UMAR ATA BANDIAL, C J.---The petitioner is a civil contractor. He has a Category C-I licence valid until 30-6-2011 for executing projects up to the value of Rs,500/- million. He was excluded in shortlisting process for execution of the Urban Water Supply Scheme, Toba Tek Singh originally planned to cost of Rs,815.984 million. This was due to the lower categorization of his licence.
Subsequently, however the said project was bifurcated on 1-2-2011 into two projects valuing Rs,393.315 million and 366.818 million. This was done pursuant to a permission letter issued by the Chief Engineer South, Public Heath Engineering Department ("CE South") dated 8-1-2011 ("impugned letter"). This permission is statedly compliant with Rule 9 of Punjab Procurement Regulatory Authority Rules 2009 ("Rules"). Fresh tenders were not issued and competition was confined to the contractors of higher category that had been short listed earlier. As a result the petitioner although eligible was excluded. Hence, this petition.
2. During the course of hearing, an objection was raised to the authority of the CE South to issue the impugned letter without sanction by the Provincial Government. Rule 9 Mid requiring such sanction is reproduced below: "Rule 9. Limitation on splitting or regrouping of proposed procurement.-- Save as otherwise provided and subject to the regulation made by the PPRA, with the prior approval of the Government of the Punjab, a procuring agency shall announce in an appropriate manner all proposed procurements for each financial year and shall proceed accordingly without any splitting or regrouping of the procurements so planned. The annual requirements thus determined would be advertised in advance on the PPRA's website as well as on the website of the procuring agency in case the procuring agency has its own website."
' It is explained that the Provincial Government has allowed delegation of authority in paragraph
(viii) of the Standard Operating Procedures ("SOPs") issued by the Provincial Government on 13-10- 2011 which provides as follow:-- viii. Principle decision is that pre-qualification must be conducted on the total cost of the project, splitting/grouping should be done on logical basis/analysis of the project with true spirit, as much as possible minimum limit of. Rs,50 million be kept in kind, for special cases/deviation from instructions the concerned Chief Engineer should discuss the same with the Secretary, HUD and PHED prior to splitting grouping.
3. Based on paragraph (viii) of the SOPs the respondents were asked to demonstrate communication on the subject between two officers, namely, Secretary to the Provincial Government ("Secretary") and the CE South, but no written material has been brought on record.
4. This case has been prolonging for the last few hearings for the requisite documents to be shown by the respondents. However, today there is an application bearing C.M. No,10 of 2013 by the petitioner seeking permission to withdraw the petition. The petitioner has been examined during the hearing. He states that he has been approached by residents of Toba Tek Singh whose water supply scheme has been delayed on account of the present petition. The petitioner is, otherwise, not a prominent or busy civil contractor. The last contract he executed for the Provincial Government was a scheme in Okara valuing Rs,2.0 million.
5. Notwithstanding the petitioner's application, the reason the Court has chosen to carefully, examine the exercise of executive authority in the present case is because under rule 9 ibid and the SOPS, the splitting of a works contract ought not to be done after the stage of shortlisting of contractors; otherwise such splitting can be used to exclude competition by eligible contractors of a lower category by awarding the contract to a favoured higher category public contractor.
Needless to say a higher category contractor has higher over-heads and is therefore likely to demand higher price. Such caution should be exercised to ensure transparent utilization of public money on public contracts in accordance with law.
6. The regulatory mechanism established in the Rules is meant to advance the said object of the Rules and the SOPs and to primarily ensure utilization of public funds in a transparent, fair and reasonable manner that promotes public interest. The failure to establish on record delegation by the Provincial Government to the CE South to split the original contract in terms of the SOPs reflects lack of evidence on record showing that the respondents satisfied the said condition laid down in the Rules and the SOPs,
7. Be that as it may, there is no material on record to justify a finding of malice or of dishonesty by the respondents. However, negligence and indifference in the discharge of duty by the respondents is spelt out from the facts. The Rules must be complied strictly by the executive authorities responsible for utilizing public funds. Otherwise, their actions are invalid and ineffective.
8. Notwithstanding the foregoing, the ground reality is that the project in question has been executed, according to the learned Additional Advocate-General on instructions, to the extent of 37% of its value. Although the petitioner himself does not possess the merit to justify interference in the matter, however, this petition has raised a question of public interest.
9. On that plane, it is ordered that the respondents shall, in all their projects, comply with the Rules.
In the present case, the CE South shall prepare a reference for the Secretary by placing on record such material on the basis of which splitting up of the subject contract is justifiable. The Secretary shall apply his mind fairly to the said reference and pass an appropriate order strictly in accordance with law on the subject. The order passed by the Secretary affirming or rejecting the reference and the grounds of his decision shall be forwarded to the Deputy Registrar (Judicial) of this Court within two weeks from the date of receipt of a certified copy of this order.
10. Accordingly, this petition along with aforesaid C.M. is disposed