This order will dispose of ICAs No. 951 and 991 of 2009, which have been instituted against the same judgment dated 16.11.2009, passed by a learned Single Judge of this Court disposing of WPs No. 11923 and 12808 of 2009.
2. Briefly stating the facts giving rise to the present ICAs are that Pakistan Railways invited bids for award of contract of luggage vans running with the trains on specified Routes, for a period of three years vide public invitation notice dated 04.12.2008. It is an admitted fact that an auction was conducted for award of the contract of luggage vans attached to various trains divided into six groups running on various routes. The following bids were received with respect to Group 'D' route in the said process from six bidders:--- {{TABLE}} Bidder Bid Amount (in Rs.) for Group 'D'Ranking (according to bid amounts)
Javed Iqbal (Respondent No. 6)
141,035,786 1 M/s. Ittehad Cargo Service (Respondent No. 7).141,035,500 2 M/s. Mehdi & Co. (Respondent No. 8)140,000,000 3 M/s. National Cargo Services.
(Petitioner)139,800,000 4 M/s. Gujrat Cargo Services (Respondent No. 9)138,000,000 5 M/s. Malik Mushtaq Goods Transport Co. (Respondent No. 10). 130,070,000 6 {{TABLE}} The auction proceedings did not procure satisfactory offers for the contract in question and the auction proceedings thus scrapped and the earnest money/call deposits of the bidders were returned. However subsequently on 10.06.2009, on the basis of some negotiations having been finalized with M/s. Malik Mushtaq Goods Transport Company, Respondent No. 10 of the writ petition, a revised bid from the said respondent for the contract in question was accepted by the Pakistan Railways and the contract was awarded to the said company for Rs.4,95,00,000/- per annum for a period of one year only. This process of inviting the revised bid of the said Respondent No. 10 and awarding of the contract in question to the said company was assailed through WPs No. 11923 and 12808 of 2009, instituted by M/s. National Cargo Service, petitioner of W.P. No. 11923 of 2009 and M/s. Ittehad Cargo Service petitioner of WP.No. 12808 of 2009, both of which writ petitions came up for hearing before a learned Single Judge of this Court on 16.11.2009, who was pleased to accept the writ petitions through a consolidated judgment dated 16.11.2009. In the operative part of the judgment dated 16.11.2009, the learned Single Judge passed the further direction to the following effect: "10. For the foregoing facts and reasons, the award of contract to respondent #10 being illegal and without lawful authority is declared as such. Pakistan Railways is directed to invite fresh, bids for auction of the luggage vans forthwith and making every effort to avoid carteliiation. Copy of this petition be sent to Chairman Pakistan Railways who shall look into the matter so as to ensure that not only the interest of Pakistan Railway are secured and that the contract is awarded in a fair, transparent manner strictly in accordance with law.
Disposed of in terms articulated ibid."
3. The instant two ICAs have been instituted against the said consolidated judgment dated 16.11.2009 of the learned Single Judge of this Court.
4. ICA No. 951 of 2009 came up for preliminary hearing on 26.11.2009 and a pre-admission notice was issued to the respondents for 16.12.2009 and the same day, an order was passed by a learned Division Bench of this Court on C.M. No. 1 of 2009 whereby the operation of the impugned judgment passed by the learned Single Judge was suspended in the meanwhile. A similar order dated 14.12.2009 was passed in ICA No. 991 of 2009 on a preliminary hearing.
5. The learned counsel for the appellant has raised the following contentions in support of his case- -
(i) the writ, petitioners ',re estopped by their words and conduct to institute the writ petitions, because the pay order dated 18.3.2009 forming basis of the private negotiation process was prepared in the name of Sakhawat Ali, who is the petitioner of W.P. No. 11923 of 2009 and having himself participated in the negotiation process and not succeeded in getting the contract could not have instituted the present writ petition;
(ii) the contract was awarded to the appellant on 10.6.2009 for a period of one year'and only less than three months time is now left in the contract period and cancellation of the contract at this stage shall cause huge loss to the national exchequer even if the contract awarded to the appellant is in violation of any rules; (iii)the contracts for the groups A and B were also awarded by. the Pakistan Railways through private negotiation which acts were not challenged by the respondents and cancellation of the contract awarded to the appellant shall be an act of discrimination; (iv)it is the consistent practice of the Pakistan Railway Department that they award contract through private negotiation and this consistent practice of the department has the force of law.
The learned counsel relied upon the judgment reported as (PLD 1976 Lahore 453) in this context.
6. The learned counsel for the Pakistan Railways has surprisingly supported the contentions of the learned counsel for the appellant notwithstanding the fact that Pakistan Railways was a Respondent of the writ petitioner and did not opt to prefer an appeal against the acceptance of writ petitions vide judgment dated 16.11.2009. The learned counsel contended that before finalizing the awarding of contract to the appellants, the Pakistan Railways addressed letter dated 27.05.2009 to all the bidders to revise their offers as a result of which only the appellant submitted a revised bid to the tune of Rs. 148.5 million being 10% above the already offer made and was thus awarded the contract in the best interest of the Pakistan Railways. The learned counsel for the Pakistan Railways further argued that a committee for evaluation of the bids offered was constituted, which approved the bid of the appellant.
7. The learned counsel for private Respondents No. 7 and 10'of ICA No. 951 of 2009 and of Respondents No. 7 and 9 of ICA No. 991 of 2009, who were respectively the petitioners in WPs No. 12808 and 11923 of 2009 defended vehemently the impugned judgment dated 16.11.2009, passed by the learned Single Judge and raised the following objections to the maintainability of the instant ICAs:--
(i) The Pakistan Railways is a public department and has to perform its duties in a transparent manner and awarding of the contract in question lacks this transparent exercise by the Pakistan Railways;
(ii) that the grant of contract to the appellant through private negotiation is absolutely illegal and is violative of Public Procurement Rules, 2004 read with Public Procurement Regulatory Authority Ordinance, 2002; (iii)that the grant of contract by the Pakistan Railways through private negotiation is not at all permissible; (iv)that the Pakistan Railways did not even execute any agreement with the appellant for the grant of contract in question, which is the necessary requirement of law and awarded the contract to the said appellant through a simple letter dated 10.06.2009; (v)that the appellant is running the contract on the basis of an ad-interim injunctive order issued by a learned Division Bench of this Court dated 26.11.2009 and the acceptance of ICA shall perpetuate the illegal and mala fide grant of contract to the said appellant; (vi)that the judgment dated 16.11.2009 passed by the learned Single Judge is perfectly legal and no exception can be taken to the same particularly due to the fact that the learned Single Judge directed the Pakistan Railways to invite fresh bids for granting the contract of the luggage vans forthwith;
(vii) that the contract was awarded to the appellant ignoring the restraining order dated 15.6.2009, passed by the learned Single Judge, on CM. No. 1 of 2009, which order reads as follows "Notice for 02.07.2009. In the meanwhile, the respondents shall not sign the contract with the Respondent No. 10;
(viii) that the letter dated 27.05.2009 relied upon by the learned counsel for the Pakistan Railways in support of his contention to the effect that notices for inviting improved bids from the previous bidders were issued, was a subsequently manufactured document; (ix)that the mentioning ui the name of Sakhawat Ali in the pay order dated 18.3.2009 does not conclusively lead to the fact that he participated in the private negotiation process and even if such a fact is presumed, there is no estoppal in law against the said person to challenge the award of contract by the Pakistan Railways on the ground of haring been given in an illegal and mala fide manner;
(x) that the ICA is incompetent in view of the fact that a remedy of appeal has been provided in the matter in view of.RuleNo. 48(5) of Public Procurement Rules, 2004.
8. We have considered the arguments of the learned counsel for the parties and have perused the record.
9. The learned Single Judge in the impugned judgment dated 16.11.2009 has held that the first process of inviting bids for awarding the contract in question shelved and all the bidders were informed accordingly. The learned Single Judge further held that the Pakistan Railways, which was one of the respondents in the writ petitions was asked to show any law, rule, regulation and instructions, which permitted the Pakistan Railways to award contract without inviting bids but no such provision was referred to in reply. This lacuna was the basic rationale for passing the impugned judgment by the learned Single Judge. It was not the case of the Pakistan Railways either during the pendency of the writ petition and also before this Court that any fresh process of inviting bids through proper publication was undertaken by the Pakistan Railways. The said public department was unable to show any such provision of law authorizing it to award the contract in the manner in which it was done.
10.It is obvious that the contract in question was granted by the Pakistan Railways to the appellant through some private negotiation in which process the appellant is said to have improved its earlier bid. In this context, the provisions of Public Procurement Regulatory Authority Ordinance, 2002 are very much relevant. This Ordinance according to Section 1 sub-section (2) and sub-section (3) extends to the whole of Pakistan and came into force on 15th of May, 2002.
According to Section 2 Clause (j), procuring agency was given a specific meaning and interpretation in the following manner:--
(j) "procuring agency" means--
(i) any Ministry, Division, Department or any office of the Federal Government;
(ii) any authority, corporation, body or organization - established by or under a Federal law or which is owned or controlled by the Federal Government."
Applying the definition of "procuring agency" as given in the Ordinance of 2002, the Pakistan Railways, which is a department of the Federal Government falls within the definition of procuring agency. In exercise of powers vested in the Federal Government to make rules, the enabling provision of Section 26 of the Ordinance reads as follows: '26. Power of the Federal Government to make rules.--The Federal Government may, by notification in the official Gazette, make rules for carrying out the purposes of this Ordinance."
Resultantly, Public Procurement Rules, 2004 were made and enforced through Gazette publication dated 9th of June, 2004. In order to ensure transparency in the awarding of contracts by a procuring agency, a concept of competitive bidding has been introduced in the said rules and Rules 3 and 4 read as follows:-- "3. Scope and applicability.--Save as otherwise provided, these rules shall apply to all procurements made by all procuring agencies of the Federal Government whether within or outside Pakistan.
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 procurements process is sufficient and economical."
The term "competitive bidding" was also defined in Rule 2 clause (c), which reads as follows: "(c) "competitive bidding" means a procedure leading to the award of a contract whereby all the interested persons, firms, companies or organizations may bid for the contract and includes both national competitive bidding and international competitive bidding."
11.Rule 20 provided that the procuring agencies shall use open competitive bidding as the principle method of procurement for the procurement of goods, services and works.
12.Rule 34 sub-rule (2) deals with the situation of re-bidding process to be undertaken by the procuring agency, which requires a revised method of specifications, evaluation criteria to be adopted in the re-bidding process. The awarding of contract through negotiations have been specifically prohibited in Rule 40, which provides as follows: "40. Limitation on negotiations.--Save as otherwise provided there shall be no negotiations with the bidder having submitted the lowest evaluated bid or with any other bidder: Provided that the extent of negotiation permissible shall be subject to the, regulations issued by the Authority."
13.Rule 42 enlists alternative methods of procurements of goods, services and works and clause
(v) of the said rules reads as follows:-- "(v) in case of an emergency: Provided that the procuring agencies shall specify appropriate fora vested with necessary authority to declare an emergency.
(d) negotiated tendering.--A procuring agency may engage a negotiated tendering with one or more suppliers or contractors with and without prior publication of a procurement notification. This procedure shall only be used when,-- (i)the supplies involved are manufactured purely for the purpose of supporting a specific piece of research or an experiment, a study or a particular development; (ii)for technical or artistic reasons, or for reasons connected with protection of exclusive rights or intellectual property, the supplies may be manufactured or delivered only by a particular supplier; (iii)for reasons of extreme urgency brought by events unforeseeable by the procuring agency, the time limits laid down for open and limited bidding methods cannot be met. The circumstances invoked to justify extreme urgency must not be attributable to the procuring agency.
Provided that any procuring agency desirous of using negotiated tendering as a method of procurement shall record its reasons and justification in writing for resorting to negotiated tendering and shall place the same on record."
14.A perusal of the provisions of Ordinance of 2002 and of the Rules of 2004 made there-under make it abundantly clear that they are aimed at ensuring a transparent exercise of power by a procuring agency in the awarding of its contracts. It is a well settled principle of law laid down in the judgment reported as Arsalla Khan vs. Bashir Ahmad Blour and 3 others (PLD 1976 Supreme.
Court 581) that public departments cannot award valuable rights of its contracts through private negotiations as it defeats the express limitations placed on its powers by the relevant rules. The Public Procurement Rules, 2004 envisage only an emergent situation as provided in Rule 42 clause
(v) to bypass the competitive bidding process and it is not the case of the Pakistan Railways that any such situation existed which necessitated the Pakistan Railways to award the contract in question to the appellant in the manner in which it has been awarded through letter dated 10.06.2009. At least the official respondents were unable to point out any document supporting the above eventuality.
15.The superior Courts consistently has insisted upon the transparent exercise of powers by public authorities in awarding the contracts of valuable rights and the following judgments can be referred to as a ready reference:-- (i)Malik Atta Muhammad and another vs. Government of Punjab through Secretary, Local Government and Rural Development, Lahore and others (2007 SCM R 178)
(ii)Mubashar Iqbal Cheema vs. Cantonment Board (PLD 2009 Lahore 506)
(iii)Dr. Tariq Mehmood Memon vs. Province of Sindh through Chief Secretary and another (2007 M LD 1225).
16. The following circumstances seriously reflect upon the transparent exercise of powers by the Pakistan Railways in this matter:--
(i) No public notice of inviting the fresh bidding was undertaken.
(ii) The committee constituted by the Pakistan Railways for processing the bid of the appellant was not shown to have analyzed it nor any document was produced before the Court to show as to whether this revised bid of the appellant was in fact even put up before the said, committee, which committee according to the learned counsel for the Pakistan Railways, has been permanently constituted and is functioning.
(iii) The contract was awarded to the appellant only through issuance of letter dated 10.06.2009 and the charge of the contract in question was handed over to the appellant even without signing of any formal agreement.
(iv)There is no document proving the submission of a revised bid by the appellant for one year contract, which was awarded to it through letter dated 10.06.2009.
(v)In the first process of inviting bids, the contract was aimed to be operative for three years and we do not know as to what prevailed with the Pakistan Railways to award the contract for one year only and that too without adopting the process of competitive bidding.
(vi)There is no order passed by any competent authority of the Pakistan Railways to adopt the process of negotiation for awarding the contract in question to the appellant.
(vii) The entire exercise undertaken by the Pakistan Railways in awarding the contract in question to the appellant lacks transparency and good governance.
17.The learned Single Judge has recorded a specific finding to the above effect in Para 8 of the impugned judgment dated 16.11.2009, which reads as under: "It is thus clear that the process for the award of contract to Respondent #10 is not only without lawful authority but the same have been conducted in a non-transparent manner, hence, cannot be sustained in the eye of law."
18.The learned counsel for the appellant could not point out any illegality in the impugned judgment dated 16.11.2009. We have also scrutinized it very carefully and find it to be a judgment clothed with perfection and propriety. In Paragraph No. 10 of the impugned judgment dated 16.11.2009, the learned Single Judge of this Court also issued further necessary direction to the Pakistan Railways to invite fresh bids for auction of the contract in question making all efforts to avoid cartelization. We are thus not inclined to interfere in the judgment passed by the learned Single Judge.
19.The mere fact that the appellants are running the contract after passing of the impugned judgment in the writ petition and that too on account of an injunctive order issued by a learned Division Bench of this Court dated 26.11.2009 does not justify to give protection to the illegal and apparently non-transparent method of awarding the contract in question by the Pakistan Railways to the appellant.
20.The contention of the learned counsel for the appellant that huge loss is likely to be caused, if the contract awarded to the appellant is cancelled at this stage carries no weight. However, since the appellant is a beneficiary of the illegally awarded contract, therefore, we direct the auditors of the Pakistan Railways to immediately assess the loss, if any, which accrues of the public exchequer Pakistan Railways on account of the illegally awarding of the contract to the appellant and its consequent cancellation by the learned Single Judge of this Court. The audit report shall be put up before the committee which already stands constituted by the Pakistan Railways and if it is found correct then such a financial loss shall be made good by the present appellant and from the personal pockets of the officials of the Pakistan Railways in equal share, who issued the letter dated 10.06.2009 and also contributed towards awarding of the contract in question to the appellant in addition to any other action which such committee direct to be taken against the persons held .and found responsible for the loss.
21.The objection of the learned counsel for the private respondent that the ICAs are not maintainable because of the availability of alternative remedy of appeal is not entertainable.
Suffice it to say that since no complaint was lodged to the committee as per provisions of Rule 48(2) of Public Procurement Rules, 2004 and no order having been passed in pursuance to Rule 48 in the matter, therefore, the preferring of any appeal as envisaged in Rule 48 clause (5) does not arise so as to attract the prohibitory clause of Section 3 sub-section (2) proviso (1).
22. In view of all the above circumstances, the instant ICAs, have no merits and are DISMISSED with costs throughout.