Jawad Hassan, J. This judgment will dispose of the titled writ petition filed by the Petitioner, M/s 5H INSAAT Ve Ticaret Anonim Sirketi, under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 (the "Constitution") in which the validity of impugned notices of termination issued by the Respondent No.4 under Clause 15.5 of the Contract Agreement dated 28.01.2025 (the "Contract") has been challenged. The Petitioner also seeks a direction to the Respondents to release the mobilization advance payment on immediate basis and also issue work commencement orders in its favour.
2. Mr. Akhtar Javaid, ASC submitted that the Respondent No.4 published an advertisement with regard to procurement of works for improvement of Water Supply System in District Rawalpindi under the project called "the Developing Resilient Environment and Advancing Municipal Services for Four Lots" (the "Project") for which the Asian Development Bank (the "ADB") provided a concessional loan with no commitment charges and flat 2% interest. He further submitted that pursuant to the bidding process, the Petitioner and the Respondent No.5 submitted their respective bids but finally, on 28.01.2025, the Contract was awarded to the Petitioner for Lot-2 and Lot-3 after fulfillment of all legal formalities/requirements to the entire satisfaction of the ADB. Thereafter, the Petitioner also submitted performance securities worth more than Rs.2.2 billion in cash and then following the ADB guidelines, it promptly submitted a request for the mobilization advances for both the (aforesaid) lots, besides approaching the concerned authority for issuance of the work commencement order, but despite lapse of more than four months, the needful has not been done so far. He vociferously argued that due to delay in commencement of the Project by the Respondents, not only the Petitioner is facing severe hardships but also it will adversely affect rights of the people residing in Rawalpindi because the only purpose of the Project is to modernize the water supply infrastructure of the city, by providing its residents the reliable access to clean, safe and healthy drinking water as guaranteed under Article 9 read with Article 9-A of the Constitution. He added that fundamental rights of the Petitioner, including right to business & trade as guaranteed under Article 18 of the Constitution, are involved and it is constitutional duty of this Court to protect these rights. He pleaded that after approval of the bid, awarding of work and execution of the Contract, vested rights have been created in favour of the Petitioner and this Court has already elaborated in detail the bidder, vested rights of the bidder and awarding of the contract to him/her/it in the case of M/s Bio Labs Private Limited versus Province of Punjab etc. (PLD 2020 Lahore 565).
3. Conversely, learned counsel appearing on behalf of the Respondent No.5 submitted that order dated 27.03.2025 is illegal and has been passed by the Respondent No.1, i.e. the Secretary, Local Government & Community Development Department, Government of the Punjab, by not properly discussing the legal as well as factual contentions raised by his client. He further submitted that relevant provisions of the Punjab Procurement Regulatory Authority Act 2009 (the "Act") and the Punjab Procurement Rules 2014 (the "Rules") have not been considered in true perspective inasmuch as, the Respondent No.1 has also ignored the principles settled by the superior Courts of the country on similar issue in different cases from time to time. He contended that the Respondent No.5 is successful bidder because it has fulfilled all the legal procedure/formalities, as such, the Contract should be granted to it but the same has illegally been awarded to the Petitioner in violation of Rule 2(n) of the Rules, which clearly states that contract means the agreement proposed to be entered into between the procuring agency and the successful bidder.
4. Arguments have been heard and record perused.
5. First of all, it would be advantageous to discuss about the bidder, its role, rights and the scope of awarding contact to a party. A bidder is an individual or organization that submits a proposal to undertake a specific project or provide goods/services at a specified price and in the context of public interest projects or government contracts, the bidders play an important role in competing for projects/contracts. The basic role of a bidder is to (i) submit proposals or bids for a project or contract; (ii) provide goods or services as specified in the said project or contract and (iii) comply with the terms and conditions of the project/contract awarded to him. Whereas the rights of a bidder include the right of fair evaluation of his bid, right to be notified of bid evaluation results and most importantly, right to protest or dispute the awarding of the contract if necessary. As regards, the scope of awarding a bidding contract, it involves several key aspects which are given below: "(a) Notification: The winning bidder is issued a Notification of Award, and all bidders are notified of the bid evaluation results.
(b) Publication: The contract award is published in a newspaper or website, including details such as the name of the winning bidder, contract price, duration, and scope.
(c) Contract Execution: The contract is executed between the contracting authority and the winning bidder, outlining the terms and conditions.
(d) Conditions Precedent: The awarding of the contract is subject to certain conditions, such as availability of funds, approval from funding agencies, and compliance with regulations.
(e) Timeline: The contract is typically awarded within the bid/proposal validity period, and the timeline may vary depending on factors like procurement method and complexity."
The process of awarding a contract or project involves bid evaluation, recommendation of the contracting authority regarding the winning bidder, approval by the relevant authority and then signing of the contract between the contracting authority and the winning bidder. In M/s Bio Labs Case (supra), this Court has already vastly discussed the bidder, role of the bidder, vested rights of the bidder and all the procedural steps about awarding of the contract to the bidder under relevant provisions of the Act read with the Rules.
6. The core point involved in this case is whether in presence of an alternate remedy available to the parties in the shape of arbitration, this Court can intervene in it. Before making any observation in relation thereto, it would be significant to first discuss regarding the arbitration and its scope.
Arbitration is a dispute resolution process where the parties agree to submit their disputes to a neutral third-party called the arbitrator, who, after listening stance of the parties, makes a binding decision. There are two types of arbitration. The first is "voluntary arbitration" in which the parties agree to arbitration voluntarily, through a contract or agreement and second type is known as "mandatory arbitration" which is required by law or contract, and the parties must participate in the process. A slight touch can also be made to the benefits of arbitration. The first and the basic benefit of arbitration is the faster resolution of a dispute because it contains a process which is faster than the traditional litigation, reducing the time and cost associated with resolving disputes.
Arbitration can be more cost-effective than approaching the Court as it eradicates many of the formalities and procedures associated with the litigation. It is commonly used to resolve commercial disputes, labour disputes, such as grievances and collective bargaining agreements but the arbitrator can also play pivotal role in resolving international disputes, such as disputes between countries or multinational corporations.
7. Another important aspect of the matter, which also needs consideration, is that the Project relates to welfare of the public at large and it would not be wrong to say that a public interest project only aims to benefit society as a whole, often addressing social, environmental, or economic issues because it improves quality of life and promotes sustainable development. If such like projects are delayed then it will negatively impact the quality of life for the individuals, who are to be benefited from it, particularly when the project is intended to provide essential services or infrastructure. It can decimate public trust in government agencies, project directors, and other stakeholders, besides making it harder to secure funding or support for future projects.
Especially, when the foreign investment involves then delay in completion of such kind of projects, will jeopardize tendency of entering new technologies, management practices and marketing techniques in the country. This Court has already discussed in detail the scope of foreign investment and the role of foreign investors in Pakistan in the judgment reported as M.C.R. (Pvt)
Ltd, franchisee of Pizza Hut versus Multan Development Authority and others (2021 CLD 639), relevant paragraphs 28 and 29 of which are reproduced hereunder for ease of the matter: "28. Undoubtedly freedom of trade, business and commerce is a fundamental right guaranteed under Article 18 of the Constitution which states that every citizen shall have the right to enter upon any lawful profession or occupation, and to conduct any lawful trade or business. One of the basic purposes behind provision of this fundamental right is certainly to advance culture of socio-economic progress and to protect and promote business and trade activities and, at the same time, to encourage simplification of the process of establishing and carrying out new business ventures throughout the country because activities of business and trade create opportunities for the masses around and provide job options, financial stability and progress in the area.
29. Since the Pizza Hut is an international chain and entered into lease agreement with WASA, it is the duty of the Courts in Pakistan to see the rights of the parties and to protect their interest in order to build confidence of investors in Pakistan but at the same time the interest of government functionaries has also to be examined regarding financial interest of the Government."
8. Now coming to the merits of this case, suffice to mention here that on the previous date of hearing, i.e. 27.05.2025, this Court, while taking up C.M.No.01/2025, has already granted interim relief to the Petitioner by observing that admittedly the Contract has been awarded to the Petitioner and since it has invested a huge amount of more than Rs.2.2. billion in the Project, therefore, vested rights have been created in its favour. Further, if the Contract is terminated, the Petitioner will suffer a huge financial loss. It is also to be noted that the impugned notices of termination, issued under Clause 15.5 of the Contract, specifically mentions the Petitioner's contract with the Respondents No.2, 3 and 4. Clause 21.3 of the Contract clearly states that if the parties so agree, they may jointly request (in writing, with a copy to the Engineer) the Dispute Avoidance and Adjudication Board (the "DAAB") to provide assistance and/or informally discuss and attempt to resolve any issue or disagreement that may have arisen between them during the performance of the Contract. If the DAAB becomes aware of an issue or disagreement, it may invite the parties to make such a joint request, which may be made at any time. If a quick look glance is made on Clause 21.5 of the Contract, it also speaks about amicable settlement by mentioning that both the parties shall attempt to settle the dispute amicably before the commencement of arbitration. Then, under Clause 21.6 of the Contract, any dispute in respect of which the decision of the DAAB has not become final and binding shall be finally settled by international arbitration under the Rules of Arbitration of International Chamber of Commerce. In order to avoid such arbitration, while seeking guidance from the jurisprudence developed by this Court and the Supreme Court of Pakistan on mediation from time to time, this Court feels it appropriate to refer the matter for mandatory mediation, before the arbitration starts. Firstly, the concept of mediation has been promoted by this Court in the case of Waqas Yaqub versus Adeel Yaqub and another (2024 CLD 990) and its scope has been further elaborated in the cases of Faisal Zafar and another versus Siraj-ud-Din and 4 others (2024 CLD 1), Netherlands Financierings Maatschappij Voor Ontwikkelingslanden N.V. (F.M.O.)versus Morgah Valley Limited and SECP (PLD 2024 Lahore 315=2024 CLD 685), Strategic Plans Division and another versus Punjab Revenue Authority and others (PLD 2024 Lahore 545), Sohail Nisar V/s Nadeem Nisar and others (2025 MLD 105) and Messrs National Logistics Cell versus Assistant/Deputy Commissioner and others (2025 PTD 614). The approach of mandatory mediation adopted by this Court has been followed by the High Courts of other Provinces as well as the Islamabad High Court and finally, the Supreme Court of Pakistan has also appreciated it in the case of Messrs Mughals Pakistan (Pvt.) Limited versus Employees Old Age Benefits Institution through Director Law, Lahore and others (PLD 2025 SC 1) by holding that: "... Mediation must be increasingly seen as a right of the parties within the litigation process.
Access to justice includes the right to have disputes resolved in a timely and efficient manner.
Mediation, as a faster and cost-effective alternative, satisfies this fundamental aspect of justice.
Mediation respects the autonomy of the parties by giving them control over the process and outcome, unlike litigation, where outcomes are imposed by judges. Litigants have the right to avoid the adversarial consequences of litigation, such as financial strain, emotional distress, and reputational harm. Mediation provides a non-confrontational environment that mitigates these risks. Procedural justice emphasizes the fairness of the process, and mediation upholds this by ensuring participation, neutrality, and respect - core elements of a fair process. In contexts where economic inequalities limit access to legal representation, mediation ensures that the justice system remains accessible to the underprivileged. Many societies have strong traditions of community-led dispute resolution. Mediation builds on these traditions, ensuring justice remains culturally relevant. "Mediation is at the heart of access to justice. Courts must embrace it as an essential tool for efficient and humane dispute resolution."4 In conclusion, mediation is not merely an alternative to litigation but a complementary and necessary component of the justice system. ... The reasons which make mediation a compelling choice for an appropriate avenue to resolve disputes efficiently and effectively, inter alia, include: (i) Cost-effectiveness; mediation incurs lower legal fees and expenses due to shorter and less formal processes; (ii) Time efficiency; resolutions can often be reached much faster through mediation than through court proceedings, which can take years to conclude, (iii) Flexibility; the procedures in mediation are flexible, allowing parties to tailor the specific processes to their specific needs, including choosing their mediator and deciding the rules for the proceedings, (iv) Confidentiality; unlike trials in courts which are generally public, mediation processes are private. This confidentiality can be crucial for preserving personal relationships, protecting trade secrets or avoiding negative publicity, (v) Preservation of relationships; mediation encourages cooperation and communication, which can help maintain or even improve relationships between parties, a key consideration in business context or family disputes, (vi) Control over the outcome; parties have more control over the resolution as they are directly involved in negotiating the settlement, (vii) Expertise; parties have choose an expert in the filed relevant to their dispute to act as the mediator, which can lead to more informed decisions and (viii) Reduced hostility; mediation tends to be less adversarial than court litigation, which can reduce tensions and hostility between parties... It needs to be reiterated that "an ounce of mediation is worth a pound of arbitration and a ton of litigation." Our courts, more recently, have encouraged ADR. The courts should not only encourage "mediating more and litigating less" but also exhibit a promediation bias which connotes a pre-disposition within the legal system for resolution of disputes through mediation rather than through litigation or other forms of dispute resolution. Such bias does not favor one party over another but rather prioritizes mediation as the preferred method of dispute resolution. It is grounded in the belief that settlements are generally more efficient and satisfactory for all parties involved compared to outcomes determined by a court. Mediation offers the best chance of a solution where both parties leave with dignity and satisfaction, as opposed to the all-or-nothing results of litigation. (emphasizes added)."
In this regard, reference can also be made to the principles settled by Supreme Court of Pakistan on mediation in the cases of Province of Punjab through Secretary C&W, Lahore and others versus Messrs Haroon Company, Government Contractor and others (2024 SCMR 947), Taisei Corporation and another versus A.M. Construction Company (Pvt.) Ltd. and another (2024 SCMR 640), Commissioner Inland Revenue versus Messrs RYK Mills (2023 SCMR 1856), Orient Power Company (Private) Limited through Authorized Officer versus Sui Northern Gas Pipelines Limited through Managing Director (2021 SCMR 1728), Federation of Pakistan and others versus Attock Petroleum Ltd. Islamabad (2007 SCMR 1095). Recently, the Supreme Court of Pakistan has further expanded the scope of mediation in C.P.L.A. No.3519 of 2021 titled "Muhammad Naseer Butt versus Additional District Judge, Lahore, etc." through judgment dated 06.05.2025, relevant paragraph Nos.5, 6, 7 and 8 of which are reproduced hereunder for ease of the matter: "5. Mediation is not merely an alternative to litigation; it is a paradigm shift in dispute resolution, built on the principles of collaboration, confidentiality, and party autonomy. It offers a nonadversarial framework that empowers parties to shape the outcome of their own disputes, guided by a neutral facilitator rather than a judicial determination.
6. The benefits of mediation are manifold. It reduces the costs associated with protracted legal battles, alleviates the burden on courts, and ensures quicker resolution of disputes. The confidential nature of mediation protects the privacy of the parties, and its informal setting encourages honest communication and problem-solving. Moreover, the flexibility of the process allows parties to explore creative, interest-based solutions that a court of law may not be empowered to grant. These benefits were remarkably evident in the present case. What years of litigation could not resolve, mediation achieved within weeks. This reinforces the principle that the earlier a dispute is channeled through mediation, the greater the potential for cost and time savings, reduced emotional strain, and restored relationships.
7. Courts must embrace a pro-mediation ethos, particularly at the initial stages of litigation.
Judges and lawyers must be sensitized to identify cases fit for mediation and facilitate their referral in a timely manner. Litigants, likewise, should be encouraged to consider mediation and other methods of alternative dispute resolution as a first resort, rather than a last recourse.
8. The statutory recognition and legislative frameworks provided by the Alternative Dispute Resolution Act, 2017, and subsequent provincial legislations underline mediation's established legal validity. Recent judicial directions and rules, such as the ADR Mediation Accreditation (Eligibility)
Rules, 2023 and Mediation Practice Direction (Civil) Rules, 2023, further consolidate mediation as a mainstream dispute resolution tool within Pakistan's judicial ecosystem."
9. Since, in the aforesaid case, the Supreme Court of Pakistan has put more emphasis in resolving the disputes through mediation by holding that "the benefits of mediation are manifold. It reduces the costs associated with protracted legal battles, alleviates the burden on courts, and ensures quicker resolution of disputes. The confidential nature of mediation protects the privacy of the parties, and its informal setting encourages honest communication and problem-solving.
Moreover, the flexibility of the process allows parties to explore creative, interest-based solutions that a court of law may not be empowered to grant. These benefits were remarkably evident in the present case. What years of litigation could not resolve, mediation achieved within weeks. This reinforces the principle that the earlier a dispute is channeled through mediation, the greater the potential for cost and time savings, reduced emotional strain, and restored relationships", therefore, in view of the above background and the facts of the case, specifically when consensus has also been reached between the parties for amicable settlement of the dispute, the impugned notices of termination dated 12.05.2025 are set-aside. The Respondent No.1/Secretary, Local Government & Community Development Department, Government of the Punjab has already dealt with the matter, who has passed the detailed order dated 27.03.2025 by confirming rights of the Petitioner, and he having awareness of the matter, can also play important role to mediate all the differences/disputes between the parties. Under Rule 3(3) of the Punjab Government Rules of Business, 2011 (the "Rules of Business"), business of the Government has been distributed amongst several Departments in the manner indicated in the Second Schedule and functions of the Secretary are described under Rule 10 of the Rules of Business, which is reproduced hereunder for ease of the matter: "10. Functions of the Secretary.- (1) A Secretary shall:
(a) be the official head of the Department and be responsible for its efficient administration and discipline, for the conduct of business assigned to the Department and for the observance of laws and rules, including these rules, in the Department;
(b) be responsible to the Minister for the business of the Department and keep him informed about the working of the Department, and of important cases disposed of without reference to the Minister;
(c) assist the Minister in the formulation of policy and bring to the notice of the Minister cases required to be submitted to the Chief Minister under the rules;
(d) execute the sanctioned policy;
(e) submit, with the approval of the Minister, proposals for legislation to the Cabinet;
(f) keep the Chief Secretary informed of important cases disposed of in the Department;
(g) issue, subject to any general or special orders of the Government: i) standing orders specifying the cases or class of cases which may be disposed of by an officer subordinate to the Secretary; and ii) specific orders and instructions to its officers for the conduct of the business assigned to a local government.
(2) While submitting a case for the orders of the Minister, the Secretary shall suggest a definite line of action.
(3) Where the Minister's orders appear to contravene any law, rules, regulations or Government policy, the Secretary shall resubmit the case to the Minister inviting his attention to the relevant law, rules, regulations or Government policy, and if the Minister disagrees with the Secretary, the Minister may refer the case to the Chief Minister for orders."
This Court, while interpreting the aforesaid provisions of the Rules of Business first time has given verdict regarding responsibilities and functions of the heads of government departments in the case of PIA Officers Cooperative Housing Society Ltd. through President versus Province of Punjab through Secretary to the Government of Punjab, Cooperatives Department, Lahore and 4 others (2024 CLC 947) by holding that the Secretary, being official head of the department, is responsible for its efficient administration and discipline, for the conduct of business assigned to the department and for the observance of laws and rules. This concept has subsequently been further strengthened by this Court in another case cited as Muhammad Banaras versus Government of the Punjab etc. (PLJ 2024 Lahore 242). Recently, in the case of Adnan Arif versus Province of Punjab and others (2025 CLC 550) this Court has further elaborated the scope of powers conferred upon the Secretary by observing that he/she has constitutional powers. In the said case, this Court has placed reliance on the judgment passed by the Supreme Court of Pakistan reported as Messrs Mustafa Impex, Karachi and others versus The Government of Pakistan through Secretary Finance, Islamabad and others (PLD 2016 SC 808) and held that: "....that the Rules of Business cannot be understated within a constitutional framework and all rules are binding for, and in relation to, the powers thereby conferred on the Executive, this is especially so in the case of the Rules of Business. In the said case, the Supreme Court of Pakistan has further observed that the Rules of Business are closely intertwined with the concept of good governance for and in the public interest and allowing a departure therefrom would be detrimental to open and transparent forms of government, therefore, it can be safely stated that the Rules have the constitutional command because the same have been made under Article 139 of the Constitution...."
Keeping in view the fact that the Respondent No.1/Secretary, Local Government & Community Development Department, Government, being official head of the department is fully responsible for efficient and smooth working of the Department, so he will act as a Neutral Facilitator/Mediator and ensure that all relevant stakeholders are brought together for the purpose of meaningful mediation with a view to resolve the dispute in amicable and expeditious manner because the Project relates to welfare of the public at large. The mediation process will be concluded as early as possible but not later than two weeks from the receipt of certified copy of this order. Tayyab Farid, Special Secretary, Housing, Urban Development, Public Health Engineering Department, Lahore; Hamza Salick, Program Director, Project Coordination Unit, Lahore and Muhammad Saleem Ashraf, Managing Director, WASA, Rawalpindi, who are present in the Court and agree to this course of action, will also make positive efforts on their part in arriving at a conclusive amicable settlement.
Disposed of accordingly.