C.M.No.7094 and 7095 of 2015 These are miscellaneous applications on behalf of respondent No.2 to place on record certain additional documents and dispensation for filing certified copies of documents. Learned counsel for the applicant/respondent No.2 submits that additional documents which are sought to be placed on record are relevant and have material bearing upon fair decision of the instant writ petition. Copy of the application was handed over to learned counsel for the petitioner on 25.11.2015 to seek instructions and opportunity to file reply if need be. No reply has been filed, however, learned counsel for the petitioner requests for some further time to seek instructions regarding documents.
I have gone through the application and documents attached therewith. These documents relates to award of recent purchase order in favour of the petitioner by respondent No.2 with similar terms and conditions as are impugned in the main writ petition. Other document is intention to place purchase order on M/S Data Steel Pipe Industries (Local Manufacturer) in tender enquiry No.3282/2015 which is subject matter of the instant writ petition. Apparently, these documents are relevant and will also have material bearing upon fair decision of this case. Neither replies have been filed to these applications nor genuineness of these documents has been questioned by petitioner, however, further adjournment is requested by learned counsel for petitioner to seek instructions on these documents. At this juncture it is needless to mention that on the previous date of hearing, the matter was adjourned with clear understanding that the petitioner will seek instructions and file reply to the C.M, if need be. Despite opportunity, no response has been filed or instructions have been sought to make submissions on these documents. Therefore, I am not inclined to further adjourn the matter on this ground alone being a part heard matter. Accordingly, applications are allowed and documents are placed on record. C.Ms stands disposed of.
Main Case This constitutional petition has been filed seeking declaration that clause 43.1 of Tender Enquiry No.SN 3282/2015 (Tender Enquiry) of Steel Line Pipe by Sui Northern Gas Pipe Lines Limited (SNGPL) be declared unconstitutional with consequence that petitioner cannot be disqualified on the basis of said clause. Further prayer is made for declaring petitioner as lowest evaluated bidder for items No.4,7 and 10 of tender enquiry, hence entitled for award of contract. Injunction is also sought against respondents No.1 and 2 to be restrained from issuing letter of intent/purchase order to any one of the respondents No.3 to 5 relating to items No.4,7, and 10 of tender enquiry.
2. Brief facts are that respondent No.2 (SNGPL) invited Tender Enquiry No.3282/2015 dated 28.2.2015 for supply of Steel Line Pipe of different specifications mentioned in various items of the Tender Enquiry including items No.4,7 and 10. The petitioner being one of the local manufacturer of large steel line pipes participated in the Tender Enquiry and submitted its Technical as well as Finance proposals on 19.6.2015 for items No.4,7 and 10 of the Tender Enquiry. The petitioner Technical proposal was opened and accepted on 28.7.2015 and it was also informed that Financial bid will be opened on 04.8.2015. On opening petitioner financial bid, it was found that Financial proposal was conditional. Accordingly, on 06.8.2015, petitioner was informed that on page 2 of its financial bid, it has been stated that "petitioner offer is on the basis of current rate of duties and taxes and if there is increase in duties and taxes by Government after submission of bid, it will be borne by SNGPL". In the said letter dated 06.8.2015, petitioner was asked by SNGPL to delete the above said condition and confirm compliance of clause 43.1 of the instructions to bidders in the Tender Enquiry. The petitioner was also informed that reply should reach SNGPL on same day i.e.06.8.2015 by close of office hours, otherwise, petitioner bid will not to be considered for further evaluation. In response, petitioner vide letter dated 07.8.2015 refused to withdraw aforesaid condition. Resultantly, petitioners bid for items No.4,7 and 10 was not further evaluated for being non-complied of clause 43.1 of the Tender Enquiry. The petitioner being aggrieved filed instant writ petition on 16.9.2015 challenging vires of clause 43.1 of the Tender Enquiry alongwith consequential relief mentioned in para 1 above.
3. Learned counsel for the petitioner argued that clause 43.1 of Tender Enquiry is discriminatory and violative of Article 25 of the Constitution of Islamic Republic of Pakistan 1973 (Constitution). He elaborated that impugned clause 43.1 is only applicable to local manufacturers to the effect that after acceptance of bids, if taxes or duties on goods to be supplied are increased, SNGPL shall not be liable to pay the increase amount so charged from supplier. He submits that as aforesaid clause is not applicable to the foreign manufacturers, therefore, the same is discriminatory.
Reliance is placed Dr. Shahnaz Wajid Vs. Federation of Pakistan etc (2011 SCMR 1737). He submits that impugned clause has deprived the petitioner from competing with foreign vendors on level playing field which is violative of Article 18 of the Constitution. He further submits that foreign bidders are not class different from local bidders because both have same technology, therefore, discrimination cannot be made by SNGPL between them on the basis of any intelligible differentia.
He submits that SNGPL being a State owned company is bound to act justly, fairly and in transparent manner in award of contracts where national exchequer is involved. However, SNGPL in violation of aforesaid settled principle of law and Public Procurement Rules, 2004 has not only favoured foreign bidders over local bidders but its impugned actions will also cause heavy financial loss to national exchequer, because in case of increase of duties and taxes of goods in respect of foreign suppliers, SNGPL will have to bear said increased in duties and taxes. In this context, reliance is placed on Alleged Corruption in Rental Power Plants etc (2012 SCMR 773), Messrs Toyota Garden Motors (Pvt) Ltd Vs. Government of Punjab etc (PLD 2012 Lahore 503), Crescent Steel and Allied Product Limited Vs. Sui Southern Gas Co. Limited (2015 CLD 745), (2015 CLD 72). He adds that as acts of SNGPL lacks transparency, therefore, this Court in exercise of its power under judicial review should interfere in the matter and strike down clause 43.1 of the tender enquiry. In this behalf, reliance is placed on Messrs Ramna Pipe and General Mills (Pvt) Ltd Vs. Messrs Sui Northern Gas Pipe Lines (Pvt) Ltd etc (2004 SCMR 1274), Messrs Airport Support Services Vs. The Airport Manager, Quaid-e-Azam International Airport Karachi etc (1998 SCMR 2268), Raja Muahid Muzaffar and others Vs. Federation of Pakistan and others (2012 SCMR 1651), Suo Motu Case Action regarding huge loss to public exchequer by ignoring lowest bid of Fauji Foundation and Multinational Energy from vitol by awarding LNG Contract (PLD 2010 Supreme Court 731). Learned counsel argued that even if impugned clause 43.1 was accepted by petitioner previously, it will not amount to estoppal, because there is no estoppal against law especially constitution. He concluded that decision of Engineering Development Board (EDB) dated 04.12.2014 and judgment dated 02.10.2015 passed by this Court in Writ Petition No.33283/2014 relied upon by respondents in their replies, are not relevant to the issue involved in this constitutional petition and therefore, distinguishable.
4. Conversely, learned counsel for respondent No.2 raised preliminary objections to the maintainability of this writ petition on the ground of estoppel by submitting that petitioner has been consistently participating for the past decade, in almost all tenders by SNGPL for procurement of large steel line pipes without any demur or reservation to the standard terms and conditions therein including clause 43.1 of the tender. He submits that petitioner has not come to the court with clean hands thus not entitled for discretionary relief, because in response to questionnaire, which was part of tender documents, petitioner categorically replied that its offer was firm and irrevocable and it will abide to other terms and conditions of Tender Enquiry. Submits that for this reason, petitioner technical proposal was accepted, however, when financial proposal was opened, same was found to be conditional and inconsistent with the questionnaire answered and technical proposal submitted by petitioner. Submits that on 06.8.2015 petitioner was given sufficient notice and opportunity for deleting aforesaid condition but it refused to delete the same, therefore, its bid/proposal being non-complied and non-responsive was not further evaluated. He further submits that regarding impugned clause 43.1 EDB after hearing and holding meetings with various local manufacturers including petitioners already held on 04.12.2014 that said clause 43.1 of the tender is a valid clause. Submits that EDB decision was also upheld by this Court on 02.10.2015 in Writ Petition No.33283/2014, therefore, the same issue cannot be agitated again through this constitutional petition.
5. On merits, he argued that contract to be awarded to foreign bidders is on FOB (Free on Board) basis which is in pursuance to Government of Pakistan policy letter dated 23.4.1984. Submits that as per ICC Rules (Incoterms 2010) in FOB contracts, obligation of the supplier is to supply goods at the port and after such delivery, responsibility to pay the duty and taxes is on the purchaser. He further submits that there is no discrimination between local manufacturers who have to make supplies on FOR basis and foreign manufacturers who have to make supplies on FOB basis. Adds that local bidders are also given protections and concessions under SRO 827(1) 2001 dated 03.12.2001 (SRO) and through clause 3(ix)(c) of the Tender Enquiry. He further submits that impugned clause 43.1 of the Tender Enquiry is a standard clause which is also in compliance with rule 2(h) and 32 of the Public Procurement Rules, 2004 (PPRA). He submits that respondents are acting justly, fairly and transparent manner in pursuance to Federal Government Policy, therefore, the matter is not entertainable for judicial review. He placed reliance on Dr. Muhammad Javaid Shafi v. Syed Rashid Arshad etc (PLD 2015 Supreme Court 212), Dr. Akhtar Hassan Khan v. Federation of Pakistan etc (2012 SCMR 455), Suo Motu Case No.13 of 2009 (PLD 2011 Supreme Court 619) and Air India Ltd v. Cocbin International Airport etc (AIR 2000 Supreme Court 801).
6. I have heard the arguments of learned counsel for the parties and perused the record with their able assistance.
7. There is no cavil with the settled proposition of law that contracts carrying element of public interest, concluded by state owned companies has to be just, fair, transparent, reasonable and free of any taint of malafide, discrimination. There is also no doubt that all above aspects remain open for judicial review and in case of deviation can be corrected through appropriate orders under Article 199 of the Constitution. Now the moot question is whether impugned clause 43.1 of the Tender Enquiry is discriminatory to local bidders and the respondent No.2 has acted in nontransparent, unreasonable and malafidely manner. For convenience, clause 43.1 of the Tender Enquiry is reproduced hereunder:- FOR LOCAL MANUFACTURERS ONLY 43.1 in an event of any custom/excise duties or tax on any goods is imposed or increased, either by the provincial or Federation Government, the SNGPL shall not be liable to pay the amount so charged from the supplier/seller. The supplier/seller shall have no right to claim repayment or any from SNGPL paid by him on account of imposition of new custom excise duties or tax or increase in the existing rate of custom excise duty or tax".
It is admitted on all hands that Government of Pakistan in pursuance to direction of Economic Committee of Cabinet (ECC) dated 22.2.1984 issued policy letter dated 23.4.1984 to the effect that in order to support Pakistan National Shipping Corporation (PNSC), all public sector imports, including Pakistan steel imports except for edible oil will be imported on FOB basis with shipment in PNSC vessels and freight to be paid in Pakistan Rupees. Accordingly, it was directed that all Pakistan imports will henceforth be under arrangement of PNSC. In pursuance to aforesaid policy directive, SNGPL being public sector company, in all its contracts provided that bids from foreign bidders will be on FOB basis and from local bidders, it will be on FOR basis. In present Tender Enquiry, Clause 2.1(b) specifically provides that for goods offered from abroad, the prices will be quoted on FOB basis as well as CRF Karachi basis, whereas clause 2.1 (a) provide that for goods offered from within Pakistan, the price of goods be quoted on FOR basis including all custom duties, Sales tax and other taxes already paid or payable. Further clause 2.1 (a)(v) of Tender Enquiry stipulates that for goods from within Pakistan, bids will be evaluated at the FOR prices quoted by the bidders and as per clause 2.1(b))iv) for goods from abroad bids will be evaluated on FOB basis.
8. The FOB (Free on Board) contract is not a new concept developed by SNGPL in Tender Enquiry rather it is time tested and well recognized term in all commercial transactions. FOB contract is defined by International Chamber of Commerce (ICC) in its Rules named as Incoterms 2010. As per Incoterm 2010 FOB means "that seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel, and the buyer bears all costs from that moment onward". Clause A6 of Incoterms postulates that in FOB contracts the seller must pay all costs relating to the goods until they have been delivered. For ready reference, said clause A6 is reproduced hereunder"- "A6 Allocation of costs The seller must pay a) All costs relating to the goods until they have been delivered in accordance with A4, other than those payable by the buyer as envisaged in B6; and b) Where applicable, the costs of customs formalities necessary for export, as well as all duties, taxes and other charges payable upon export"
Liability of a buyer in FOB contracts is provided in Clause B6 of Incoterms 2010, to the effect that once goods are delivered, cost and duties and taxes are payable by buyer. Clause B6 is reproduced hereunder:- B6 Allocation of costs The buyer must pay a) All costs relating to the goods from the time they have been delivered as envisaged in A4, except, where applicable, the costs of customs formalities necessary for export, as well as all duties, taxes and other charges payable upon export as referred to in A6b; c) Where applicable, all duties, taxes and other charges, as well as the costs of carrying out customs formalities payable upon import of the goods and the costs for their transport through any country.
Bare reading of obligations of seller in clause A6 and obligations of buyer in clause B6 regarding FOB contracts in Incoterms 2010, leaves no manner of doubt, that before delivery of goods on port, the responsibility to pay costs, taxes and duties is on the seller. However, once the goods are delivered on board vessel, responsibility to pay costs, taxes and duties is on the purchaser.
In view of above, indeed clause 43.1 of the Tender Enquiry could not be made applicable to the foreign bidders who are not liable to pay any duty after delivery in FOB contracts, executed in compliance of policy directive of Government of Pakistan dated 23.4.1984 in pursuance to ECC directive dated 22.2.1984.
9. I have also noted that issue whether impugned clause 43.1 is discriminatory was also raised before EDB by local manufacturer, where after several meeting with various local manufacturers including petitioner, EDB vide its office order dated 04.12.2014 held that claim of local bidder is not entertainable in view of FOB supplies, as it is not compatible with foreign supplier who are not liable to pay any duty in any circumstances. Relevant part of EDB decision is reproduced hereunder:- "With reference to Clause 40 and Clause 43.1 (Instructions to Bidders) with regard to pay of revised duties and taxes during the extended period of supply of goods, the DSPIL claim is not entertained in case of FOB supplies as it is not compatible with foreign supplier who is not liable to pay any duty in any circumstances".
The aforesaid decision of EDB was also challenged before this clauses are discriminatory and unfair to local bidders. The said writ petition was dismissed on 02.10.2015 and this Court also held that local bidder having participated in the bid is estopped to challenge said conditions.
10. From above narrated facts and circumstances it cannot be said that SNGPL has acted malafidely or in unfair and nontransparent manner in introducing clause 43.1 to local manufacturers only. This Court while exercising power of judicial review in respect of contracts of public importance by state functionaries is concerned about infirmity and arbitrariness in decision making process to ensure fairness and transparency in the process. However, this Court cannot examine details of terms and conditions of contract and substitute decision of decision makers. In this regard, reliance is placed on Suo Motu Case No.13 of 2009 in the matter of Action on press clipping from the daily "Patriot" Islamabad dated 4.7.2009 regarding Joint Venture Agreement between CDA and Multi-Professional Cooperative Housing Society (MPCHS) for development of land in Sector E-11 Islamabad) (PLD 2011 Supreme Court 619) where it is held as under:- "It is well-settled that in matters in which the Government bodies exercise their contractual powers, the principle of judicial review cannot be denied. However, in such matters, judicial review is intended to prevent arbitrariness or favouritism and it must be exercised in larger public interest. It has also been held by the Courts that in matters of judicial review the basic test is to see whether there is any infirmity in the decision making process. It is also a well-settled principle of law that since the power of judicial review is not an appeal from the decision, the Court cannot substitute its decision for that of the decision maker. The interference with the decision making process is warranted where it is vitiated on account of arbitrariness, illegality, irrationality and procedural impropriety or where it is actuated by mala fides".
Similar view was also expressed by Supreme Court of India in case of Tata Cellular v. Union of India (AIR 1996 Supreme Court 11) where it is held as under:- "It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review.
Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government but the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down.
Judicial review is concerned with reviewing not the merits of the decision in support of which the application of judicial review is made, but the decision making process itself.
In Chief Constable of the North Wales Police v Evans (1982) 3 AIIER 141 at 154 Lord Brightman said; Judicial review, as the words imply, is not an appeal from a decision, but a review of the manner in which the decision was made. Judicial Review is concerned, not with the decision, but with the decision making process. Unless that restrictions on the power of the Court is observed, the Court will, in my view, under the guise of preventing the abuse of power, be itself guilty of usurping power.
Therefore, it is not for the Court to determine whether a particular policy or particular decision taken in the fulfillment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under: (i) Illegality: This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it. (ii) Irrationality, namely, Wednesbury unreasonableness (iii) Procedural impropriety. "
Same principle was also applied, in case Air India Ltd v. Cochin International Airport Ltd (AIR 2000 Supreme Court 801), and Sterling Computers Ltd Vs. M/s M. & N. Publications Ltd (AIR 1996 Supreme Court 51).
11. Notwithstanding the fact that clause 43.1 could not be applied to FOB contracts, I have also carefully examined the arguments of learned counsel for the petitioner that clause 43.1 does not give level playing field to local bidders, hence discriminatory. I found this argument misconceived and of no force for reasons discussed hereafter:- Petitioner main grievance is that under impugned clause 43.1, in case of increase in duties and taxes in Pakistan, local bidder will have to bear increase of such duty and taxes whereas same burden is not on foreign bidders, because in their case, it is SNGPL who will bear burden of increase in duties and taxes. This argument is inherently defective because in case of foreign bidder, the duties and taxes are to be paid by those bidder in their own country of manufacture and in case costs, duties and taxes in their own country are increased during supply, it is not SNGPL which has to burden the increase in such costs, taxes and duties but the same has to be paid by foreign supplier itself. Similarly when foreign bidder import raw material to manufacture finished goods and pay duty thereon in its own country and in case of increase in duty, on raw material, the responsibility to pay higher duty on raw material is of the foreign bidder and SNGPL has nothing to do with it who just has to receive the finishing goods at the fixed rate on FOB basis from foreign supplier and on FOR basis from local supplier. Therefore, it cannot be said that because clause 43.1 is not applied to foreign bidders, level playing field is not provided to local bidders or any undue benefit has been given to foreign bidders. It is also not denied by the petitioner that local bidders are already given protections and benefits in all contracts through SRO and also by clause 3(ix)(c) of Tender Enquiry.
12. Now the next question is that once clause 43.1 was neither applicable to FOB contracts nor discriminatory, whether SNGPL acted lawfully in not evaluating the petitioners bid for being noncompliant. In this behalf, I found substance in arguments of learned counsel for the respondent No.2 that petitioner was very well aware regarding the FOR terms of bid from within Pakistan and FOB bid from abroad at the time when petitioner submitted its financial as well as technical bids simultaneously on 19.6.2015. However, in response to questionnaire which was part of Tender Enquiry, petitioner responded that its offer is firm, irrevocable and on FOR basis. Again in response to question No.13 in Tender Enquiry that whether petitioner has any reservation on terms and conditions stipulated in the tender document, the petitioner specifically mentioned that it does not have any reservation. In Appendix B of bid form, petitioner mentioned that its offer to supply and delivery against items No.4,7 and 10 is consistent with the conditions of contract and specification therein. Again no such reservation was indicated in the said document. In the absence of any reservation rather acceptance on terms and condition of bid documents, petitioner technical proposal was accepted on 28.7.2015. It was only on 04.8.2015 when petitioner financial bid was opened, it was found that in contrary to the petitioner stance in the questionnaire in appendix D to the tender document and statement in appendix B to the tender document, petitioner made reservation to the effect that its offer is on the basis of current rate and duty and taxes and if there is any increase or imposition of duty and taxes by Government after submission of bid, it will be borne by SNGPL. The petitioner was specifically asked by SNGPL on 06.8.2015 to delete said condition otherwise its bid will not be considered for further evaluation. However, the petitioner in response on 07.8.2015 refused to delete the said condition in financial bid, resultantly, petitioner financial bid was not considered. In the given circumstances, it is a simple case of non-compliance of terms and conditions of tender documents and I do not see any element of malafide and illegality on part of the respondent SNGPL in not further evaluating the bid of the petitioner.
13. It is not disputed that petitioner for the last decade participated in many other steel line pipes, Tender Enquiries by SNGPL where similar clause as of 43.1 was inserted. The petitioner never objected to said clause rather accepted terms and condition of tender and also made supplies. In this regard, very recently on 22.6.2015, tender inquiry No.23228/2015 was awarded to the petitioner where it agreed to all terms and conditions including clause 43.1 in the said tender. Similarly even in the instant Tender Enquiry another local bidder M/S Data Steel Pipe Industry has made no objection to clause 43.1 of the tender and not only offered its bid but also secured the tender. No doubt that there is no estoppal against law, however, by participating regularly in all tenders for procurement of steel line pipes by SNGPL, without any reservation and demur the conduct of petitioner become self contradictory. The case law referred by learned counsel for the petitioner is not relevant to the facts and circumstances of this case because as discussed above, impugned clause 43.1 is neither discriminatory nor applicable to FOB contracts of foreign bidders. Besides there is no lack of transparency or violation of PPRA on part of SNGPL in introducing clause 43.1 in the Tender Enquiry to only local manufacturers.
14. For detailed reasons recorded above, this petition has no substance which is accordingly dismissed with no order as to cost.