' SHAMS MEMOOD MIRZA, J.---This writ petition challenges the decision by respondent No.2 (PARCO) to award contract for supply of Nitrogen to respondent No.3 without inviting tenders in terms of Pakistan Procurement Regulatory Authority Ordinance, 2002.
2. Facts of the case are that the petitioner is a public limited company engaged in the business of manufacturing, purifying, sale and distribution of Industrial gas as well medical gases Oxygen, Nitrogen etc. PARCO awarded contract dated 15.01.2013 to respondent No.3, Linde Pakistan Limited (Linde) for supply of Nitrogen, which came to the knowledge of the petitioner through news clipping dated 12.03.2013. The case of the petitioner is that PARCO could not have awarded the contract to Linde without inviting tenders in terms of the Pakistan Procurement Regulatory Authority Ordinance, 2002 on the ground that Government of Pakistan owned 60% shares in PARCO and that 6 Directors out of 10 on its Board of Directors are nominated by Government of Pakistan. It was thus contended that 60% shareholding being owned by the Government of Pakistan, PARCO is a Government owned and controlled organization and is a public funded company.While referring to Rule II(G) of public Sector Company (Corporate Governing Rules 2013), it is stated that PARCO is a public sector company. Rule 3 of Public Procurement Rules, 2004 was also pressed into service by the petitioner to contend that the said Rules were applicable to PARCO, it being a company controlled and owned by the Federal Government. It was also the case of the petitioner that PARCO comes within the definition of "procuring agency" in terms of section 2(J)(ii) of Pakistan Procurement Regulatory Authority Ordinance, 2002. It was thus stated that by virtue of Rule 12(2) and (3) and Rule 20, PARCO was bound to invite tenders for competitive bidding for supply of Nitrogen and to publish the same in one English and one Urdu daily newspaper and to post the same on its website.
3. Respondents Nos.2 and 3 have filed para wise comments to this petition wherein the stance of the petitioner has been controverted. Learned counsel for PARCO submitted that writ petition was not maintainable against PARCO being a public limited company. While referring to various agreements available on the record, it was stated that the managerial and operational decisions of PARCO are to be decided by consensus between the two groups of shareholders and as such PARCO is not amenable to writ jurisdiction. Learned counsel for respondent No.3, while adopting the arguments of respondent No.2, further added that addendum agreement dated 15.01.2013 through which contract for supply of Nitrogen was awarded was not a new contract but formed part of an earlier agreement executed between the parties.
4. From the arguments addressed at bar by learned counsel for the parties, the following questions have arisen for their determination by this Court. a. Whether PARCO by virtue of its corporate structure as mentioned in memorandum of understanding dated 31.03.1986 can be construed as a Government owned and controlled organization and thus amenable to writ jurisdiction of this Court? b. Whether addendum agreement dated 15.01.2013 was a new agreement or merely an extension qf agreement dated 12.01.1999? c. Whether PARCO comes within the definition of procuring agency in terms of Pakistan Procurement Regulatory Authority Ordinance, 2002.
5. Before proceedings any further in the matter, it would be important to lay down the circumstances in which PARCO was incorporated. PARCO is a public limited company set up as a joint venture between the Government of Pakistan and Emirate of Abu Dhabi through Abu Dhabi Petroleum Investments LLC. For establishing PARCO, the parties entered into a participant's agreement dated 22.11.1973 as amended by supplemental participants agreement dated 11.05.1977.
PARCO was set up as a public limited company to own and operate an oil refinery with all the ancillary facilities. It was incorporated on 09.05.1974 with government of Pakistan and Abu Dhabi Petroleum Investment LLC holding 60% and 40% shares respectively. On 31.03.1986 a Memorandum of Understanding was executed between the Government of Pakistan and Emirate of Abu Dhabi to secure efficient management and operations of PARCO. Clause 1 of the said Memorandum is relevant and reads as under: ' All the affairs of PARCO shall be determined by its Board of Directors and/or its general meetings as applicable. All the decisions of Boards of PARCO and its General Meetings shall be taken by consensus by two parties concerned. The articles of Associations (AOA) of the company will be amended accordingly.
' In terms of the said clause, Articles 37 and 74 of the Articles of Associations of PARCO were amended accordingly. The Board of Directors of PARCO in its meeting dated 10.01.2012 passed a resolution which reads as under: ' Pak-Arab Refinery Limited (PRCO) has been formed as a joint Venture Company between the Government of Pakistan and the Emirate of Abu Dhabi through ADPI. PARCO has been incorporated under the Companies Ordinance 1984, and therefore, the provisions of the Ordinance shall be strictly applicable which refers to the management of the Company being under the sole control of the Board of Directors. The management of PARCO shall also be strictly governed by clauses of the Articles of Association of Company, wherein the control of the Company shall be vested in the Board of Directors and the business of the Company shall be managed by the Board and all decisions at all decisions at a meeting of the Board shall be taken by consensus of the Directors representing ADPI and the Government of Pakistan present at the meeting.
6. Pursuant to implementation agreement executed between Government and Emirates of Abu Dhabi, PARCO entered into an agreement with respondent No.3, Linde (then known as BOC Pakistan Limited) on 12.01.1999 for building of a plant for the production of Nitrogen. Clauses 4 and 5 of the said agreement are relevant, which are reproduced as under:
4. PARCO shall have the right during normal business hours and upon giving reasonable notice to BOCP to enter upon BOCP site to review the working being undertaken with regard to the construction and commissioning of the BOCP facility. No such review by PARCO shall relieve BOCP of its obligations set out in this Agreement.
6. Where there is a physical link between BOCP facility and PARCO Refinery that BOCP Facility will be completed by March 31, 2000 and that the BOCP Facility has passed the necessary commissioning Test before this date.
7. The agreement was to remain in force for an initial term of 15 years by virtue of clause 10 of the said agreement but could further be extended by mutual consent of the parties. It was also provided in clause 10 thereof that in the event of BOC Pakistan Limited not seeking extension beyond the initial term of 15 years or any extended time thereafter, PARCO will acquire the BOC facility on mutually agreed terms. With the expansion and addition of units in the refinery, the requirement of Nitrogen gas also increased with the refinery requiring an average of 1200 Nm 3/HR.
The excess Nitrogen was provided by respondent No.3 in the form of liquid Nitrogen from its other Nitrogen producing facility. In consequence of Government of Pakistan's directive for producing Euro-II complying diesel, PARCO had to establish a hydro sulfurization plant in 2010 and asphalt blowing unit in 2012 at its refinery with a result that the requirements of Nitrogen increased 480 Nm- 3 per hour. In view of the increased requirement of Nitrogen, PARCO decided to replace the existing plant and to extend the principal agreement with Linde in terms of clause 10 thereof. The decision to extend the principal agreement and to replace the existing plant was approved by Board of Directors of PARCO on 15.01.2013. On 15.01.2013 the parties entered into an addendum agreement whereby Linde, inter alia, agreed to build a new facility/plant for replacing the existing facility/plant at its own costs to meet the enhanced requirements of PARCO. In terms of the said addendum agreement, the revised terms and conditions would apply for a further period of 15 years and in case of breakdown of supply of Nitrogen from new plant, Linde was held to be responsible for supply of Nitrogen from its other facilities.
8. The first question requiring determination is whether PARCO, which is a public limited company can be termed as a Government owned and controlled organization and thus amenable to writ jurisdiction of this Court. PARCO no doubt is a joint venture but being a limited liability company its administration is being run by its Board of Directors which by the terms of Memorandum of Understanding dated 31.03.1986 and Articles of Association has to make all decisions through consensus A regardless of the pattern of shareholding in PARCO and numerical strength of the directors of Government on the board of PARCO. It is manifest in this arrangement that the nominee directors of the Government of Pakistan cannot and do not exercise administrative and financial control over PARCO. PARCO thus is an entity that is free from the executive control of the Federal Government and all of its affairs are to be run by its Board of directors representing the two set of shareholders through consensus. It is not only the decision making in Board of directors, however, where mutuality has to be sought through consensus (Article 74) but all the decisions in the General Meeting shall have to be taken by both the set of shareholders through consensus (Article 39). Furthermore, there does not exist any document on the record to demonstrate that Government of Pakistan funds the operations of PARCO. In Pakistan International Airline Corporation and others v. Tanweer ur Rehman and others PLD 2010 SC 676, the Hon'ble Supreme Court laid the test for a person including a body corporate performing functions in connection with the affairs of the Federation by holding as follows a. Whether the functions entrusted to the organization or person concerned are indeed the functions of the State involving some exercise of sovereign or public power; b. Whether the control of organization vests in a substantial manner in the hands of the Government; and c. Whether the bulk of funds is provided by the State.
' The present case does not in any demonstrable way satisfy the above-mentioned three tests laid down by the Hon'ble Supreme Court. For PARCO to be held as an instrumentality of State, the petitioner ought to have demonstrated with cogent documentary material that the Government was providing substantial financial assistance to it and that the Government had deep and pervasive control over its management and policies and also to substantiate that the functions carried out by PARCO are public functions closely related to State functions. The primary burden was on the petitioner to establish that PARCO was a "person" within the meaning of Article 199 of the Constitution, which it has failed to discharge. It may furthermore be of some relevance to point out that subscription of part of capital by the Government has never been considered to establish control of Government over the affairs of a company/corporation (see Printing Corporation of Pakistan v. Province of Sindh PLD 1990 SC 452 and Muhammad Mubeen-us-Salam V. Federation of Pakistan PLD 2006 SC 602).
9. The next question is whether PARCO comes within the definition of procuring agency in terms of Pakistan Procurement Regulatory Authority Ordinance, 2002. Section 2 (j) of the Public Procurement Regulatory Authority Ordinance, 2002 defines "procuring agency" to mean, amongst others, any corporation, body or organization established by or under a Federal law or which is owned or controlled by the Federal Government. Similarly, the definition of "Public Fund" includes the funds of enterprises which are owned and controlled by the Federal Government. The catchword in both the definitions is "owned and controlled by Federal Government". The reading of the aforementioned provisions of Public Procurement Regulatory Authority Ordinance, 2002 leaves no room for doubt that both the expressions "owned" and "controlled" have been used disjunctively and both need to be present in a corporation before it can be said to fall in the definition of a procuring agency. In a limited liability company, as PARCO is, there is some divorce of ownership from the control. This is particularly so in public limited companies where the ownership (theoretically) rests with a large and diverse body of shareholders but the control (management) of the company rests with the directors. As stated earlier, the two groups of shareholder through Memorandum of Understanding dated 31.03.1986 brought about a change in the corporate governance structure of PARCO by deciding to take all the decisions through consensus. This consensual arrangement over decision making in PARCO makes it impossible for PARCO to be termed as an enterprise owned and controlled by Government. PARCO, therefore, does not fall in the definition of "procuring agency" and its funds cannot be termed as "Public Fund". Pakistan Procurement Regulatory Authority Ordinance, 2002, which regulates 'public procurement' i.e. Acquisition of goods, services, etc financed wholly or partly out of the Public Fund, is not applicable to contracts entered into by PARCO.
10. There is yet another important aspect of the matter to which Ms. Ayesha Hamid, the learned counsel for Linde drew the attention of this Court. She described contract dated 15.01.2013 as merely an extension of original agreement dated 12.01.1999 executed initially between PARCO and Linde. As stated in the earlier part of this judgment, PARCO and Linde had entered into an Agreement dated 12.1.1999 whereby Linde had agreed to design, build, own and operate a plant for production of nitrogen at the premises of PARCO at Mehmood Kot and agreed to make available, and to supply, to PARCO Nitrogen for the safe operations of its refinery. The term of the agreement extended up to 15 years from date of commissioning i.e. 31.3.2000 of the facility/plant. Linde constructed/installed the entire facility comprising (i) nitrogen plant having a capacity to produce 800 NM3/HR of gaseous nitrogen, (ii) liquid nitrogen storage having a capacity of about 110 tons and (iii) vaporizing facility to meet PARCO's nitrogen requirements entirely at its own expense. In terms of clause 10 of agreement dated 12.01.1999, the agreement could be extended for a further period of 15 years. The only question is whether agreement dated 15.01.2013 is an altogether new agreement or forms part of agreement dated 12.01.1999 having been executed in terms of clause 10 thereof. The purpose for executing Agreement dated 12.01.1999 between PARCO and Linde (then BOC Pakistan Limited) was the supply of Nitrogen by Linde to PARCO. In terms of Clause 3 of the said agreement, PARCO shall have the right, during the initial term, to request for additional plant to balance the production and consumption of Nitrogen. With the expansion in production capacity of the refinery being run by PARCO, its requirement for Nitrogen also increased. In this regard, PARCO decided to extend the term of the principal agreement *ith Linde in terms of clause 10 thereof. A review of the various provisions of addendum agreement dated 15.01.2013 makes it apparent that it was executed in pursuance of clause 10 of the principal agreement. The building of new plant for supply of Nitrogen under addendum agreement dated 15.01.2013 does not make it a new agreement. Clearly, both PARCO and Linde proceeded with the execution of addendum agreement for building of the new plant on the basis of clause 10 of the principal agreement. With its roots in clause 10 of the principal agreement, the addendum agreement thus became its part and cannot be termed as a new agreement even if the argument is accepted that PARCO falls in the definition of "procuring agency", which it does not as has been held in the earlier part of this judgment.
11. In the result, this writ petition fails and is accordingly dismissed.