JUDGMENT KARAMAT NAZIR BHANDARI, J. - By way of proclamation issued in Daily Nawa-i-Waqt dated 16.7.1996, the respondent-Zila Council invited bids for lease of the rights of Zila Council to recover tax leviable on transfer of properties. According to the proclamation, the auction was to take place on 31.7.1996 and if no auction could take place on the said date, fresh auction will take place on 5.8.1996. The petitioner was one of the bidders on 31.7.1996 and his bid amounting to Rs. 4,26,00,000/- (rupees four crore and twenty six lacs only) was the highest. As required before the bidding, the petitioner deposited a .Sum of Rs. 20,00,000/- (rupees twenty lacs only) through Call Deposit Receipt, which is still with the respondent-Council. It is the case of the petitioner that instead of awarding him the contract, surreptitiously and without notice to the petitioner, a fresh auction is shown to have taken place on 5.8.1996 in which respondent No. 6 is shown to be the K.L.R. C.C. Highest bidder in the sum of Rs. 4,27,50,000/- (rupees four Crores, twenty seven lacs and fifty thousand only). This bid was accepted and a regular agreement, executed between the respondent-Council and respondent- Contractor, which is to remain in force till 30.6.1997. The petitioner asserts that on 18.8.1996, he sent a telegram to the Minister, as well as Secretary. Local Government Department and Secretary Local Government Board protesting the sham nature of the transaction and offering Rs. 4,30,00,000/- (rupees four Crores and thirty lacs only). It is stated that this telegram remained un responded.
2. The petition was formally admitted to regular hearing on 16.10.1996 to consider the question that without formally setting aside the earlier auction dated 31.7.1996, the second auction dated 5.8.1996 is illegal. In the comments submitted by respondents No. 1 and 2, facts are substantially admitted except the nature of second auction dated 5.8.1996. It is the case of the respondent-Council that the highest offer of the petitioner was not accepted for valid and cogent reasons and the second auction has been correctly and legally held and the assertion that it is surreptitious and sham has been denied. The respondent No.6, contractor, has not filed any written statement but has supported the assertions made by respondents No.1 and 2.
3. In support of the petition, learned counsel has repeated the contention to consider which this petition was admitted. According to him, there is no express order formally refusing to accept the highest bid of the petitioner in the first auction. It is urged that at no stage the respondent- Council communicated to the petitioner the non-acceptance of the highest bid. Learned counsel urged that in the circumstances the petitioner was justified in expecting that his offer being highest would be accepted. According to the learned counsel, the petitioner did not participate in the second auction held on 5.8.1996 because of the above impression and absence of any intimation as to non- acceptance.
4. On the other hand learned counsel appearing for Zila Council has urged that no vested right accrues to highest bidder and it remains the discretion of the respondent-Council to accept or not to accept even the highest bid. Reliance is placed on Javaid Iqbal Abbasi and Company Versus Province of Punjab and 6 others (1996 S.C.M.R. 1433) and Messrs Muhammad Safdar and Company through Muhammad Safdar Sate Proprietor of the Company, Okara Versus The Province of the Punjab through Secretary, Local Government of Rural Development Department, Government of the Punjab, Lahore and 4 others (P.L.D. 1996 Lahore 22). It is also contended that the period of lease in favour of respondent No. 6 is K.L.R. C.C. Coming to an end on 30.6.1997 and any interference by "this Court at this juncture is liable to upset the entire working of the contract with uncertain results and this will not be in public interest. It is also claimed that the highest offer was in fact rejected on 31.7.1996 for cogent reasons. Learned counsel for respondent-contractor has by and large supported the arguments advanced by the learned counsel for the respondent-Zila Council.
5. Since the necessary documents have not been placed on record by the respondent-Zila Council, I have examined the original file. It seems prior to holding auction on 31.7.1996, an effort was made to auction the lease on 2.6.1996 but since the bid did not go beyond 4.66 Crores as against the minimum auction price of 5 Crores, the auction was not approved. Second attempt seems to have been made on 9.7.1996 and on the relevant bid sheet a note is scribed " ". Third attempt to auction was made on 14.7.1996 and as per record the Auction Sub- Committee again rejected the bid of 4.66 Crores as the Committee had already rejected the bid of 4.66 Crores. As noted, the next attempt to auction, was made on 31.7.1996 in which the petitioner's bid of 4.26 Crores was the highest. The bid sheet shows that members of the Sub-Committee had signed a note giving entire history of the auction attempts and invited appropriate orders from the Administrator. The Administrator has passed a view short order "M. Retry once again". The next page (Page No. 15) of the file contains the proceedings of the auction held on 5.8.1996. Once again a detailed note containing necessary history is made by the Auction Sub- Committee and the note suggests that the highest bid of 4.27 Crores approximately for the remaining period of the year may be accepted because the Zila Council itself cannot collect that much amount by itself. It is in these circumstances that the Administrator vide letter dated 13.8.1996 sought approval of the offer of respondent No. 6 from the Secretary Government of the Punjab Local Government Board, Lahore.
This offer seems to have been approved by the Government vide letter dated 2.9.1996. It is, however, astonishing that the original of this approval is not on the record, only a photo copy is available at Page No. 20. The Note at Page No. 20 suggests that the Government has approved the offer vide letter dated 2.9.1996 and thereafter a formal agreement has been executed between the respondent- Zila Council and the respondent-contractor.
6. The above survey of the record shows that at least on paper an effort has been made to indicate that the entire exercise is honest and legal. Few things, however, clearly emerge which need be noted and emphasized for future guidance, if for nothing else.
(I) The file does not reveal as to whether and in what manner the earlier highest bidder viz the petitioner was informed that his bid had not been accepted.
(II) Fixation of dates of second or subsequent auction in the same proclamation does not have the sanction of the rules.
(III) The original letter of the Government accepting the proposal of the Administrator in respect of highest bid of respondent No. 6 is not on the file although the same ought to be there as it was addressed to the Administrator.
(IV) Efforts to auction the lease from 2.6.1996 to 5.6.1996 were consistently made but the minimum auction price of 5 Crores was not offered.
The fixation of the dates of subsequent auction in the same proclamation is in violation of Rule 4 (1) of the Punjab Local Councils (Lease) Rules, 1990 which provides that for the conduct of an auction, a public notice in not less than one daily newspaper and at least seven days before the date fixed for auction shall be given by the Local Council. Second proviso to Sub- Rule (2) lays down that the first auction for the relevant year shall be at least two months before the start of the financial year and subsequent attempts, if any, shall be made after fifteen days from the first attempt. From the cumulative reading of these provisions and keeping in view the ultimate object viz collection of best revenue, it is clear that Local Councils ought to adhere to the time frame given in these rules, strictly. The proclamation must issue at least 7 days before the auction and the intervening period between two attempts must be 15 days. In this case the period between 31.7.1996 and 5.8.1996 is less than 15 days and no separate proclamation for holding auction on 5.8.1996 has been issued. The second auction, therefore, does not seem to be in conformity with Rule 4 of the above Rules. Local Council has no right to presume that the first or second auction will not fetch proper bid and that the same will not be accepted and, therefore, fix a second date in the same proclamation. Local Councils have to start the process at least two months before the commencement of the relevant year. This means that if the year starts with the first of July, the effort to auction the lease rights must commence towards the end of April or beginning of May every year.
8. Although there is no statutory provision requiring that the Administrator in turning down the highest bid must pass speaking and well- reasoned order but the absence of statutory provision/instruction does not at the same time mean that the Administrator or the competent authority K.L.R. C.C. Should ignore the demands of natural justice to pass a speaking order. In this case, as noted above, the Administrator has only passed a slipshod order to the effect "M. Retie once again." If this order is read with the long prepared note, it may make some sense but the above principle requires that the order of the Administrator must show the facts and the application of mind.
9. It is nowhere laid down that once a highest bid is not accepted, the last bidder must be informed.
It is equally nowhere laid down that such an interested person who has made the highest offer should not be informed about the fate of his offer. This may not be a statutory requirement but it is the rule of equity and propriety and good business manship that the highest bidder be informed of the non-acceptance of the offer and if possible, the reason for the same. Keeping every thing in the file and letting the concerned person to guess is highly inequitable and un businessman-like. The Administrator and authorities should make every thing transparent and open. It is emphasized that the highest bidder has a right to know the fate of his bid and the Administrator or the Council has the obligation to inform the highest bidder in writing the fact of non-acceptance and the summary of reasons for the same. Nothing can be left to absolute and unqualified discretion of the Administrator or the Local Council or the Government, as the same breeds arbitrariness. This is in- spite of the rule of the law that the highest bid does not create any vested right and the highest bidder cannot compel the authority to accept his bid but this rale of law does not rule out the principle of good business manship and of propriety that the highest bidder be informed in a proper manner the fate of his bid. In this particular case, he could have been informed about it soon after rejection of the bid on 31.7.1996 and invited to take part again on 5.8.1996.
10. It seems in view of what has been stated above, the second auction dated 5.8.1996 cannot be said to have been held strictly in accordance with the time frame but it does not end the matter.
The real question is that respondent-Council and respondent-contractor having worked out the agreement for almost 7/8 months, should this Court intervene at this juncture and direct fresh auction when only about 2/3 months are left to the remaining period of the lease. I am clear in my mind that the answer is no. Interference at this juncture will upset the apple cart and smooth working of the contract. I am also mindful of the fact that offer of respondent No. 6 was higher to the offer of the petitioner by about 1 lac. It has been stated at the bar that a sum of Rs. 3 Crores approximately has since been paid by respondent-contractor to respondent-Zila Council. If the auction dated 5.8.1996 is declared as illegal at this juncture, lot of complications are likely to arise.
The Constitutional writ being not a writ of course, can be withheld if the issue of the same is likely to create more problems.
11. For the reasons and after having laid down the guide lines to be followed in the future, I withhold the exercise of Constitutional jurisdiction in this case and hereby dismiss this petition, leaving the parties to bear their on. Costs.
12. Copy of the judgment will be sent to the Secretary, Department of Local Government and Rural Development, Government of Punjab, Lahore, for circulation to Local Councils for guidance and adherence.