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PLD 2015 Sindh 26

CITY TRADING AND CONTRACTING PRIVATE LIMITED vs PROVINCE OF SINDH

CitationPLD 2015 Sindh 26
CourtSindh High Court
Case No.Constitutional Petition No.D-2821 of 2011
Date2014-02-20
Judge(s)Irfan Saadat Khan, Zafar Ahmed Rajput
ResultPetition dismissed

ORDER

' IRFAN SAADAT KHAN, J.---This constitution petition has been filed with the following prayers:- ("A) Direct respondent No.4 (SBCA) to approve the petitioner's Plans and Designs of the Turnkey Project of Sports Complex and Commercial-cum-Residential building to be built on the said Government Plot, and further direct SBCA to issue to the petitioner No Objection Certificate for construction, sale and advertisement of a residential-cum-commercial high rise building on 40% portion of the said Project and also for construction of Sports Complex as per the plan.

(B) Permanently restrain the respondents and all their officers, magistrates and employees from, in any manner, interfering with the exclusive possession of the petitioner of the said plot on M.A.

Jinnah Road Karachi or creating any hindrance, whatsoever in the way of construction of the said Project. Interim injunction in this regard is also prayed.

(C) Declare that inasmuch as the said plot of the project is the exclusive property of the Province of Sindh, the approval of any government or local agency is not necessary and is not required or compulsory for the petitioner for seeking approval of the plan and Design for building the project.

(D) Declare that the petitioner has legal right under the law to lease out to the purchasers and sell shops, offices, warehouses, apartments and parking spaces on its own conditions without complying with any Pro-forma or directions of the respondents Nos. 1 and 2.

(E) Declare that the petitioner has acquired vested rights to construct the Project as per the said Agreements and the registered irrevocable Power of Attorney executed with the petitioner.

(F) Direct the respondents and all department officers and subordinates of respondent No.1 to act expeditiously and promptly to do all things necessary as per their obligations arising from the said Agreements to enable the petitioner to commence and complete the Project, in public interest.

(G) To grant any other relief to the petitioner deemed pertinent in the facts and circumstances of the case.

2. Briefly stated the facts of the case are that the respondent No.1 constituted a Project Implementation Committee for construction of a sports complex at plot of land bearing No.31 PR(Old Survey No.E-8/1), commonly known as "P&G Ground" measuring 17,125 Sq. Yards. The said committee then appointed Messrs Surti and Partners as its consultant to advise it at various stages of the construction of the said sports complex. Surti and Company thereafter studied the subject and examined the documents of ten firms and through a detailed analysis report and the marks obtained by those firms along with their evaluation report and other documents vide letter dated March 26, 2003 informed the same to the respondent No.2. As per the said report of Surti and Partners, Messrs City Trading and Constructing W.L.L of Doha, Qatar obtained 71 marks. The respondent No.2 then informed the Directors of the said Trading and Contracting W.L.L Qatar that they have been selected as Developers/Constructors for construction of Sports Complex by the Project Implementation Committee in its meeting held on 27th May, 2003. The respondent No.1 also through Section Officer (Cabinet), Government of Sindh, vide letter dated July 25, 2003, informed the respondent No.2 about the decision taken by the Cabinet in its meeting held on July 8, 2003 on the subject enclosing summary of the cabinet meeting. Another cabinet meeting took place on March 11, 2005 and certain parameters about the said project were approved. The decision of the cabinet meeting held on March 11, 2005 was communicated to the respondent No.2 by the Government of Sindh, Services, General Administration and Co-Ordination Department through its section officer vide letter dated April 5, 2005. The petitioner then incorporated itself into a private limited company under the Companies Ordinance 1984 and obtained a certificate of incorporation dated June 15, 2005. Petitioner also obtained National Tax Number.

3. Thereafter the respondent No.2, acting on behalf of the Governor, entered into an agreement dated 29-11-2006 with the petitioner awarding the petitioner Turnkey Contract on Self-Financing Basis for the construction of Indoor Sports Complex, Car Parking and Multistorey Commercial- cum-residential Buildings (including seating of 4100 people and parking for 2185 cars and 2119 motorbikes totaling 4304 vehicles to control traffic congestion) on the said plot. Thereafter on 30th November 2007 a supplementary agreement was also executed between the parties by agreeing upon certain additional conditions. As per the petitioner a total benefit of Rs.3,051,100,000.00 would be received by the Government of Sindh after completion of the said project. Salient features of the said agreements are as under:

(i) That the said project would be constructed on turnkey basis and total finance would be provided by the petitioner.

(ii) That a state of art indoor sports complex would be constructed on 60% area of the plot.

(iii) That the indoor sports complex and 28 constructed shops in the sports portion of the said plot would be handed over by the petitioner to the respondent No.1 free of cost.

(iv) That on 40% area of the plot the petitioner was given the right to build commercial-cum- residential building and the petitioner would be entitled to execute lease of the said 40% portion and to retain the sale proceeds thereof.

(v) That the lease would be for a period of 99 years.

4. Possession of the plot was then handed over to the petitioner vide letter dated 15-12-2006. The petitioner then started necessary paper work of the said project which included payment of certain fee to SBCA. SBCA was also approached for approving building plan so that the project could be started. It is averred that in spite of several requests SBCA did not approve the plan of the petitioner and no objection for construction of the said project was not issued. The petitioner was left with no alternative but to file the instant petition.

5. Mr. Rasheed A. Akhund, Advocate has appeared on behalf of the petitioner and submitted that the respondent No.4 may be directed to grant approval in order to enable the petitioner to start construction on the said plot, which has been duly approved by the respondent No.2 and other Government functionaries. He states that even the respondent No.2 has requested the respondent No.4 to approve the plan but in spite of the request the respondent No.4 has not approved the same. He states that the refusal of respondent No.4 is illegal as they have no authority under the law to refuse the said approval by totally ignoring the permissions granted by respondents Nos.1 and 2. He states that the said project has been approved by the Provincial Cabinet, hence action of respondent No.4 is in violation of the settled principles of law. While elaborating his view point, the learned counsel states that the project is Turnkey Contract on Self-Financing Basis. He states that by not approving the said project by respondent No.4 has in fact caused loss of more than 3 billion Rupees to the Government of Sindh and if the position persists, no foreign investor would come to Pakistan for making investment in any project of the country. He states that in the present project Government incurs no expense but would earn more than three billions rupees and the project would remain the exclusive property of the Government of Sindh. He states that the petitioner is only interested in its 40% share in the said project. He states that agreement made on 29-11-2006 is still intact as the same has not been revoked by the Government. He further states that right to lease 40% share in the plot and receive payments against booking of offices and shops in respect of this share is the exclusive right of the petitioner. He states that the notification bearing No. SOB(SG&CD) 18-219 /2008 dated 31st December, 2008-issued by the respondent No.1 whereby Government of Sindh has excluded all the Government buildings under the purview of Government of Sindh from operation of all the provisions of Ordinance does not apply to the petitioner. He submits that the petition may be allowed and the respondent No.4 may be directed to grant approval of the said project. The learned counsel then invited our attention to Articles 173 and 199 of the Constitution of the Islamic Republic of Pakistan 1973.

6. Learned counsel further states that the Sindh Government Rules of Business, 1987 also supports his case. He states that if provisions of section 1(3) of SBCA Ordinance 1979 are examined it would reveal that the relevant provisions do not put any bar upon the petitioner to get the said approval.

He invited our attention to certain provisions of SBCA 1979 also. The learned counsel then referred to Karachi Building and Town Planning Regulation, 2002 (the Regulations) and submits that clauses 1-4.1 and 1-4.2 also support the case of the petitioner. He submits that in pursuance of the agreement a vested right has been created in favour of the petitioner. Learned counsel states that the agreement entered between the petitioner and Government officials also creates a Promissory Estoppel in favour of the petitioner. Learned counsel submits that since the action of the respondent No. 4 is illegal, therefore, they may be directed to approve the plan to enable the petitioner to start the construction work on the said project. Support of his above arguments the learned counsel has relied upon the following decisions:--

(1) PLD 1996 Karachi 1 (Zohra v. The Government of Sindh)

(2) 2004 SCM R 1274 (Ramna Pipe v. Sui Northern)

(3) PLD 2002 SC 208 (Pakistan v. Fecto Belarus Tractors Ltd.)

7. Mr. Miran Mohammad Shah, Additional Advocate General, has appeared on behalf of respondents Nos.1 and 2, whereas Mr. Ahmed Pirzada, Advocate has appeared on behalf of the respondent No.3. They submitted that the petitioner is not entitled to be given the said NOC since they have violated the provisions of section 10 of Colonization Act 1912. Learned counsel thereafter submitted that the land could not be allotted without fulfilling the requirements of the law. They further stated that the Governor Sindh has no authority to allot the said land. They have also objected to the power of attorney given to Syed Ghulam Akbar Shah Bukhari and stated that the said person has no authority to enter into the agreement on behalf of Governor. They further stated that the land was allotted to the petitioner free of cost i.e. Without any consideration. They stated it is hardly believable that the plot of more than 17000 Sq. Yards can be granted without any consideration, which amply proves that something is wrong somewhere. They stated that it is beyond comprehension that such a huge plot situated in the heart of city could be given to the petitioner without even charging a single penny, which proves mala fide on the part of the persons entering into the agreement with the petitioner.

8. Learned counsel further stated that in fact Articles 129 and 137 support the case of the respondents rather than the petitioner. Learned counsel further submitted that neither the Revenue Department nor the Land Utilization Department were made party to the said agreement, which also shows mala fide on the part of the petitioner. They further stated that it is only the land utilization department who has the authority to deal with the Government lands and the respondent No.2 has no authority under the law to allot the said plot to the petitioner. Thereafter they stated that the project was not a Turnkey Contract as asserted by counsel rather the project authorized the petitioner to lease out 40% of the said plot by charging substantial amount from the persons to whom offices and shops would be sold. The learned counsel vehemently opposed the instant petition and have categorically stated that the petitioner has come to the Court with unclean hands and is not entitled to be granted the said NOC.

9. Ms. Afsheen Aman, Advocate and Rao Sarfaraz, Law Officer appeared on behalf of the respondent No.4 and adopted the arguments of Mr. Ahmed Pirzada and Mr. Miran Mohammad Shah. They submitted that as per section 1(1) of Sindh Building Control Ordinance 1979 the petitioners are not entitled for the said NOC. They stated that clauses 1-4.1 and 1-4.2 of Karachi Building and Town Planning Regulation do not support the case of petitioner. They stated that the concession granted under the said notification dated 31st December 2008 is not available to the petitioner since it speaks of 'building' and not that of "land'. They, therefore, finally submitted that the petitioner is not entitled for the said NOC. The learned counsel have further stated that the clause No.3-2.2.1 of the Regulations has also not been complied with by the petitioner.

10. Mr. Rasheed A.. Akhund, Advocate, while submitting his rebuttal, objected to the arguments advanced by Ms. Afsheen Aman, Advocate and Rao Sarfaraz. Law Officer and stated that since they are not the authorized officers, therefore, they cannot make appearance on behalf of the respondent No.4. Mr. Rasheed A. Akhund advocate then submitted that as per Rules 3 and 7 of the Sindh Government Rules of Business 1987, the Chief Minister is the head of Government departments working under the Government of Sindh and in the instant case no objection has been granted by the Chief Minister, hence, the respondent No.4 has no authority to object on issuance of the NOC. Learned counsel for the petitioner stated that if the petition is not allowed the public at large would suffer. Ms. Afsheen Aman and Mr. Rao Sarfaraz on the other hand, stated that they have been duly authorized to appear in all cases on behalf of respondent No.4 before the High Court. Hence this objection of Mr. Akhund is rejected.

11. We have heard all the learned counsel for the parties at considerable length. We have perused the material placed before us the record and the case laws relied upon by the respective parties.

12. Before advancing further we deem it expedient to discuss the term "turnkey contract" as greatly emphasized by the learned counsel for the petitioner. Though no document has been placed on record wherein the said term has been defined therefore we made research on our own.

13.. These types of contracts are done on behalf of the clients who do not have expertise and experience to undertake the said work. Turnkey Contract is a contract in which one party takes full responsibility for constructing and commissioning of complete project. The contractor assumes the responsibility from the start of the project to the final handing over of the same to its owner thereof. Turnkey contract is a business arrangement in which the project is delivered in complete format. The owner only comes into the picture when project becomes fully operational; in other words is ready to the extent that only turning of the key is required. In such type of projects the owner agrees to pay the said contractor a stipulated amount as per owners specifications. Turnkey contract saves the owner from appointing numerous contractors required for different specifications and in a way releases him from time and again engagements of different contractors for assigning them different jobs required for the said project. The term 'turnkey contract' has been defined in the Black's Law Dictionary, 6' Edition, page 1516, as under:-- "Turn-key contract: Project in which all owner need do is "turn the key" in the lock to open the building with nothing remaining to be done and all risks to be assumed by contractor: Glassman Const. Co., Inc. V. Maryland City Plaza, Inc., D.C.Md., 371 F. Supp. 1154, 1159. Term used in building trade to designate those contracts in which builder agrees to complete. Work of building and installation to point of readiness for occupancy. It ordinarily means that builder will complete work to certain specified point, such as building a complete house ready for occupancy as a dwelling, and that builder agrees to assume all risk. Gantt V. Van der Hoek, 251 S.C. 307, 162 S.E. 2d 267, 270.

' In oil drilling industry a job wherein driller of oil well undertakes to furnish everything and does all work required to complete well, place it on production, and turn it over ready to turn the key and start oil running into tanks. Retsal Drilling Co., V. Commissioner of Internal Revenue. C.C.A.-Tex., 127 F.2d 355, 357. A turn-key contract to drill a well involves the testing of the formation contemplated by the parties and completion of a producing well or its abandonment as a dry hole, all done for an agreed-upon total consideration, putting the risk of rising costs, well trouble, weather, and the like upon the driller, but it does not, in the absence of a clear expression, require the driller to guarantee a producing well. Totah Drilling Co. V. Abraham, 64 N.M. 380, 328 P. 2d 1083, 1091"

' The term Turnkey includes:

(1) A contract involving complete process of designing.

(2) Specification

(3) Construction

(4) Commissioning.

14. Now coming to the present case, it is seen that though the agreement has been termed as a turnkey contract on self-financing basis but in our view the said contract lacks the basic parameters of turnkey contract on the following grounds:-

(1) In a turnkey contract the contractor assumes the responsibility up to the time the project is handed over to the owner whereas in the instant case perusal of the agreement clearly reveals that the petitioner claims 40% rights of the commercial portion for leasing out the same itself

(2) In a turnkey contract an amount is agreed between the contractor and the owner for completion of the project and the contractor at no point of time claims rights to lease after the completion of the project whereas in the instant case an understanding has been developed between the petitioner and respondent No.2 with regard to giving 40% rights to the petitioner.

(3) In a turnkey contract after completion of the project the contractor handed over the project and it is the owner who decides the fate of the project after getting its possession, whereas in the instant case it is categorically mentioned that the Sindh Government will not interfere with the arrangement of the execution of lease by the petitioner as it will be the sole discretion of the contractor. It is also mentioned that the sale proceeds of the commercial portion of the said plot would be kept by the petitioner to the exclusion of the Government of Sindh, this is also against the features of the turnkey contract.

' Hence keeping in view the above parameters, we are of the view that the said project cannot be termed as a turnkey contract. Hence so far as this aspect is concerned we do not agree with the submissions made by the learned counsel for the petitioner.

15. Now coming to the various legal propositions raised by the learned counsel for the petitioner with regard to vested right accrued in favour of the petitioner and applicability of principle of promissory estoppel by virtue of entering into the agreement with the respondent No.2 which is not subject to any event and contingency in the instant case, it is seen that the counsel appearing on behalf of respondents Nos.1 to 3 have categorically stated that the plot in question owned by the Provincial Government, was leased to Volunteer Corp. Ministry of Defence for the 99 years in the year 1952. Thereafter, upon violation of the terms, the said plot was allowed to National Theatre in the year 1958. The said plot was then again handed over to the Sindh Volunteer Corp and in the year 1974 it was then transferred to Pakistan Sports Board which also was without due sanction of law. The respondent No.1 states that in fact respondent No.2, acting on behalf of Government, has no authority under the law to enter into an agreement with the petitioner and this is the reason why NOC was not issued to the petitioner as the person who has entered into the agreement with the petitioner in such agreement, on the face of it, as per counsel for respondents Nos.1, 3 and 4, was not the competent authority and hence the contract was void, therefore the question of any vested right or that of promissory estoppel does not arise. Counsel for the petitioner has not produced any document before us to show that Pakistan Sports Board was having lawful authority to enter into the agreement with the petitioner. Hence, so far as this aspect of the petition that vested right or promissory estoppel has accrued in favour of the petitioner is found to be devoid of any merit and is hereby repelled. Decisions relied upon by the learned counsel for the petitioner on this issue have also been examined and are found to be distinguishable.

16. Next objection raised by the learned counsel is with regard to Article 173 of the Constitution, the said Article is reproduced herein below:-- "173. Power to acquire property and to make contracts, etc.

(1) The executive authority of the Federation and of a Province shall extend, subject to any Act of the appropriate Legislature, to the grant, sale, disposition or mortgage of any property vested in, and to the purchase or acquisition of property on behalf of Federal Government or, as the case may be, the Provincial Government, and to the making of contracts.

(2) All property acquired for the purposes of the Federation or of a Province shall vest in the Federal Government or, as the case may be, in the Provincial Government.

(3) All contracts made in the exercise of the executive authority of the Federation or of a Province shall be expressed to be made in the name of the President or, as the case may be, the Governor of the Province, and all such contracts and all assurances of property made in the exercise of that authority shall be executed on behalf of the President or Governor by such persons and in such manner as he may direct or authorize.

(4) Neither the President, nor the Governor of a Province, shall be personally liable in respect of any contract or assurance made or executed in the exercise of the executive authority of the Federation or, as the case may be, the Province, nor shall any person making or executing any such contract or assurance on behalf of any of them be personally liable in respect thereof (5)

Transfer of land by the Federal Government or a Provincial Government shall be regulated by law."

' Perusal of this Article clearly reveals that transfer of land by Federal Government or by Provincial Government shall be regulated by law, and in the instant case, since it is observed that the land belongs to Board of Revenue/Land Utilization Department, the Pakistan Sports Board or the respondent No.2 have no authority under the law to enter into any agreement, hence, the desired NOC could not be granted., Therefore on this point also we do not agree with the submissions made by the learned counsel for the petitioner.

17. It is further stated that the Government lands are governed under section 10 of the Colonization Act 1912 which reads as under: "10. Issue of statement of conditions of tenancies--

(1) The Board of Revenue subject to the general approval of the Government, may grant land in colony to any person on such conditions as it thinks fit.

(2) The Provincial Government may issue a statement or statements of the conditions on which it is willing to grant land in a colony to tenants.

(3) Where such statements of conditions have been issued, the Collector may, subject to the control of Board of Revenue allot land to any person, to be held subject to such statements of conditions issued under subsection (2) of this section, as the Collector may by written order declare to be applicable to the case.

(4) No person shall be deemed to be a tenant or to have any right, or title in the kind allotted to him until such a written order has been passed and he has taken possession of the land with the permission of the Collector. After possession has been so taken, the grant shall be held subject to the conditions declared applicable thereto".

' Perusal of the above section reveals that it is only the Board of Revenue which has the authority to grant land to any person on such condition as it thinks fit. Since admittedly the plot of land has not been allotted to the petitioner by the Board of Revenue, therefore, the grant of land to the petitioner by the respondent No.2 does not appear to be in accordance with law. Hence, on this aspect also we do not agree with the submissions made by the learned counsel for the petitioner.

18. The learned counsel for the petitioner has also produced before us a notification dated December 31, 2008 issued by the respondent No.1 . The said notification is reproduced herein below: ' Karachi dated the December 31, 2008.

' NO. SOB (SGA&CD) 18-219/2008: In exercise of the powers conferred by Section 1 Subsection (3) of the Sindh Building Control Ordinance 1979, the Government of Sindh is pleased to exclude all the Government buildings under the purview of Government of Sindh from the operation of all the provisions of the Ordinance (ibid).

' CHIEF SECRETARY ' GOVERNMENT OF SINDH ' We are afraid that this facility is not available to the petitioner, since this notification talks about the execution of the Government buildings, whereas admittedly the area allotted to the petitioner is not a Government building rather the same is a government land, hence no benefit of the above mentioned notification could be granted to the petitioner.

19. Our attention was also invited to Clauses 1-4.1 and 1-4.2 of the Karachi Building and Town Planning Regulations 2002 which read as under: ' Clause 1-4.1 The Government hereby delegates to the authority, *[Master Plan Group of Offices (MPGO)] and to the Concerned Authorities listed in Schedule 1A, the powers and duties assigned by these Regulations.

' 1-4.2 From time to time the Government may, by notification, modify or withdraw from any Concerned Authority any such powers or duties, or add to or revise the list in Schedule 'IA, or may recommend the revision of the boundaries of any of the jurisdiction of any Concerned Authority specified therein, after following the procedures specified in these Regulations".

' From perusal of the above clauses it is clear that these clauses hardly have any nexus with the instant case.

20. Ms. Afsheen Aman and Mr. Rao Sarfaraz have also invited our attention to clause 3-2.2 of the Karachi Building and Town Planning Regulations, 2002, which reads as under: 3-2.2 Submission of Plans for Approval The Owner shall submit to the Authority: 3-2.2.1. Two sets of all documents relating to the plot together with a letter from the Concerned Authority confirming the title/land use physically fresh demarcated/dimensions of the plot along with the existence of any road widening/cut line reservation.

' Counsel for the respondent No.4 vehemently submitted that the petitioner has failed to comply with the above requirement of law. Learned counsel for the petitioner was specifically asked whether the above referred clause has been complied with, however, no satisfactory reply in this regard was furnished by the learned counsel for the petitioner hence apparently this provision of law has remained un-complied with by the petitioner otherwise necessary details would have been furnished by the petitioner.

21. The most interesting part is that the petitioner has entered into the agreement with respondent No.2 and from comments filed on behalf of respondent No.2 they have not supported the petitioner and have categorically denied the averments of the petitioner and have also mentioned that the cabinet who has approved the project implementation committee was never informed about the ownership of the land and the respondent No.2 was not vested with the authority to enter into such type of agreement with the petitioner. The said respondent has also categorically stated that they were not the owners of the plot to enter into the agreement without first ascertaining about the real ownership of the plot which is vested with Board of Revenue/Land Utilization Department and were not even vested with the authority to hand over the possession of the plot to the petitioner. In the comments, the respondent No.2 has categorically mentioned that they had no knowledge about the actual ownership of the property and have entered into the agreement with the petitioner which does not have any sanction of law.

22. We, therefore dispose of the petition by observing as under: The agreement entered between the petitioner and respondent No.2 is not a turnkey contract.

(2) The respondent No.2 was not competent to enter into such type of agreement with the petitioner.

(3) On the basis of legal aspects discussed above, the petitioner has no right to claim any benefit of either accrual of any vested right or that of promissory estoppel in their favour.

(4) Petitioner on the basis of above observations is not entitled for D implementation of the said agreement or that of grant of NOC from SBCA.

' The petition is found to be devoid of any merit and is accordingly dismissed.

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