RAHEEL KAMRAN, J. The appellants have assailed the order dated 26.10.2022 passed by the learned Single Judge of this Court whereby Writ Petition No.8331 of 2022 filed by respondent No.1 was allowed while setting aside the order dated 13.45.2022 and the appellants were directed to forthwith release the pay orders to the said respondent which were submitted by it in relation, to Tenders No.116/21 and No.118/21.
2. Facts in the background are that the bids were invited by the appellants through advertisement published in the daily Business Recorder, Lahore on 06.05.2021 in respect of Tender No.116/21 and Tender No.118/21 for procurement of 2000 of 50 KVA and 300 of 200 KVA distribution transformers respectively, wherein respondent No.1 submitted its bid along with pay orders for both the tenders.
The tender was to remain valid for 120 days after the expiry date 27.05.2021. The validity period mentioned in the bidding document was to expire on 24.09.2021. The appellants, according to respondent No.1, did not issue the requisite Letters of Intent and instead through letter dated 30.09.2021, asked the said respondent to extend the validity period of the bid. Respondent No.1 duly replied to the said letter on 04.10.2021. Notwithstanding the fact that respondent No.1 did not agree to an extension of bid validity period, the appellants issued Letters of Intent on 06.10.2021. Feeling aggrieved, respondent No.1 filed Writ Petition No.2387 of 2022 which was disposed of on 06.04.2022 by remitting the same to the appellants for taking a decision thereon, resultantly the order dated 13.05.2022 was passed which was assailed successfully by respondent No.1 in the writ petition, hence this appeal.
3. The writ petition of respondent No.1 was allowed for the following reason:- "There is no dispute that the validity of the bid was 24.09.2021 and that the Letters of Intent were issued on 06.10.2021 although the petitioner had expressly statedly its inability through letter dated 04.10.2021 for extension in the validity period of the bid".
4. Learned counsel for the appellants states that the Letters of Intent impugned by respondent No.1 in Writ Petition No. 8331 of 2022 were issued within the bid validity period which, according to him, expired on 24.11.2021. Even otherwise, he adds, that the provisions of Rule 26(4)(c) of the Public Procurement Rules, 2004 ("Procurement Rules") have been misconstrued while allowing the writ petition of respondent No.1. He maintains that vide letters dated 29.09.2021 read with letters dated 04.10.2021, respondent No.1 had itself extended the bid validity against Tenders No.116/21 and 118/21 with conditions, therefore, the said respondent was estopped by its own words and conduct to challenge the Letters of Intent dated 06.10.2021. He emphasizes that the Bid Performance guarantee(s) were submitted by respondent No.1 and taken by the appellants to ensure that the offer was not withdrawn during the bid validity period and purchase orders were issued to respondent No.1 and if forfeiture was not permitted when offer was withdrawn in violation of the Letters of Intent and terms and conditions of purchase order, the very purpose of such condition in the offer/bid would be defeated, therefore, could not be avoided by respondent No.1 as consequences ensuing from the act of falling back on its solemn commitment. He also questions maintainability of the titled writ petition on the ground of availability of alternate remedy of arbitration under Rule 49 of the Procurement Rules. He finally contends that having availed the remedy of civil suit in relation to the Tender No.100/21, it was not proper for respondent No.1 to change its track and invoke jurisdiction of this Court under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 through Writ Petition No.8331 of 2022, which was liable to be dismissed.
5. Learned Legal Advisor for respondent No.1 has supported the impugned order for the reasons stated therein.
6. Arguments heard. Record perused.
7. Generally the procurements made by all procuring agencies of the Federal Government are governed by the Rules, 2004 framed under Section 26 of the Public Procurement Regulatory Ordinance, 2002 (XXII of 2002) ("Ordinance 2002") as manifest from Rule 3 of the said Rules.
Appellant No. 1, being a corporation owned or controlled by the Federal Government, falls within the definition of procuring agency as defined in Section 2(j) of the aforementioned Ordinance, therefore, the procurement made by it is also amenable to the provisions of the aforementioned Ordinance and the Rules.
8. In order to properly appreciate the scope of Rule 26 of the Procurement Rules, the same is reproduced as follows:-
26. Bid validity.- (1) A procuring agency, keeping in view the nature of the procurement, shall subject the bid to a bid validity period.
(2) Bids shall be valid for the period of time specified in the bidding document.
(3) The procuring agency shall ordinarily be under an obligation to process and evaluate the bid within the stipulated period bid validity. However, under exceptional circumstances and for reason to be recorded in writing, if an extension is considered necessary, all those who have submitted their bids shall be asked to extend their respective bid validity period. Such extension shall be for not more than the period equal to the period of the original bid validity.
(4) Bidders who,-
(a) agree to extension of their bid validity period shall also extend the validity of the bid bond or security for the extended period of the bid validity;
(b) agree to the procuring agency's request for extension of bid validity period shall not be permitted to change the substance of their bids; and
(c) do not agree to an extension of the bid validity period shall be allowed to withdraw their bids without forfeiture of their bid bonds or securities.
9. From perusal of the above, it is abundantly clear that sub-rule (1) of Rule 26 of the Procurement Rules makes it mandatory for a procuring agency to subject the bid to a bid validity period. The object of such requirements is to ensure certainty in the business transactions in addition to fostering fairness, transparency, efficiency and bring value for money, which are fundamental principles of procurement as embodied in Rule 4. Although the procuring agency enjoys a discretion regarding the period to be specified, however, length of the bid validity period to be stipulated must keep in view the nature of procurement in question. Sub-rule (2) of Rule 26 of the Procurement Rules unequivocally provides that bids shall be valid for the period of time specified in the bidding document. Sub-rule (3) of Rule 26 of the Procurement Rules places an obligation upon the procuring agency to ordinarily process and evaluate the bid within the stipulated bid validity period, however, under 'exceptional circumstances' the bidders can be asked to extend their bid validity period and such request can only be made for reason to be recorded in writing, if an extension is considered necessary. The request for extension of bid validity period, when considered necessary by the procuring agency, has to be made to all those who have submitted their bids otherwise the same constitutes a violation of Rule 26(3) of the Procurement Rules. The period of such extension has been capped equal to the period of original validity. Be that as it may, the extension of bid validity period must be made before expiry of the original bid validity period otherwise bids become invalid under sub-rule (2) of Rule 26 of the Procurement Rules. The extension of bid validity period is not a unilateral act of the procuring agency but the same is contingent upon agreement of the bidders to extend their bid validity period, as manifest from sub-rule (4) of Rule 26 of the Procurement Rules and while agreeing to the procuring agency request for extension of bid validity period, the bidders are not permitted to change the substance of their bids and in case the bidders do not agree to an extension of the bid validity period, they are allowed to withdraw their bids without forfeiture of their bid bonds or securities.
10. Although generally the requirement to record reasons by a public body or authority for its order or action is justiciable, however, that is not the case under sub-rule (3) of Rule of the Procurement Rules. The effect of exercise under sub-rule (3) ibid is not to confer authority upon the procuring agency to unilaterally take any administrative action but to make a request to all the bidders to agree to the extension of the bid validity period while preserving their freedom of contract in accepting or rejecting such request subject to certain limitations prescribed therein. However, any violation of the limitations prescribed in Rule 26 of the Procurement Rules is justiciable. The bidder(s) may accept or reject such request of the procuring agency regardless of the validity or otherwise of the reasons recorded in writing by the procuring agency and the consequences provided in sub-rule (4) of Rule 26 of the Procurement Rules shall accordingly follow. Be that as it may, the requirements to record reasons in writing under the said sub-rule have been introduced to meet the requirements of transparency and accountability qua conduct of the procuring agency.
11. From perusal of the Tender Notice published in the daily Business Recorder, Lahore, on 06.05.2021 in relation to the procurement in question, the tenders were stated to be valid for 120 days after the opening date. For Tenders Nos.116/21 and 118/21, the date of opening was specified in the said tender notice to be 27.05.2021 and accordingly the bid validity period for the tenders in question expired on 24.09.2021. There is nothing whatsoever available on record to support contention of learned counsel for the appellants that the original bid validity period was upto 24.11.2021. In this regard, reliance of the learned counsel for the appellants on the validity of Bank guarantee furnished by respondent No. 1 in support of its financial proposal is utterly misconceived inasmuch as it is an obligation cast upon a procuring agency under sub-rule (1) of Rule 26 of the Procurement Rules to subject the bid to a bid validity period, which cannot be ascertained from any document such as bids security furnished by the bidders in support of their respective bids. Learned counsel for the appellants has not disputed the period of bid validity specified in the tender notice published on behalf of the appellants which clearly expired on 24.09.2021 i.e. the 120th day of the opening bids submitted for Tenders Nos.116/21 and 118/21.
12. Rule 26 of the Procurement Rules nowhere provides that a request for extension of the bid validity period can be verbally made by the procuring agency. On the contrary, sub-rule (3) of Rule 26 of the Procurement Rules, by necessary implication, requires such request to be made in writing.
In the instant case, the only document placed on record by the appellants seeking extension in bid validity is their letter No.11366 dated 30.09.2021 addressed to respondent No.1 which states as under:- "Sub: EXTENSION IN BID VALIDITY AGAINST TENDER NOS. 116/21 AND 118/21 BOTH DATED 27.05.2021 REGARDING PROCUREMENT OF 50 KVA AND 200 KVA DISTRIBUTION TRANSFORMERS.
The subjected tenders, are under process. You have been repeatedly requested well in time telephonically and in meetings to extend the bid validities of subjected, tenders but no response received from you.
Keeping in view of above, you are therefore requested to extend the bid validities of captioned tenders upto 24.12.2021".
The aforementioned letter neither records exceptional circumstances nor reasons necessitating an extension of bid validity period. Be that as it may, the aforementioned request of appellants for the extension of bid validity period was clearly made after expiry of the bid validity period which expired on 24.09.2021. Sub-rule (2) of Rule 26 of the Procurement Rules unequivocally provides the bids to be valid for the period of time specified in the bidding document, meaning thereby that after expiry of that period, there is no valid bid in field, therefore, no question of extension thereof could arise. There is nothing available on record to establish that request for extension of bids validity period in the instant case was made in writing by the appellants to the bidders including respondent No.1 prior to expiry of the period of their bids validity. The aforementioned letter dated 30.09.2021 constituted an invalid request for the extension of bid validity period after expiry thereof, therefore, the same had no legal effect.
13. Additionally, there is nothing on record to establish that extension of bid validity period in this case was requested to all those who submitted their bids in relation to Tenders Nos.116/21 and 118/21, which is a stark violation of the mandatory requirement of Rule 26(3) of the Procurement Rules, therefore, such request is void and of no legal effect.
14. As regards plea of the appellants that vide letters dated 29.09.2021 read with letter dated 04.10.2021, respondent No.1 had itself extended the bid validity period against Tenders Nos.116/21 and 118/21, suffice it to say at the cost of repetition that after expiry of the bid validity period on 24.09.2021, there is no valid bid in field, therefore, no question of extension of period of validity could arise.
15. Even otherwise, from perusal of the letters dated 29.09.2021, it is abundantly clear that respondent No.1 conditionally agreed extension in the bid validity period that proposed to change the substance of its bid, which was impermissible under sub-rule (4)(b) of Rule 26 of the Procurement Rules. Be that as it may, the conditions proposed by respondent No.1 for the extension of bid validity period were not accepted by the appellants, therefore, the aforementioned letters dated 29.09.2021 could not, by any stretch of imagination, be termed as forming an agreement for the extension of bid validity period under Rule 26 of the Procurement Rules. As regards letter dated 04.10.2021, it was clearly stated therein on behalf of respondent No.1 that it was not possible under any circumstances to extend the bid validity period owning to increase in foreign exchange rate and price escalation of the raw material. It can, therefore, safely be concluded that respondent No.1 did not exercise its freedom of contract to extend the bid validity period for Tenders Nos.116/21 and 118/21 and the appellants could not have issued the Letters of Intent dated 06.10.2021 after expiry of the bid validity period.
16. There is no force in the contention of learned counsel for the appellants that respondent No.1 was estopped by its own words and conduct to challenge the Letters of Intent dated 06.10.2021, as the same were not issued within the bid validity period in violation of Rule 26(2) of the Procurement Rules. Needless to add here that there is no estoppel against law.
17. The relief granted to respondent No.1 by the learned Single Judge of this Court qua release of the pay orders submitted in relation to Tenders Nos.116/21 and 118/21 while allowing Writ Petition No.8331 of 2022, is clearly in consonance with the letter and spirit of sub-rule(4)(c) of Rule 26 of the Procurement Rules.
18. Undeniably the suit instituted by respondent No.1 relates to Tender No.100/21 and recourse to the remedy of suit in the said transaction did not stand in the way of respondent Nu. I to assail the impugned Letters of Intent for having been issued without lawful authority and of no legal effect in relation to altogether different transactions i.e. Tenders Nos.116/21 and 118/21.
19. As regards submission of learned counsel for the appellants that the writ petition filed by respondent No.1 could not be entertained and allowed by the learned Single Judge of this Court in view of the alternate remedy provided under Rule 49 of the Procurement Rules, suffice it to say that the remedy of arbitration visualized under the said rule provides for resolution of disputes between the parties to the contract whereas in the instant case there is no contract as defined in Rule 2(e) of the Procurement Rules inter se the appellants and respondent No.1 and the dispute here essentially relates to the extension of bid validity period under Rule 26 of the Procurement Rules.
20. For the foregoing reasons, this appeal is dismissed being devoid of any merit.