting contained in clause (c) is that the seven situations envisaged by it are disjunctive, i,e,, if any one of the situations is found to exist then the procuring agency may take recourse to the direct contracting method of procurement. Secondly, it is to be noted that the provisions of Rule 42 are discretionary and not mandatory inasmuch as the word used there is "may" and not "shall". Thus, even though a situation may be covered by one of the seven sub-clauses of clause (c), that does not make it incumbent on the procuring agency to take recourse to Rule 42. It has been granted discretion in this regard.
The manner in which a public agency is to exercise its discretionary powers is of course well established.
21. In the present case, TCP and PSA Gwadar place reliance on sub-clause (ii) of clause (c). The submission is that at Gwadar Port, there is only one supplier of stevedoring services, namely PSA Gwadar. This is so on account of the exclusivity provisions of the concession agreement. Therefore, if at all TCP is to obtain stevedoring services at Gwadar, it can only do so from PSA Gwadar and no other person and hence TCP had no option or alternative but to enter into the agreement dated 14- 4-2010 with PSA Gwadar. Learned counsel for the petitioners submitted that even if sub-clause (ii) were found to be applicable, TCP had ignored the proviso to that sub-clause and hence even in terms of what TCP itself and PSA Gwadar contended, the agreement dated 14-4-2010 was not validly entered into. In our view, the proviso does not have application in the facts and circumstances of the present case. The reason is that the proviso relates expressly, and only, to the procurement of a "proprietary object". Although this term is not defined in the 2004 Rules, it seems to refer to something, whether an actual physical article or in the nature of an intangible such as intellectual property, in which the supplier or manufacturer concerned has proprietary rights, i,e,, rights of property. In the present case that is not the situation at hand. The reason why PSA Gwadar is the sole supplier of stevedoring services at Gwadar Port is on account of a contractual right in terms of the concession agreement, which does not, in our view, amount to a "proprietary object" in order to attract the application of the proviso.
22. Since the validity of the agreement between TCP and PSA Gwadar under Rule 42 is dependent on the exclusivity rights conferred on the latter by means of the concession agreement, it now becomes necessary to consider the objections and challenge to the same by the petitioners. The first point taken by learned counsel was that such exclusive rights could not be granted by GPA under its parent statute namely the GPA Ordinance and reliance was placed on section 13(2)(j) of the said Ordinance. This provision is as follows:-- "13. Powers of the Authority.---(1) Subject to other provisions of this Ordinance, the Authority may take such measures and exercise such powers as may be necessary for carrying out of the, purposes of this Ordinance.
(2) Without prejudice to the generality of the powers conferred by subsection (1), the Authority may, --
(i) get the works and subsequent operations constructed, completed, carried out or discharged through their officers and staff or sublet, transfer or assign the same to any other person, agency, departments, company or contractor on such terms and conditions as may be prescribed by the Baard and approved by the Federal Government: ' Provided that the person, agency, department, company or contractor to whom any work or operation in the above manner has been assigned shall observe all-laws, rules and regulations as applicable to the Authority or adopted by the Authority."
' Learned counsel for PSA Gwadar and TCP submitted' that on a proper interpretation of the foregoing provisions there was nothing therein to prevent GPA from entering into the concession agreement. We are inclined to agree with this submission. The precise argument of learned counsel for the petitioners was that while GPA could certainly enter into a contract with a private patty for the construction of facilities at the port, and the provision of services therein, such contract could not contain any exclusivity provision for which express statutory power had to be conferred on GPA. In our view, this is too narrow and restricted interpretation of section 13. There is nothing in that section as would warrant such an interpretation. Indeed, it may be noted that subsection confers a general power on the Authority (i,e,, GPA) to take such measures and exercise such powers as may be necessary for carrying out the purposes of the 2002 Ordinance and the various clauses of subsection are merely specific instances of such powers, but without prejudice to the generality of the powers conferred by subsection (1). The concession agreement is on BOT basis and it is not controverted that for the purpose of development of Gwadar Port, the Federal Government felt it necessary to involve experienced foreign port operators. Exclusivity provisions are common in BOT type contracts, and as noted above, and emphasized by learned counsel for PSA Gwadar, the exclusivity provisions of the concession agreement at hand do not prevent GPA in any manner, whether by itself or through the grant of other concessions, from further developing Gwadar Port and adding new and other facilities there. Indeed, the concession holder does not even have any right of first refusal in this regard. Therefore, in our view, on a proper interpretation of section 13 and in the facts and circumstances of the actual concession agreement before us, it was not beyond the powers of GPA to have entered into the same, and grant exclusive rights to the concession holder in respect of the facilities developed or to be developed in the concession area.
23. Learned counsel for the petitioners further contended, as noted above, that the concession agreement was violative of the Competition Ordinance. He submitted that the concession agreement amounted to, and created, a monopoly in the hands of the concession holder (and hence, by extension, in the hands of PSA Gwadar) which was, clearly violative of sections 3 and 4 of the Competition Ordinance. He submitted that the concession-holder had a "dominant position" and there was a clear abuse of this dominant position inasmuch as the monopolist, i,e,, the concession-holder/PSA Gwadar was refusing to allow the petitioners to participate in the provision of stevedoring services at Gwadar. As opposed to this, learned counsel, for PSA Gwadar contented that there was no monopoly or dominant position nor was there any abuse of the same by PSA Gwadar. He further submitted that in any case if at all the petitioners had any grievance in this regard they could approach the Competition Commission by filing a complaint under section 37 in terms of which an elaborate procedure was set forth to consider complaints of a violation of the Competition Ordinance, including an abuse of dominant position. He pointed out -that in terms of section 42, an appeal lay to the High Court concerned from an order of the Competition Commission and hence, according him, this point could not be agitated directly by means of a petition under Article 199.
24. In our view, the objection taken by learned counsel for the petitioners is without merit. The first point to note is that a "dominant position" (defined in section 2(1)(e)) can only come about or exist within a "relevant market" which itself is defined in section 2(1)(k). In other words, it is meaningless to speak of a dominant position or any abuse thereof without first determining the relevant market.
This determination has to be made by the Competition Commission and invariably (although not always) requires a factual investigation, inquiry and determination. Nothing has been placed on record nor alleged by the petitioners as would determine what is the relevant market in which PSA Gwadar can be said to have a dominant position. Obviously, the question of any abuse of a dominant position can only arise once this exercise has been carried out. Since in most cases this exercise would require at least some factual investigation, as pointed out by learned counsel for PSA Gwadar, the proper remedy would be for the petitioners to file a complaint under section 37 before the Competition Commission if they are so minded. Certainly, a factual investigation of the sort required to determine the "relevant market" would be beyond the scope of Article 199 proceedings, in accordance with well established principles.
25. The third point taken by learned counsel for the petitioners was to challenge the exclusivity provisions of the concession agreement under Article 18 of the Constitution. He submitted that there was a gross violation of the fundamental rights of the petitioners to pursue their lawful occupation, i,e,, the business of stevedoring at Gwadar Port inasmuch as an unlawful monopoly had been created there on account of the concession agreement. He submitted that while Article 18 which sought to regulate and promote competition, permitted a government agency to operate a monopoly, what was wholly impermissible was for the government agency to purport to contract out this right to a priyate party. In other words, Article 18 did not permit a private party from creating or operating a monopoly by the simple expedient of entering into a contract of this nature with a government agency. He placed strong reliance on a decision of the Supreme Court reported as Arshad Mahmood and others v. Government of Punjab and others PLD 2005 SC 193, referring, in particular, to the observations made at para 29 (pages 234 to 237). Learned counsel for PSA Gwadar and TCP, on the other hand, submitted that there was no violation of the rights enshrined in the Article 18. In our view, the principles enunciated in the judgment relied upon by learned counsel for the petitioners are not attracted to facts and circumstances of the present case. The reason is that in the cited case, the Government of Punjab, in purported exercise of powers under section 69-A of the Provincial Motor Vehicle Ordinance, 1965 granted a franchise (i,e,, a monopoly) to one bus operator on and over an entire bus route, and it appears that many such fran,chises were granted in respect of different bus routes. The franchisee had the exclusive right to operate transportation over that entire route, i,e,, all other operators were completely excluded from the route. The equivalent or analogous position in the present case would be if the concession granted to the concession holder by GPA had extended over the whole of Gwadar Port. That however, is not the case. The uncontroverted position is that the concession granted by the concession agreement is only over a (quite small) portion of Gwadar Port and GPA has complete liberty to develop the remaining part of Gwadar Port in such manner as it may deem appropriate including by the grant of other or further concessions to other persons in accordance with law. Indeed, as noted above, learned counsel for GPA submitted that expressions of interest have been sought to further develop Gwadar Port, but that unfortunately no positive response had resulted from such solicitation.
Therefore, since the concession area under the concession agreement at hand is only limited to a portion of Gwadar Port, it cannot be said that the principle enunciated by the Supreme Court in Arshad Mahmood's case is attracted to the facts and circumstances of the present case. In this context, it may also be noted that Gwadar Port is a new port which is under development. At the present time, the only facilities available at Gwadar Port are those being operated by PSA Gwadar under the concession agreement. It seems therefore, that at the present time, the facilities being operated under the concession agreement tend to get equated with Gwadar Port itself. However, that is neither legally nor factually the case. As Gwadar Port continues to develop over the coming years and decades, it is to be expected that other operators will come into the field, providing additional facilities at Gwadar Port, and the actual position of PSA Gwadar, namely that it is simply an operator at one portion of Gwadar Port, will become self-evident. The comparable position at Karachi Port may also be noted, where container terminals are being operated by several operators. All of them have their own portions at Karachi Port which have been developed successively, and it is this situation that, it is hoped, will eventually result at Gwadar as well.
Acordingly, in our view, there has been no violation of Article 18 of the Constitution.
26. The position that therefore emerges from the foregoing discussion is that the specific challenges to the exclusivity provisions of the concession agreement are found to be without merit.
The result is that insofar as the facilities being operated within the concession area by PSA Gwadar in terms of the concession agreement are concerned, these can be provided by it exclusively. Of course, since these are rights inhering to the latter it may, if it so, chooses (and subject to the terms of the concession agreement and the grant, if necessary, of any approvals by GPA) allow third parties to provide such services from time to time or at any time. However, the fact that PSA Gwadar may have the exclusive right to provide stevedoring, services under the concession agreement is entirely distinct separate from the question of whether, and if so, how and to what extent TCP is entitled to avail such services. In our opinion, TCP does not, by reason of the exclusivity provisions of the concession agreement, have an unfettered licence to enter into, or act upon, a direct contract with PSA Gwadar with regard to stevedoring services. TCP is still bound by the 2004 Rules, and it must therefore now be examined as to how these Rules will apply in the facts and circumstances of the present case. In order for this to be done, the 14-4-2010 agreement between TCP and PSA Gwadar must first be looked at in some detail.
27. The agreement has a term of one year, extendable by six months at TCP's sole discretion. It is limited to the importation of urea in bulk form, and enables PSA Gwadar to provide stevedoring services at the specified rate at Gwadar for such import. It is important to note what, apparently, the agreement does not do. It does not require TCP to import any quantity, minimum or otherwise at Gwadar. It is, in other words, in the nature of a standing arrangement, i,e,, if TCP were to import any urea in bulk form at or through Gwadar, it would then utilize the services of PSA Gwadar for stevedoring purposes.
28. As noted above, both TCP and PSA Gwadar have defended this agreement under Rule 42(c)(ii) of the 2004 Rules has also been noted however, that that Rule grants a discretion to the public agency, to use the alternative method concerned, and does not make it mandatory for it to do so even if any of the situations envisaged in the sub-clauses of clause (c) is found to exist. In our opinion, Rule 42 must be read in the context of the 2004 Rules as a whole. The overriding and controlling provision is Rule 4, which lays down the guiding principles in terms of which procurements have to be made, and the key elements which must go into a public agency's decision making process for any procurement. This is of course as much true for the goods being imported by TCP (urea, sugar, etc.) as it is for the services procured by it to facilitate the process of importation. Rule 8, which deals with procurement planning, must also be kept in mind. Not merely is this Rule binding on TCP, but TCP should, after all, have developed a good idea over the year as to what sorts of commodities it needs to import at what times, and the services that are needed by it for purposes of such imports. We make this observation while specifically noting that the 2009 and 2010 imports of urea were, as per the public notices issued by TCP on "emergency basis". Now procurements on emergency basis ago allow the procuring agency to take recourse to direct contracting Rule 42(c)(v)) and "extreme urgency" allows negotiated tendering (Rule 42(d)(iii)).
However, it should be kept in mind that "emergency" is specifically defined in Rule 2(1)(g), and Rule 42(c)(v) in its proviso requires all procuring agencies to specify appropriate fora vested with the necessary authority to declare an emergency. "Extreme urgency", as Rule 42(d)(iii) makes clear, must be brought about by "events unforeseeable by the procuring agency". Great care must always therefore be taken that the foundational guiding principles of Rule 4 are not circumvented by taking unnecessary and impermissible recourse to the "emergency" or "extreme urgency" provisions. It must also be noted that Rule 50 expressly provides that any unauthorized breach of the 2004 Rules amounts to misprocurement. It should also be kept in mind that even though PSA Gwadar may have exclusivity rights under the concession agreement, that does not mean that all options for TCP are closed and its hands are tied. During the course of his submissions, learned counsel for the. Petitioners (rhetorically) submitted that if importing commodities at Gwadar was such a good deal (as opposed to simply being a sweetheart deal entered into only to benefit PSA Gwadar), then private importers would be rushing to Gwadar to use the facilities there. That however, was not the case according to learned counsel. He stated that Gwadar was hardly ever, if at all, used by private importers. These submissions were strongly contested by learned counsel for PSA Gwadar, and we do not have any material available on record to come to any conclusion, one way or another. However, it would seem that TCP does have some leverage and bargaining position which it can, and ought to, use to its advantage (since that would clearly be in the public interest) when negotiating terms with PSA Gwadar for use of its services and facilities.
29. In our view, merely because TCP has entered into a standing arrangement under (sic) the 14-4- 2010 with PSA Gwadar does not give the former a carte blanche to import urea at Gwadar. After all, the preferred method of procuring goods and services under the 2004 Rules is open competitive bidding and imports at Karachi Port and Port Bin Qasim can be done on this basis. For each importation of urea (and this of course, applies equally to any other commodity being imported in bulk form), TCP's board of directors must therefore apply itself to TCP's obligations and duties under the 2004 Rules, and in particular to Rule 4, and only then decide whether the public interest is best served by bringing in the commodity at Gwadar or at Karachi or Bin Qasim (or any combination of these ports). We would therefore dispose of this petition with the following directions:-
(a) when the 14-4-2010 agreement expires or is otherwise terminated, then before renewing/extending the same or entering into another such agreement, TCP must carefully review its options and its obligations under Rule 4 and a reasoned decision must be taken in this regard by the TCP board independently and without external influence;
(b) even during the pendency of the 14-4-2010 agreement (or any similar arrangement) the TCP board must, in respect of any importation of urea independently and without external influence apply itself to determining the port (or ports) at which the urea is to be imported and the manner in which stevedoring services are to be procured and come to a reasoned decision, again keeping in mind its obligations under the 2004 Rules, in particular Rules 4 and 8 and to the maximum extent possible, goods and services should be procured by open competitive bidding;
(c) care should be taken while invoking the "emergency" or "extreme urgency" provisions and not merely must the 2004 Rules be complied with in this regard in letter and spirit, but the decision to invoke these provisions must be a reasoned decision taken by the TCP board independently and without external influence;
(d) any decision taken as above must be supported by reasons in writing approved by the board, and a copy of which must be expeditiously provided to the Authority under the 2002 Ordinance;
(e) if a decision is taken to limit the import, or a significant portion of the import, to Gwadar, then third party stevedores would be entitled to be given a copy by TCP or the Authority under the 2002 Ordinance, of the reasons for which the TCP board took the decision concerned, and if such decision or reasons are contrary to law, they would be entitled to seek appropriate relief against the same in accordance with law;
(f) if any decision as above is to be taken by any person or body other than the TCP board, then proper legal authority for the same must be shown;
(g) even if TCP regards itself bound to act in accordance with any directions of the Federal Government, it must be kept in mind that the 2004 Rules and the 2002 Ordinance are of binding nature and no action can be taken contrary to the same;
(h) while the above directions are, strictly speaking, limited to the providing of stevedoring services for importation of urea in bulk form at Gwadar (since that is the context of the present petition) the issues raised are of a general nature, and TCP must therefore at all times be mindful of its obligations under the 2002 Ordinance and the 2004 Rules;
(i) the above directions shall not apply in the case of the 145,000 metric tons of urea currently imported, or being imported, through Gwadar, since any such application would, in effect, be retrospective in nature.
' The petition stands disposed of in the above terms. There will be no order as cases.