' SALAHUDDIN MIRZA, J.---The petitioner is an Octroi contractor and resident of Talhar Town. Town Committee of Talhar vide auction notice dated 7th April 1993 (Annexure 'B') invited tenders for the collection of three specific taxes for the period 1st July 1993 to 30th June 1994, namely, (1) Qctroi tax on Sugar Cane from M/s. B. Sugar Mills Talhar, (2) Octroi tax on Store-goods and Filling Station, B.
Sugar Mills, Talhar and (3) Octroi, Piri and Parking fee/tax, road service charges and vegetables fruit Dallali tax. The petitioner gave bid for octroi tax on store-goods and filling station, Bawani Sugar Mill, Talhar (item No, 2 of the auction notice Annexure 'B'). The auction was held, as scheduled, on 20th April 1993 and petitioner's bid at Rs,7,75,000 being the highest was accepted by the Chairman, Town Committee, Talhar. The auction was supervised by the "committee of observers" set up by the Directorate of Local Government vide Office Order No, 1750-DLG/I/92 dated 13-3-1993. Eventually, the bid of the petitioner was approved and confirmed by the Government of Sindh vide Local Government Department Letter No,S0-11/TC-V(ii)/93-94 dated 28th April 1993 (Annexure L') and on the very next day on 29th April an agreement (Annexure 'M') was executed between the petitioner and Town Committee, Talhar (respondent No, 2). However, within four days of confirming the bid, the Government of Sindh cancelled the confirmation of the bid vide its letter of even number dated 3rd May 1993 and ordered re-auction of the said octroi tax. The letter makes an interesting reading and is quoted below: "I am directed to state that complaint has been received alleging that the above contract was not auctioned giving fair opportunity to all concerned to participate in the auction, in view of the evidence given by the complainant the Government of Sindh is pleased to cancel the confirmation of the bid of Rs,7,75,000 in favour of M/s. Haji Feroz Ali, Contractor communicated vide this Department's letter of even number dated 28th April, 1993.
' The Government of Sindh is further pleased to order that the said contract be reauctioned after wide publicity with Rs,8,25,000 as the official bid that is equal to amount of offer given by M/s. Sindh Management Pvt. Ltd., Badin."
' On being apprised of the cancellation of the confirmation, the petitioner preferred a review application before the Additional Chief Secretary, Local Government Department on 10-5-1993 (Annexure '0') which was, through proper channel forwarded to respondent No, 2 Town Committee which by its letter dated 18-5-1993 (Annexure 'R') strongly recommended the restoration of the confirmation of petitioner's bid and Directorate of Local Government Hyderabad vide its Letter No, 4749-DLG/I/1993 dated 20-5-1993 (Annexure 'S') also supported the case of the petitioner but the Government of Sindh (respondent No, 1) did not take any action until 6th June 1993 when the petitioner moved this Court under this Constitutional jurisdiction for the redress of his grievance and for the restoration of confirmation of his auction bid. He claims that after the confirmation of his bid by the Government and the execution of the agreement between him and the Town Committee, the Government of Sindh had become functus officio and had no power to cancel the confirmation of the bid, specially when the agreement had been acted upon and the petitioner had deposited the requisite instalments as stipulated in the agreement. The petitioner, therefore, prayed for a declaration that the order dated 3rd May 1993 (Annexure 'N') passed by respondent No, 1 was void and illegal and he also sought a direction to the respondents to put him in the operative possession of the contract with effect from 1st July 1993 when the. Agreement is to commence.
2. Interestingly enough, the Government of Sindh in the Local Government Department has not filed any counter-affidavit and it is respondent No, 2 Town Committee alone which has filed the counter-affidavit of its Chief Executive Officer. This is an extremely vague pleading which does not controvert the averments made by the petitioner in the Constitutional petition. In para. 3 of the counter-affidavit, the deponent says that the offer of Rs,37,50,000 for the recovery of Octroi on sugarcane and the offer of Rs,8,60,000 far the recovery of octroi tax on mill-stores and filling stations was rejected by the Government vide Letter No, SOII(TC)V/(22) 93-94 dated 28-4-1993 but it was not disclosed as to who had made this offer, or in response to which auction-notice this offer was made. Moreover, copy of this letter is not placed on record but copy of Letter No, SOII/TC- V(11)193-94 dated the same 28-4-1993 is on record as Annexure ' L' to the petition (page 61) whereby, as we have already seen, offer of the petitioner was confirmed. Para. 4 of the counter- affidavit is, again, beside the point at issue as it has not been revealed what all this had to do with the bid of the petitioner. Para. 5 of this counter-affidavit says that "wide publicity was held including the publicity through beat of drums in the limits of Town Committee including the important Chowks, Shahi Bazaar and main roads of Talhar Town twice on 24-5-1993 and 26-5-1993" but is not clarified what was all this exercise about, in respect of what this publicity was held and what were the modes of the publicity, beat of drums, being only one of them. The whole para. 5 makes no sense. Para. 6 says that on 26-5-1993 open auction was held in which only M/s. A.E. (Bros.) gave offer which was confirmed by Government of Sindh vide letter dated 6-6-1993 whose copy was said to be Annexure 'D' to the counter-affidavit but Annexure 'D' (page 131) turns out to be a photocopy of a petition dated 29-5-1993 from one Ali Muhammad to the Town Committee for payment to him of Rs,80 as the publicity charges for beat of drums. It was then claimed that auction was held on 26-5-1993 after wide publicity and after complying with the law both in letter and spirit but the petitioner did not take part in it. Paras. 18, 19 and 20 suggest that the counter- affidavit was in respect of stay application although the title of the counter-affidavit suggests that it was in respect of the main Constitutional petition. It was also claimed that M/s. A.E. Contractors, being sitting contractors, were already in possession of the Nakaas.
3. Learned counsel of the petitioner and of respondent No, 2 as well as learned State Counsel have been heard.
4. We are surprised at such flagrant violation of law at the hands of the officers of the Local Government Department of the Government of Sindh and at such wantonly colourful exercise of authority which smacks of rampant corruption in its ranks.
5. Wide publicity was given to the auction scheduled to be held on 20-4-1993 by inserting large size advertisements in three important daily newspapers of the three important languages, Sindhi, English and Urdu, being daily ;Jasarat' of Karachi of 13th April, daily 'Dawn' of Karachi of 13th April and daily 'Ibrat' of Hyderabad of 14th April (Annexures 'D', 'D-1' and 'D-2'). These advertisements were given through the relevant Department of the Government of Sindh. The "Committee of Observers" appointed by the Directorate of Local Government vide its letter dated 13-4-1993 (Annexure 'C') was duly intimated by the Town Committee vide its letter dated 17-4-1993 (Annexure 'E') about the auction programme, including the publication of the auction notice in the three newspapers. There is no denying the fact that the requisite call-deposits, which were condition precedent to qualify the petitioner to bid at the auction, were made by the petitioner on the very day of auction as would appear from the three receipts issued by respondent No, 2 (Annexure '0' at page 41). After the auction was held, the abovementioned "Committee of Observers" prepared a detailed report (Annexure 'H') and submitted it the very same day to the Directorate of Local Government as contemplated by its office order dated 13-4-1993 (Annexure 'C'). The very same day (20th April) the Town Committee (respondent No, 2) submitted a detailed report of the auction proceedings (Annexure 'I') to Assistant Director, Local Government, Badin showing among other things, that petitioner's bid of Rs,7,75,000, being the highest for the category in question, was accepted and, by stages through the usual proper channel, the bid reached Government of Sindh in the Local Government Department (respondent No, 1) where it was duly accepted and confirmed, as we have already seen, vide letter of 28th April 1993 Annexure 'L' (page 61) whereafter a formal agreement was entered into between the petitioner and respondent No, 2 Town Committee on the next day (Annexure 'M'). After the execution of the agreement, the relationship between the Town Committee and the petitioner has matured into a complete and closed transaction and vested rights have been created in favour of the petitioner which cannot be trampled under the feet on a flimsy pretext. No doubt the Government has wide supervisory powers over the Local Bodies as contemplated under section 53 of the Sindh Local Government Ordinance, 1979 but these powers may only be exercised rationally, judiciously, in conformity with the established principle of equity and justice and in a manner which is transparent enough to show that the action was taken bona fide for the enforcement of the provisions of the Ordinance.
What we are confronted with, however, is an arbitrary order dated 3rd May 1993 (Annexure 'N') in the form and style of a Nadir Shahi Farman saying that complaint had been received alleging that the contract was auctional without providing "fair opportunity to all concerned to participate in the auction, that the complainant (an ethereal being since he is not identified) had led evidence which had proved the allegation and, therefore, the Government was pleased to cancel the confirmation of the bid of the petitioner and that the Government was further pleased "to order that the said contract be re-auctioned after wide publicity with Rs,8,25,000 as the official bid, which is equal to amount of offer given by M/s. Sindh Management (Pvt) Limited, Badin. " We directed learned counsel of respondent No, 1 to place before us the complaint said to have been received by respondent No, 1, alongwith the enquiry proceedings conducted by the Local Government Department, the proof of service of notice upon the petitioner whereby he was called upon to attend the said enquiry, and specially the evidence adduced by the unnamed complainant before the officer which conducted the enquiry but learned counsel was not in a position to do so. Under the circumstances we have no option but to fall back upon the order (Annexure 'N') itself. A perusal of it shows that it does not aver that any notice was given to the petitioner or to respondent No, 2 Town Committee to appear before respondent No, 1 and explain their position vis-a-vis the complaint or to lead any evidence, oral or documentary, to rebut the evidence said to have been given before it by the unnamed complainant. Learned counsel of respondent No, 1 could also not explain as to how, and under what provision of law, and to whom, M/s. Sindh Management (Pvt.)
Limited, Badin had given offer of Rs,8,25,000. We are of the considered view that, supervisory powers of the Government under section 53 of the Ordinance notwithstanding, there is no escape from the conclusion that the impugned order dated 3-5-1993 (Annexure 'N') is capricious and arbitrary which was passed without any notice to either the petitioner or to respondent No, 2, thus violating the universally accepted principle of audi alteram partem, that there was neither any complaint nor any complainant and that if M/s. Sindh Management (Pvt.) Limited, Badin had made any offer to any officer of respondent No, 1, it had no legal sanctity behind it and could not be made a basis to cancel the confirmation of the bid of the petitioner. There is no force whatsoever in the vague allegation contained in the impugned order (Annexure 'N') that fair opportunity was not provided to all concerned to appear in the auction and to bid. As we have seen above, public notices were published in three leading newspapers of three main languages a week before the date of auction. If this does not amount to providing fair opportunity to all concerned what else does?
6. It is significant to note that copy of the impugned order Annexure 'N' has not even been endorsed to the petitioner who is the only party directly affected by it. Even so, the petitioner came to know about it and immediately filed review application dated 10-5-1993 before the Additional Chief Secretary, Local Government Department (Annexure '0') which met a very queerresponses from its addressee that it was referred to Director, Local Government, Hyderabad vide letter dated 15-5- 1993 Annexure ' P'. Now, action vide impugned order Annexure N' was taken by respondent No, 1, allegedly on the basis of a complaint received by it and evidence allegedly adduced by the complainant before it. There was, therefore, no occasion to refer the review application Annexure '0' to Director, Local Government Hyderabad "to furnish comments". Respondent No, 1 alone was in a position to dispose of the review application because all the facts were in his possession. This shuttling the review petition (Annexure '0') 'down the lane' to Director, Local Government, Hyderabad is, without any shadow of doubt, a dishonest attempt on the part of respondent No, 1 to hush-up the matter for the time being and to gain time for holding illegal fresh auction to cause unlawful gain to some favourite at the expense of the petitioner. Even so, the Director, Local Government duly passed on the review petition to respondent No, 2 Town Committee for comments vide his letter of 17th May (Annexure 'Q'). Comments of respondent No, 2 are on record as Annexure 'R' in which, after giving a summary of events, the Town Committee observed that the auction was conducted fairly and in accordance with the policy, and after following the relevant rules and prayed that the contract of the petitioner be again confirmed. In turn, Director, Local Government, Hyderabad vide letter dated 20th May endorsed the views of the Town Committee and concluded as follows:--- "The Town Officer in his comments vide letter No, TC/152 dated 185-1993 (copy enclosed) on the letter under reference informed that it will be profitable for the council if the above auction is confirmed and re-considered in favour of Haji Feroz Ali, whose conduct and dealing are appreciable and good being financially sound party, having good reputation amongst the businessm en in Talhar Town.
' So far offer given by M/s. Sindh Management Pvt., Badin is concerned, it is not assured as to whether they are ready to take the contract besides there is also apprehension that they might leave the octroi contract being highest in the middle of the term.
' In view of the position explained above, it is requested that the request of Haji Feroz Ali as recommended by the Town Officer, Town Committee, Talhar may kindly be considered."
' Learned counsel of respondent No, 1 could not explain as to why respondent No, 1 slept over so urgent a matter when the commencing date of collection of the octroi under the controversial auction was only 10 days away and did not take any action until the institution of this Constitutional petition. This failure on the part of respondent No, 1 becomes all the more glaring when we compare it with the haste with which it acted on 3rd May when the impugned order was passed within five days (counted from 28th April) during which complaint was allegedly received, evidence was recorded and action was taken without so much as asking respondent No, 2, the petitioner or Director, Local Government, Hyderabad to give their comments on the complaint of some unnamed complainant..
7. Apart from what has been stated above, we may with profit refer to Rule 225 of Octroi Rules which provides that a local body' after accepting a bid given in an open auction for lease of octroi, shall submit it to the Controlling Authority for confirmation and the latter shall, within 30 days of its receipt, either confirm the bid or withhold it but if it fails to do either within this period, the Controlling Authority shall be deemed to have confirmed the bid. This shows two things. First, that the law desires that auction proceedings should achieve finality without untoward delay. And second, the Octroi Rules, or the Local Government Ordinance, does not contemplate the cancellation of confirmation.
8. We may here record that learned counsel for respondent No, 1 frankly conceded that the impugned order dated 3-5-1993 Annexure ' N' was an illegal order and could not be sustained but he was of the view that the remedy available to the petitioner was by way of filing a suit for damages for breach of contract and, therefore, Constitutional petition was not maintainable and was, consequently, liable to be dismissed. Learned counsel of respondent No, 2 argued that while the auction held on 20th April was in accordance with the law and the rules and, therefore, the impugned order Annexure 'N' could not be sustained and was clearly an illegal order, but he nevertheless supported the said order because it ensures greater revenues to it and prayed that under the circumstances re-auction may be ordered.
9. We find no force in the contentions raised by learned counsel of the respondents. This is not a case of a mere breach of contract but of determining the legality of an order of a functionary of State and, therefore, this Court can entertain this dispute under its Constitutional jurisdiction. There is no dearth of reported judgments in support of this position but the judgments in the cases of M/s. Abdullah & Co. v. The Province of Sindh (1992 M LD 949) and Abdullah & Co. v. The Province of Sindh (1992 M LD 293). Argument put forth by learned counsel of respondent No, 2 can also not be sustained. An auction otherwise held in accordance with law cannot be set aside merely because a party comes forward at a belated stage and offers a higher bid. If this were the criterion for cancelling of an auction bid, no bid would ever be safe and there would be no end to this exercise.
10. To summarise our findings, we are of the view that the impugned order dated 3-5-1993 Annexure 'N' is void and illegal because, firstly, after the confirmation of bid and execution of agreement between the petitioner and respondent No, 2, the proceedings had become a past and closed transaction and respondent No, 1 had become functus officio notwithstanding the provisions of section 53 of Local Government Ordinance and, secondly, the said order was passed by respondent No, 1 in colourful exercise of authority because there is nothing on record to sustain the grounds on which it was passed. We would therefore accept this Constitutional petition in the following terms:
(a) We declare that the impugned order dated 3-5-1993 Annexure ' N' is void and illegal and order dated 28-4-1993 Annexure ' L' holds the field.
(b) We direct the respondents to put the petitioner into operative and effective possession of the Nakaas concerned on Ist July 1993 so as to enable him to discharge his contractual obligations.
11. Under the circumstances of the case respondent No, 1 shall bear the costs of respondent No, 2 as well as of the petitioner and we assess the costs at Rs,10,000 for each party.
12. Since the file discloses an extreme case of abuse of power on the part of Local Government Department, a copy of the judgment may be sent to the Chief Secretary to the Government of Sindh for information and appropriate remedial action to prevent unauthorised interference in the affairs of Local Bodies on the part of Local Government Department and to prevent misuse of authority by its officials.
13. These are the reasons for the short order pronounced on 29-6-1993 on the conclusion of the hearing,