The dispute in this petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 relates to lease of rights of collection of octroi and cattle market fee for the period commencing 1st July, 1993 to 30th June, 1994 from the area falling within the jurisdiction of Municipal Corporation, Faisalabad.
2. These rights were auctioned on 28-7-1993 when the petitioner made the highest bids at Rs.35 crore for octroi and Rs.32,08,333 for Bakkar Mandi respectively. These offers were accepted by the General House of Municipal Corporation, Faisalabad vide its Resolution No.1846 passed on 31st July, 1993 where after the petitioner deposited earnest money, 1/10 of the lease amount and monthly installment with respondent No.2. On 1st August, 1993, formal agreements were also executed. The petitioner was handed over the charge of octroi posts and he started collecting octroi duty and fee for holding Bakkar Mandi with effect from 1st August, 1993.
3. It appears that on 16 August, 1993, an order was passed by the Commissioner, Faisalabad Division, Faisalabad (respondent No.1 herein), suspending the resolution of the Municipal Corporation, Faisalabad dated 31st July, 1993 whereby the auctions in favour of the petitioner had been approved.
4. In this Constitutional petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973, the petitioner has challenged the order of the Commissioner, Faisalabad Division on various grounds, inter alia, that he had no jurisdiction to suspend the resolution especially when it had been acted upon; no reasons whatsoever have been given in the impugned order by the Commissioner for suspending the resolution; that the auctions in favour of the petitioner having been held in accordance with the rules and accepted by the Local Council which is the onlyth competent authority, a concluded contract came into being between the petitioner and respondent No.2 which could not have been interfered with by respondent No.1 unilaterally and lastly that impugned order is violative of principles of natural justice having been passed without providing an opportunity of being heard to the petitioner.
5. In the para wise comments submitted by respondent No.1, it has been stated that wide publicity was not given by the Local Council before holding auctions for collection of octroi and Bakker Mandi fee and the agreement was entered into between the petitioner and respondent No.2 without the approval of respondent No.1 who was as such competent in law to suspend the resolution. It has been explained that Divisional Commissioner (respondent No.1) had exercised the powers vesting in the Government under section 156(b) of the Punjab Local Government Ordinance, 1979 as its delegatee and it is not necessary to issue any notice to the petitioner before passing the order of suspension. It has also been submitted that the amounts for which two leases have been granted were less than the lease money for the previous year which resulted in huge loss to the Municipal Corporation and respondent No.1 was justified in public interest to interfere.
6. Mr. Muhammad Zaman Qureshi, learned counsel for the petitioner has firstly argued that the impugned order having been passed without affording any opportunity to the petitioner of being heard is violative of the principles of natural justice and, is liable to be struck down. In support of this contention, learned counsel has pointed out that admittedly auctions in favour of the petitioner were accepted by the Local Council in pursuance whereof agreements were duly executed between the parties and the rights vesting in petitioner could not have been taken away without hearing him. In support of this proposition, learned counsel has heavily relied upon the judgment of this Court in Abdul Hamid & Co. v. Government of Punjab through Secretary, Local Government and Rural Development, Lahore and 4 others PLD 1991 Lahore 30 and that of the Division Bench of Sindh High Court in Messrs Mazari & Co. Through Proprietor v. Province of Sindh through Additional Chief Secretary and another 1993 CLC 1768.
7. In reply, Syed Jamshed Ali Shah, learned counsel appearing on behalf of respondents 2 to 4- as also the learned Additional Advocate-General did not deny that the petitioner was not granted any opportunity of being heard before impugned order was passed but in their submissions, it was not necessary to do so. It was elaborated that the impugned order was interim and not final in nature and could not as such be passed in absence of the petitioner.
8. It is a common ground between the parties that the offer made by the petitioner at the auctions held on 27th July, 1993 was accepted by the Municipal Corporation in its meeting dated 31st August, 1993. It is also not disputed that pursuant thereto, agreements were duly executed between the parties on 1st August, 1993. Before that the petitioner had deposited earnest money, 1/10 of the contract amount as also the installment for the month of August, 1993. These agreements were given effect to and acted upon by putting the petitioner in charge of collection. He had been .Collecting the octroi duty and fee till 16th August, 1993 when the impugned order was passed by the Commissioner.
9. A perusal of the impugned order shows that it has purportedly been passed by the Commissioner as delegatee of the Government in exercise of powers conferred by section 156(b) of the Punjab Local Government Ordinance, 1979. Although it is correct that in this section there is no spec requirement to hear the affected person before passing an order but it is trite law that minimum requirement of natural justice of affording an opportunity of being heard is to be read into every statute in the absence of any exclusion.
10. According to the case of the respondents impugned order was passed by the Commissioner as the auctions were found against public interest for the reason that the bids made by the petitioner at the auctions were on lower side. If that be so, the requirement of hearing the petitioner to make him aware of the reasons for which proposed action was being taken stood all the more accentuated.
11. In Muhammad Mosawaar Khan v. Deputy Commissioner, Gujranwala and 2 others PLD 1983 Lahore 102 which was a case relating to cancellation of auction of collection of octroi duty by the Deputy Commissioner, Gujranwala, it was laid down that:-- "Furthermore, notwithstanding the fact that the collection of octroi was auctioned in favour of the petitioner and an agreement was also executed between the petitioner and the Town Committee Oila Didar Singh, the learned Deputy Commissioner passed the order without notice to the petitioner and in violation of the principles of natural justice. This ground by itself vitiates the impugned order and the same is liable to be struck down."
This judgment was followed by this Court in Abdul Hamid & Co. v. Government of Punjab through Secretary Local Government and Rural Development Department, Lahore and 4 others PLD 1991 Lahore 30 wherein in similar circumstances it was held that the Government could not have cancelled the contract without providing an opportunity of being heard to the contractors. (Also see Bashir Ahmad Bilour v. Municipal Committee, Peshawar through its Administrator and 3 others PLD 1976 Peshawar 1 and Arsalla Khan v. Bashir Ahmad Blour and 3 others PLD 1976 SC 581).
Reference may also be made to the decision of Division Bench of Sindh High Court in Messrs Manri & Co. Through Proprietor v. Province of Sindh through Additional Chief Secretary and another 1993 CLC 1768, in which a contract for octroi and parking fee was auctioned by Town Committee, Guddu in favour of the petitioner which was later on cancelled by Additional Chief Secretary in the exercise of supervisory powers of the Government under section 153 of the Sindh Local Government Ordinance, 1979 which is in para materia with section 156(b) of the Punjab Ordinance VI of 1979. The order of cancellation was declared to be without lawful authority by the Sindh High Court observing that:-- "Once Authority had entered into a valid contract with petitioner, vested rights were created in favour of petitioner and same could not be taken away by Authority without observance of due formalities of law--------Order cancelling contract passed by Authority without any satisfactory explanation as to how Authority was empowered to cancel a valid contract with petitioner, without serving upon it a show-cause notice was set aside in circumstances."
12. I am not persuaded to accept the contention of the learned counsel for the respondents that the impugned order viras interim in nature and, therefore, it was not necessary to hear the petitioner before passing the same. The order on the face of it does not purport to be interim but by its very wording is final in nature. The suspension of resolution has the effect of setting at naught the contracts executed between the petitioner and respondent No.2 and, therefore, it cannot be legitimately argued that the order has not adversely affected the rights of the petitioner. The only reliance of the learned counsel was on endorsement in the aforesaid order. Whereby the Mayor, Municipal Corporation, Faisalabad has been requested to send viewpoint of the Local Council within 7 days to the Commissioner for proceeding further in the matter. This endorsement cannot have the effect of whittling down the operative part of the order. In any case, it is not even clear as to what further proceedings were contemplated by the Commissioner, if so, in the exercise of which power. It is also to be noticed that though Mayor, Municipal Corporation, Faisalabad had been asked to give his viewpoint after the impugned order had been passed but even at that time no notice was issued to the petitioner nor was he called upon to explain his viewpoint.
13. The question as to whether it was necessary to grant an opportunity of being heard to an affected party before passing an order of suspension under section 159 of the Punjab Local Government Ordinance, 1979 was examined by this Court in detail in Syed Ijaz Hussain Sherazi and 28 others v. Secretary, Local Government and Rural Development Department, Lahore and 2 others (1990 CLC 230) wherein a similar argument, as is being raised by the learned counsel, was repelled.
That decision squarely applies to the petitioner's case as the consequences flowing from the order passed by the Commissioner are that rights of the petitioner have been set at naught and collection of octroi duty has been taken over as a consequence of the impugned order with the result that the petitioner stands completely ousted from the field. It is also noticed that according to the contention of the learned counsel for the respondents himself, action was taken on the ground that auctions held were not m accordance with rules and contrary to public interest. That being so, it is all the more necessary to grant an opportunity of being heard to the petitioner, so that he could meet the two grounds. This petition is liable to be accepted on this ground alone.
14. Additionally, the order is also struck down on the ground that it does not disclose any reason for passing the same or the basis on which the decision contained therein had been taken. Under section 156(b) of the Punjab Local Government Ordinance, 1979, the power vested in the Government can only be exercised if in the opinion of the Government anything done by the Local Council is not in conformity with the law or in any way against public interest. The power vesting in the Government by this provision is hedged by certain conditions namely that there must be formation of opinion by the Government or its delegatee further that the action taken in the opinion of the Government is either in not conformity with law or is in any way against public interest. The exercise of power is based upon existence of these jurisdictional facts which must be shown to exist. The impugned order merely recites that the resolution passed by the Municipal Corporation in its meeting on 31st July, 1993 was being suspended as being against the interest of public.
Neither any reason for coming to the aforesaid conclusion has been mentioned nor is there any explanation about as to how, the resolution was against public interest. The order does not even purport to be based upon any opinion formed by the Commissioner and appears to be arbitrary in nature. Such an exercise of power, which has the effect of taking away the vested rights of an individual cannot be countenanced.
15. Learned counsel for the respondents, while supporting the impugned order had laid much emphasis on the fact that the resolutions in question by which offers made by the petitioner were accepted, were against law and contrary to the rules on the subject. .Elaborating, learned counsel has submitted that for the year 1992-93 Octroi rights were auctioned for Rs39 crore while bid of the petitioner for the year 1993-94 which has been accepted was only 35 crore. According to the learned counsel as this bid was less than that of the last year, it could not have been accepted by the Council without proper approval of the Government/Commissioner.
16. This argument, with great respect to the learned counsel, is based upon a fallacy. Under the Punjab Local Government Ordinance, 1979 and the rules framed thereunder, the concept of the Commissioner or any other functionary being the controlling authority of a Local Council, as was the case under previous dispensations, has been done away with: Neither Government nor any of its functionaries can claim plenary power or jurisdiction over the functioning of Local Councils. The Commissioner, however, as delegatee of the Government, can exercise those powers which have been delegated to him as are specifically mentioned in Chapter V of the Punjab Local Government Ordinance, 1979. In order to substantiate his contention that the acceptance of the offer made by the petitioner required approval of the Government, learned counsel has firstly relied upon rule 3 of the Punjab Local Councils (Business) Rules, 1980 according to which a copy of the resolution passed by the Municipal Corporation must be forwarded to the Commissioner of the Division.
17. This requirement does not in any manner take away power of Local Councils to exercise such powers as are vested in them by law. Even otherwise, learned counsel for the petitioner has pointed out that the copy of the resolution dated 31st July, 1993 was sent to the Commissioner, Faisalabad Division. This fact is borne out by the letter dated 31-7-1993 from Mayor, Municipal Corporation, Faisalabad to the Commissioner, Faisalabad a copy of which has been filed as Annexure `B' to this petition. It is pertinent to point out that an assertion to that effect was made in para.3 of the petition, which has been admitted in categorical terms by respondents Nos.2 and 4 in their written.
Statement and there is no denial of the contents thereof in the para wise comments filed by the respondent No.1. This requirement of section 3(7), even if it has some relevancy, therefore, stands fully complied with.
18. Learned counsel next submitted that as the rights were being auctioned for an amount lesser than the previous year, its acceptance without previous approval of the Government was contrary to the instructions issued by the Government vide its letter dated 16-7-1980, according to which in cases where the contract was being granted for an amount lesser than that of the last year, previous approval of the Government is necessary. In the submission of the learned counsel, these instructions have been issued in the exercise of powers vesting in the Government under section 157 of the Punjab Local Government Ordinance, 1979.
19. This contention of the learned counsel is without any force. These instructions were issued at the time when no rules governing grant of leases stood framed. However, on 11th April, 1990, the Governor of Punjab promulgated the Punjab Local Councils (Lease) Rules, 1990. These rules have been framed in the exercise of powers conferred upon the Governor by section 144 of the Punjab Local Government Ordinance, 1979 which provides that all taxes and charges levied by the Local Councils shall be imposed, assessed, leased etc. In such manner as may be provided by the rules.
These rules lay down procedure for grant of leases in detail. According to rule 4 of the Punjab Local Councils (Lease) Rules, the power to accept or reject the bid vests in the Local Councils.
20. The exercise of this .Power is, however, subject to rule 5 which provides that no offer the amount of which is less than average amount of highest bid made during immediately preceding this year shall be accepted unless two attempts made for lease have failed. In the present case, it is not disputed by the respondents that earlier for attempts were made for auctioning these rights firstly on 21st April, 1993, then on 29th May, 1993, also on 16th June, 1993 and lastly on 27th July, 1993. It was only after these attempts had proved abortive that the bid made by the petitioner was accepted by the Local Council concerned. The requirement of rule 5 as such stood fully met with. It is, therefore, idle on the part of the respondents to contend on the basis of some instructions or memorandum that the previous approval of the Commissioner was required before the confirmation of the auction. As a matter of fact, as has been pointed out by the learned counsel for respondents himself, the concept of confirmation of an auction is wholly foreign to the Punjab Local Councils (Lease) Rules, 1990 and once a bid has been accepted by the Local Council, it matures into a contract.
21. The thrust of Syed Jamshed Ali Shah was that the discretionary power vested in this Court should not be exercised in favour of the petitioner as it would result in colossal loss to the public revenue. It is also argued that on account of collusion between the prospective bidders; the rights had to be auctioned for a price which was highly inadequate. No material has been placed on record by the respondents to show any collusion between the prospective bidders. Furthermore, once a bid was accepted by the General House of the Municipal Corporation after due deliberation and discussion, it would be highly unjust to relieve the Municipal Corporation of its obligations under the contract.
22. The only circumstance on the basis of which learned counsel for the respondents wanted this Court to draw inference that the lease money was highly inadequate was that in the previous year these rights had been auctioned for Rs.39 crore. He further added that the income-tax returns of the petitioner, who was also contractor for the last year, show that the actual collection made by him was Rs.41,29,40,357. Learned counsel also pointed out that after the impugned order was passed, the collection was taken over by the Municipal Corporation itself and for last two months, the average collection was Rs.3.34 crore, although according to the learned counsel, the coming months are likely to prove more fruitful.
23. These facts are not supported by anything on the record. Even otherwise, it has been explained by the petitioner that the expenses incurred upon recovering charges for collection have not been taken into account by the respondents and the figures mentioned above represent gross receipts and not net income. It has also been stated by the learned counsel for the petitioner that in addition to the lease money of Rs.35 crore, petitioner has to pay 3 per cent. Of the lease amount as income-tax as also salaries of the departmental staff besides making other arrangements for collection of the octroi and ensuring that no evasion takes place. According to the chart produced by the learned counsel, the expenses which the contractor is likely to incur during the contracted period are about Rs.25,50,000. It is also pointed out by the learned counsel for the petitioner that the learned counsel for respondents has not given consideration to the fact that the contract of the petitioner is for 11 months and not for 12 months. Examined in this perspective, it appears that the contention of the learned counsel that lease had been auctioned for an highly inadequate consideration does not appear to be correct.
24. Be that as it may, this disputed question of fact cannot be made the basis for denying relief to the petitioner and to allow the respondents to wriggle out of a completed contract. It is also to be noticed in this behalf that earlier for attempts for auction rights were made but no acceptable offer was forthcoming from anyone. Furthermore, there is nothing in the order of the Commissioner from which such inference could be drawn nor does the impugned order show that the Commissioner had examined the matter from this angle.
25. There is also merit in the contention of the learned counsel for the petitioner, that once the resolution passed by the Municipal Corporation had been given effect to and implemented, it could not be suspended. This contention is supported not only by the language of section 156(b) itself ,but also by a number of judgments of this Court. It will be seen that under section 156(b) the Government is authorized to suspend the execution of any resolution or the order but not the resolution itself. It is, of course open to the Government to quash proceedings taken by the Local Council by clause (a) but this power does not stand delegated by the Government to the Commissioner and the only power which has been given to him is that mentioned in clause (b) by which he is empowered to suspend the execution of the resolution. Once the resolution has been given effect to, the question of suspension of its execution does not arise. This question was examined in detail by Division Bench in Sh. Ghulam Mohiuddin v. The Commissioner, Lahore Division and others PLD 1957 (W.P.) Lahore 826 wherein B.Z. Kaikaus, J. Speaking for the Court drew a distinction between the power to suspend the resolution and to suspend the execution of the resolution. He observed that once a resolution has been acted upon, the Provincial Government cannot exercise the power of suspension of execution of resolution and was powerless to interfere.
This view finds further support from Mahbub Ali Malik (1) Corporation of the City of Lahore (2)
Commissioner, Lahore Division, Lahore (3) Chief Executive Officer of the Corporation of the City of Lahore and (4) Mir Bashir Ahmad, Assistant to the Legal Advisor of the Corporation of the City of Lahore PLD 1958 (W.P.) Lahore 370 and Muhammad Shafi v. Sialkot Municipality and another AIR 1940 Lahore 451.
26. As already observed, the Government has power to quash the proceedings of a Local Council under section 156(b) but it is an admitted position that this power does not stand delegated to the Commissioner who is the delegatee only of the powers mentioned in clause (b) of sections 151 and 156(b) which contemplate suspension of execution of any resolution of a Local Council. However, as earlier held, once the resolution has been acted upon, the question of its suspension in clause (b) does not arise.
27. Syed Jamshed Ali Shah, learned counsel for respondents has relied upon Ghulam Muhammad and 6 others v. Commissioner, Sargodha Division, Sargodha and another (1973 SCM R 95), Haji Hashmatullah and others v. Karachi Municipal Corporation and others (1975 SCM R 359) and Chiragh Din v. Municipal Committee (1986 CLC 2392) to. Contend that even after the resolution has been given effect to, it can be suspended by the Commissioner under section 156(b) of the Punjab Local Government Ordinance. This reliance of the learned counsel is not well placed as none of these judgments deals with question in controversy. The order passed which was impugned in Ghulam Muhammad's case (supra) had not been implemented and as such this precedent is clearly distinguishable. So far as Chiragh, Din's case was concerned, the relief was denied to the petitioner as it was found that the lease was granted in flagrant disregard of section 39 of the Punjab Local Government Ordinance, 1979, Rule 4 (2), Punjab Local Councils (Contract) Rules (1981) and Martial Law Instructions Nos.10 and 25 (Punjab). Haji Hashmatullah's case supra has no, relevancy at all as it relates to rule 8 of West Pakistan Municipal Committees (Property) Rules, 1962 according to which no lease for more than one year could be granted except with the previous sanction of the controlling authority. Furthermore, in that case, the power which had been exercised was under section 111(a) of Municipal Administration Ordinance, 1960 to quash the proceedings. However, in the present case, the power to quash proceedings does not stand delegated to the Commissioner.
In view of what has been stated above, this petition is allowed and the impugned order is declared to be without lawful authority and of no legal effect. The parties are left to bear their own costs.