AYESHA A. MALIK, J.--- Through this Writ Petition, the Petitioner has impugned' letter dated 30.11.2016 issued by Respondent No, 1 whereby the Petitioners have been blacklisted by the Lahore Development Authority ("LDA") for five years, such that they will not be able to participate in any tender of the LDA.
2. The Petitioners are engaged in the business of construction and development and are three separate entities, each of whom have executed and completed different projects including projects of the Respondent LDA.
Petitioners No, 3 which is joint venture Company of Petitioners No, 1 and 2, after a competitive bidding process was awarded the contract for works on the Orange Line Metro Train Project, Package-II ("Project") which works had commenced. However, a dispute arose between the parties which is now pending before an Arbitrator.
3. Counsel for the Petitioners argued that the Respondent LDA issued the impugned order of blacklisting without following due process. A show-cause notice was issued on 3.11.2016 to Petitioner No, 3, which reply was filed on 10.11.2016. However, the impugned order of blacklisting was issued to all three Petitioners on 30.11.2016. Hence no due process was followed with respect to Petitioners No, 1 and 2 and they were simply blacklisted. In this regard, learned counsel has relied upon the case titled Messrs Habib Rafiq Pvt. Ltd. through Authorized Representative V. Government of Punjab through Chief Secretary and another (2015 CLD 72). Counsel for the Petitioners further argued that the subject-matter of the blacklisting is pending before the Arbitrator which arbitration was referred with the consent of the parties. Therefore, he argued that the Respondents cannot impose any liability on the Petitioners given that the Arbitrator still has to decide on whether Petitioner No, 3 is liable for the alleged faulty works on Grid Nos, 358 and 359 of the Project. Learned counsel further stated that the reasons provided in the impugned order for black-listing the Petitioners are not available to the Respondents as there is no proof whatsoever that Petitioner No, 3 failed to perform the contract or attempted to undermine the safety, security and stability of the structure of the project by constructing 22 piles of lesser length at Grid Nos, 358 and 359. He explained that so far as the dispute of 22 piles in Grid Nos, 358 and 359 is concerned, the deficiency pointed out by the Respondent LDA was corrected and by May 2016 the sixth bill with reference to the stated Grids was paid and cleared by the stated Respondents. Thereafter simply to harass the Petitioners the Respondents took up the issue of Grid Nos, 358 and 359 in order to justify terminating the contract and to initiate a campaign of maligning the Petitioners by registering an FIR against them and initiating inquiries against them.
4. On behalf of the Respondent LDA, learned counsel explained that the Petitioners did not fulfill their contractual obligation with reference to the Project and that the Petitioners compromised in the quality of works which is evident from the construction of Grids No, 358 and 359, hence the contract was terminated. Therefore he explained that show-cause notice was issued on 3.11.2016 to which reply was filed on 10.11.2016 and ultimately the blacklisting order was issued on 30.11.2016.
Learned counsel argued that due process was followed and no illegality is made out against the impugned order. Learned counsel further stated that the dispute is pending before the Arbitrator, however the pendency of that dispute does not affect the blacklisting order as the blacklisting order is a penal consequence for non-compliance of the contract with the Respondent LDA which cannot be stopped on account of pendency of the civil dispute.
5. Heard and record perused.
6. The impugned black-listing order has been issued under Rule 21 of the Punjab Procurement Rules, 2014 ("Rules") which provides that: Subject to sub-rule (3), if a procuring agency is satisfied that a contractor has acted in a manner detrimental to the public interest or good practices or has consistently failed to perform his obligation under the contract or his performance has not been up to mark or he is found indulging in corrupt or fraudulent practice, the procuring agency may, after affording him an opportunity of hearing and through a notification, debar him from participating in any public procurement process of the procuring agency for such period as the procuring agency may determine in the light of the circumstances of the case.
In terms of the Rules, a mechanism for blacklisting is provided in the schedule appended with the Rules which provides that:
1. The procuring agency may, on information received from any resource, issue show-cause notice to a bidder or contractor.
2. The show-cause notice shall contain:
(a) precise allegation, against the bidder or contractor;
(b) the maximum period for which the procuring agency proposes to debar the bidder or contractor from participating in any public procurement of the procuring agency; and
(c) the statement, if needed, about the intention of the procuring agency to make a request to the Authority for debarring the bidder or contractor from participating in public procurements of all procuring agencies.
3. The procuring agency shall give minimum of seven days to the bidder or contractor for submission of written reply of the show-cause notice.
4. In case, the bidder or contractor fails to submit written reply within the requisite time, the procuring agency may issue notice for personal hearing to the bidder or contractor/authorize representative of the bidder or contractor and the procuring agency shall decide the matter on the basis of available record and personal hearing, if availed.
5.In case the bidder or contractor submits written reply of the show-cause notice, the procuring agency may decide to file the matter or direct issuance of a notice to the bidder or contractor for personal hearing.
6. The procuring agency shall give minimum of seven days to the bidder or contractor for appearance before the specified officer of the procuring agency for personal hearing.
7. The procuring agency shall decide the matter on the basis of the available record and personal hearing of the bidder or contractor, if availed.
8. The procuring agency shall decide the matter within fifteen days from the date of personal hearing unless the personal hearing is adjourned to a next date and GI such an eventually, the period of personal hearing shall be reckoned from the last date of personal hearing.
9. The procuring agency shalt communicate to the bidder or contractor the order of debarring the bidder or contractor from participating in any public procurement with a statement that the bidder or contractor may, within thirty days. prefer a representation against the order before the Managing Director of the. Authority.
10. The procuring agency shall, as soon as possible, communicate the order of blacklisting to the Authority with the request to upload the information on its website.
11. If the procuring agency wants the Authority to debar the bidder or contractor from participating in any public procurement of all procuring agencies, the procuring agency shall specify reasons for such dispensation.
12. The Authority shall immediately publish the information and decision of blacklisting on its website.
13. In case of request of any aggrieved person under para 11 or representation of any aggrieved person under rule 21, the Managing Director shall issue a notice for personal hearing to the parties and call for record of proceedings of blacklisting. The parties may file written statements and documents in support of their contentions.
14. In case of representation of any aggrieved person or procuring agency under rule 21, the Chairperson shall issue a notice for personal hearing to the parties and may call for the record of the proceedings. The parties may file written statements and documents in support of their contentions.
15. In every order of blacklisting under rule 21, the procuring agency shall record reasons of blacklisting and also reasons for short, long or medium period of blacklisting.
16. The Authority shall upload all the decisions under rule 21, available with it, on its website. But the name of a bidder or contractor shall immediately be removed from the list of blacklisted persons on expiry of period of blacklisting or order of the competent authority to the effect, whichever is earlier.
17. An effort shall be made for electronic communication of all the notices and other documents pursuant to this mechanism or process.
In terms of the record show-cause notice was issued to Petitioner No, 3 on 3.11.2016, to which reply was filed on 10.11.2016. Thereafter personal hearing was given to Petitioner No, 3 after which the impugned order for blacklisting was issued on 30.11.2016. No show-cause notice was issued to Petitioners No, 1 and 2, no hearing was given to them nor has any order been passed against them.
The impugned order under "Copy for information to states as follows: I. The Director General, LDA ii. Managing Director, PPRA, S&GAD and GoP with a request to upload the information on the website. It is further requested to debar both the contractors from participating in any public procurement of all procuring agencies in Punjab for the reasons specified in para 2 above: iii. The Project Coordinator, PMU, LDA. iv. The Engineer/Project Director, LOLMTP (Package-II), LDA. v. The Registrar, M/s. Pakistan Engineering Council (PEC), Ataturk Avenue (East) G-5/2, Islamabad with a request not to renew the enlistment of contractors M/s. Ch. A. Latif & Sons (Pvt.) Ltd. and M/s. Maqbool Associates (Pvt) Ltd. vi. The Project Manager, NESPAK-CEC (JV). LOLMTP. vii. Office Copy:
7. Interestingly it is through the CC that the Respondent LDA directed the Respondent Punjab Procurement Regulatory Authority (PPRA) to debar all three Petitioners from participating in public procurement of any procuring agency in Punjab, In this regard, there,. is absolutely no provision. of law that allows Respondent LDA to pass any such direction to Respondent PPRA nor can they through the "CC" of the impugned order direct PPRA to take action against the Petitioners. Not only is this a glaring violation of due process but is absolutely contrary to the requirements of the Punjab Procurement Regulatory Authority Act and the Rules. it is also noted that the Respondent LDA in the "CC" at No, V directed the Pakistan Engineering Council not to renew the enlistment of the three Petitioners. Again there is no legal basis for making such direction. Learned counsel for Respondent LDA wren confirmed with the basis for directing Respondent. PPRA well as Pakistan Engineering Council was unable to explain under what provision of law, LDA draws the authority to make such a request. Therefore to the extent of Petitioners No, 1 and 2, there is no blacklisting order.
The 'CC Note' at the end of the impugned, order cannot be considered as a blacklisting order against petitioners No, 1 and 2 as due process was not followed for blacklisting the stated Petitioners. 'Hence implementation of the impugned order against Petitioners No, 1 and 2 is illegal and therefore set aside. Furthermore the directions given to Respondent No, 2, PPRA and Respondent No, 3, Pakistan Engineering Council are also without any legal basis and the Respondent No, 1 LDA is cautioned from resorting to such practices as it cannot direct Respondent PRRA or the Pakistan Engineering Council from not fulfilling their statutory obligations.
8. So far as Petitioner No, ,3 is 'concerned, the grounds mentioned in the impugned order dated 30.11.2016 for- blacklisting are as follows:
(a) There is no doubt that the contractor failed to perform his contractual obligation under various clauses of the-contract document.
(b) The contractor has riot raised the issue of Black-listing in any Court of Law.
(c) As per "Schedule" (sub-rule (6) of Rule 21) paras 1 to 8, all actions, such as issuance of show- cause notice personal hearing and decision, are to be taken by the "procuring agency".
(d) The Contractor attempt to undermine the safety, security and stability -of the structure of the project by constructing' lesser length of 22 piles at two grids (358 & 359) is a solid ground to black- list him besides other reasons.
The issue of Ground (a) is admittedly in dispute before the Arbitrator, hence it cannot be used as a basis Jo blacklist Petitioner No, 3 as the Arbitrator has yet to determine whether the Petitioner No, 3 failed to perform its contractual obligations or whether Respondent LDA was at fault and illegally terminated the contract. Ground (b) is astonishingly a novel concept which find no basis in the law as Petitioner No, 3 is not required to raise the issue of blacklisting in any Court, of law prior to the issuance of any notice or order of black-listing. Hence there is no legal basis for this ground. The main ground relied upon by the Respondent LDA is Ground (d) which hold Petitioner No, 3 liable for the Safety security and stability of the structure of the project with reference to Grid Nos, 358' and
359. This matter is also in dispute before the Arbitrator and at this-stage it is premature-- for- the Respondents to levy this allegation the lesser length issue was corrected under the contract. The allegation, if any, against-Petitioner No, 3 is that is intended to compromise on public safety and security in-collusion with the staff of LDA as well as that of NESPAK. This issue was also considered in W.P. No, 40127/2016 titled Maqbool Associates (Pvt.) Limited etc. V. Anti-Corruption Establishment Lahore through its .Director General, etc. wherein the same Petitioners challenged an inquiry initiated by the Federal Investigation Agency with reference to the same Grid Nos, 358 &, 359. Its was mentioned in that case that during the pendency of the writ petition, FIR No, 2/2017 dated 27.1.2017 was registered against the Petitioners which was-also with malafide intent to harass the Petitioners. The issue in the FIR is of whether the lesser lengths were made with malafide intent in collusion-with LDA and NESPAK employees which issue is under investigation. Therefore at this stage it cannot form a ground for black-listing Petitioner No:
3. Furthermore the impugned order does not explain that how public safety and security was compromised nor does it explain that how the lesser length impacted the entire project and resulted in a safety or security hazard. It appears that the black-listing order, was issued simply to deny the Petitioners the right to participate in public tenders. Therefore the impugned order of blacklisting is not sustainable under the law.
9. In view of the aforesaid, the instant Writ petition is allowed and impugned order of black-listing dated 30.11.2016 issued by Respondent LDA to the Petitioners is set aside. The Respondents are directed to immediately, remove the black-listing order against the Petitioners from the LDA and PPRA website.