' Shaukat Ali/herein petitioner has prayed for grant of following reliefs in this Constitution petition:-- -
(i) To declare that the grant of lease of Block No,4-A/116 to respondent No,4 by respondents Nos.1 to 3 is illegal, without lawful authority and against the Rules;
(ii) to declare that the denial by respondents Nos.1 to 3 of the lease of Block No,4/116 to the petitioner is illegal, without lawful authority and against the Rules;
(iii) to direct the respondents to resume the area in the aforesaid Blocks and to transfer the same on the same terms (as have been allowed to respondent No,4) on lease to the petitioner; and
(iv) to grant such other relief/reliefs to which the petitioner may be found entitled to.
2. The facts which form the background of this Constitution petition are fortunately not in dispute.
These are: vide an advertisement published in the Daily "Jang", Lahore dated 15-3-1992, interested parties/persons were invited to participate in an auction being held on 1-4-1992 for the grant of licensing rights for quarrying stone in the area measuring 93 acres situated in Chak No,116/SB, Tehsil and District Sargodha. According to that advertisement, the licensing rights were for a period of 5 years; that every offerer was required to deposit Rs,5,000 (refundable) as earnest money; that the highest bidder was to deposit 1/5th of his offer at the fall of hammer in auction; and that the Licensing Authority had power to accept or reject the offer made by the participants without assigning any reason. Najibullah/respondent No,4, Sher Bahadur & Company, and Shaukat All petitioner participated in the aforesaid auction and gave offers in the following terms:---{{TABLE}}
(1) Najibullah/respondent No,4. Rs,3,32,00,000.
(2) Shaukat Ali/petitioner Rs,3,31,00,000
(3) Sher Bahadur & Company Rs,2,61,00,000 ' Respondent No,4 did not deposit the 1/5th of his offer, which came to be Rs,6,64,000 and instead deposited Rs,10,00,000 on the relevant date. The Licensing Authority, however, did not finalise the acceptance of offer on account of presence of interim injunction issued by High Court in a writ petition filed by a previous allottee namely, Ashiq Hussain.
3. Meanwhile the National Highway Authority requested the Licensing Authority to give it an area measuring 82.92 acres from the above mentioned licensing area for the purpose of its utilization by Messrs Daewoo Corporation which was engaged in the construction of the "Motorway". In order to meet the above demand, the Licensing Authority entered into negotiations with Ashiq Hussain/previous lessee, Messrs Daewoo Corporation and fourth respondent. Resultantly, a settlement was reached by which Ashiq Hussain got Rs,4,00,000 from Messrs Daewoo Corporation and withdrew his writ petition pending in the High Court; the licensing Authority carved out new licensing area comprising of 10.08 acres from the licensing area, designating it as Block 4-A and was offered to fourth respondent vide letter, dated 26-9-1992. This letter was sent both to fourth respondent as well as to National Highway Authority. Najibullah/fourth respondent, thereafter, moved an application to the Deputy Director (Mineral Development), Sargodha on 27-9- 1992/stating therein that he was prepared to comply with the terms of letter dated 26-9-1992 and asked for issuance of work order. Pursuant to this application, it was on 1-10-1992 when the Licensing Authority issued work order to fourth respondent. Feeling dissatisfied with this order, Shaukat Ali had filed the instant Constitution petition.
' 3-A. Raja Muhammad Anwar, Senior Advocate Supreme Court appearing on behalf of the petitioner raised three grounds in support of this petition:--- "Firstly, that Najibullah/fourth respondent, in violation of the terms of auction/Annex. 'A', did not deposit 1/5th of his offer and only contented himself with depositing Rs,10,00,000. On the basis of this circumstance, it was contended that the offer of fourth respondent had fallen through in terms of Punjab Minor Minerals Concession Rules, 1990. According to learned counsel, grant of licensing rights to fourth respondent by Licensing Authority vide order dated 1-10-1992 was clearly illegal, without any lawful support and merited to be set aside. Reliance was placed on Rule 17 of the Punjab Minor Minerals Concession Rules, 1990 (hereafter called as 'Rules of 1990'), Ghulam Muhammad and 6 others v. Commissioner, Sargodha and others 1973 SCM R 95; Arsalla Khan v.
Bashir Ahmad.Blour and others PLD 1976 SC 581; Province of Punjab and others v. Dr. Muhammad Daud Khan Tariq 1993 SCM R 508 and Shaukat Ali v. Government of Punjab through Secretary, Industries and Mineral Department and others PLD 1992 Lah. 277; ' Secondly, that the actions/acts of respondents Nos.2 and 3 were steeped into mala fide.
According to the learned counsel, the Rules clearly prescribed the grant of licensing rights of minor minerals through unrestricted public auction and not otherwise. According to the Learned counsel, the Licensing Authority had no right to carve out the fresh Block 4-A comprising of 10 acres and give it to fourth respondent by negotiation; ' thirdly, that the petitioner, in the first instance, had offered to Licensing Authority that he was prepared to give Rs,50,00,000 for 10.08 acres and now he was prepared to pay Rs,1,00,00,000 for the remaining period of the lease. On this basis, it was represented that the Licensing Authority had treated fourth respondent with clear favour unknown to law.
4. The learned counsel for the fourth respondent, on the other hand, fully supported the acts/actions of the Licensing Authority, culminating in work order dated 1-10-1992. According to him, the contentions of the learned counsel for the petitioner were mere fetish of technicalities. It was stressed that the fourth respondent, who was the highest offerer in the auction held on 1-4- 1992, had deposited Rs,10,00,000 with the fall of hammer; that on account of the circumstances, the Licensing Authority had sliced away the licensing area and offered 10.08 acres to fourth respondent; that his deposit was fully commensurate with the offered leased area. He further contended-that fourth respondent had actively facilitated the Licensing Authority in coming out of the situation created by demand of National Highway Authority. On these circumstances, it was suggested that the Licensing Authority was clearly right in giving the work order to fourth respondent, who was the highest bidder in the auction and whose highest offer was not only highest, but was subsisting in the context of circumstances, narrated above.
5. Mr. Abdul Sattar Najam, learned Advocate-General, while representing respondents Nos.1, 2 and 3 took the stance that acts, actions by the Licensing Authority culminating in order, dated 1-10-1992 were wholly mala fide and were steeped into malicious exercise of authority. According to him, the Licensing Authority had no power, whatsoever, to lease the licensing area except through public auction.
6. I have heard the learned counsel for the parties at a considerable length and perused the record of this petition. Before proceeding to examination of the contentions of the parties, I find it necessary to state a well-settled proposition of law of contract that agreements are made by consensus of parties. It starts with offer and finalises in acceptance of that offer by promisee. In order to form a contract, it is necessary that offer made by proposer must, be accepted by promisee in unconditional and unqualified terms. Any slight variation or departure from the offer results into its rejection and the same amounts to counter proposal/counter offer. If any authority is needed, reference be made to Norod Chandra Roy v. Raja Kirtya Nanda Singh and others AIR 1922 Pat. 24; Nihal Chand v. Amar Nath AIR 1926 Lah. 645 and Rao Girdhari Lal v. Societe Belge de Banque SA. AIR 1938 Lah.
341. I See from this angle, it is quite clear that fourth respondent had made the offer on 1-4-1992 for licensing rights in 93.00 acres; that the Licensing Authority had not accepted that offer; sliced away 82.92 acres from that licensing area and so reduced it to 10.08 acres and offered the same, vide letter dated 27-9-1992 to fourth respondent. The terms of this offer were clearly and wholly deviant from the offer of the petitioner dated 1-4-1992. Not only the size of licensing area was different, but the lease money too was not the same. Resultantly it can be safely said that the offer of fourth respondent dated 1-4-1992 stood rejected and so had come toan end on 26-6-1992.
7. Now the stage is set to have a rapid view of the Rules of 1990. These were made by the Governor of Punjab on 21-7-1990 in exercise of his powers under sections 2 and 5 of the Regulations of Mines and Oil Fields and Mineral Development (Government Control) Act (XXIV of 1948). These deal with the grant of licences for the right of excavating minor minerals. Rule 6 lays down that grant/lease of such rights shall be given through auction conducted by Auction Committee constituted under the rules. Rule 14 empowers the Licensing Authority to accept/reject the offers made by the participants in public auction without assigning any reason. Rule 15 in the context of rule 6 is not without significance. It authorises the competent authority to enter into negotiation with the parties, who had participated in the auction to increase their offers if he finds that their offers are inadequate. This rule positively enacts that if the competent Authority does not succeed in its negotiation, it shall reauction the licensing rights. Rule 31 deals with some unforeseen eventuality. It states that if some land from the leased area is needed for any public purpose, the lessee shall surrender such area to leasing Authority and shall be entitled to proportionate reduction in the lease money for the area so surrendered. This is, in all, the picture of the rules.
8. From the above critical examination of the relevant rules, it is quite clear that, the rules only prescribe the grant of licensing rights in the licensing area through unrestricted public auction. The licensing Authority, under the Rules, has no power to grant leases to people by any other mode including negotiation. The only exception to this mode is that if in the auction, the Licensing Authority comes to the conclusion that the offers made by the participants are inadequate, it can enter into negotiations with all the parties who had participated in the offer, for the purpose of seeking enhancement in their offers and if these negotiations fail to yield increase, it has no option, but to reauction the grant of licensing rights. This construction of Rule is fully in accord with the golden rules of openness, fairness and impartiality enshrined in Article 2 of the Constitution of Pakistan (1973).
9. Before I proceed further, I am tempted to quote the saying of Justice Frankfurter in Vitarelli v.
Seaton (1959) 359 US 535, 3 L Ed. 2d 1012:--- "An executive agency must be rigorously held to the standards by which it professes its action to be judged....Accordingly, if dismissal from employment is based on a defined procedure, even though generous beyond the requirements that bind such agency, that procedure must be scrupulously observed... This judicially evolved rule of administrative law is now firmly established and, if I may add, rightly so. He that takes the procedural sword shall perish with the sword."
' The above rule pertaining to exercise of governmental power and its judicial review came up for consideration before the Supreme Court of India in Ramana Dayaram Shetty v. The International Airport Authority of India and others AIR 1979 SC 1628, justice P.N. Bhagwati while speaking for Court said:--- "Today the Government, in a welfare State is the regulator and dispenser of special services and provider of a large number of benefits, including jobs, contracts, licences, quotas, mineral rights etc. The Government pours forth health, money, benefits, services, contracts, quotas and licences.
The valuables dispensed by Government take many forms, but they all share one characteristic.
They are steadily taking the place of traditional forms of wealth. These valuables which derive from relationships to Government are of many kinds. They comprise social security benefits, cash grants for political sufferers and the whole scheme of State and local welfare. Then again, thousands of people are employed in the State and the Central Government and local authorities. Licences are required before one can engage in many kinds of businesses or work. The power of giving licences means power to withhold them and this gives control to the Government or to the agents of Government on the lives of many people. Many individuals and many more businesses enjoy largess in the form of Government contracts. These contracts often resemble subsidies. It is virtually impossible to lose money on them and many enterprises are set up primarily to do business with Government. Government owns and controls hundreds of acres of public land valuable for mining and other purposes. These resources are available for utilization by private corporations and individuals by way of lease or licence. All these mean growth in the Government largess and with the increasing magnitude and range of Governmental functions as we move closer to a welfare State, more and more of our wealth consists of these new forms. Some of these forms of wealth may be in the nature of legal rights but the large majority of them are in the nature of privileges. But on that account can it be said that they do not enjoy any legal protection? Can they be regarded as gratuity furnished by the State so that the State may withhold, grant or revoke it at its pleasure? Is the position of the Government in this respect the same as that of a private giver? We do not think so. The law has not been slow to recognize the importance of this new kind of wealth and the need to protect individual interest in it, and with that end in view, it has developed new forms of protection. Some interests in Government largess, formerly regarded as privileges, have been recognized as rights while others have been given legal protection not only by forging procedural safeguards but also by confining/structuring and checking Government discretion in the matter of grant of such largess. The discretion of the Government has been held to be not unlimited in that the Government cannot give or withhold largess in its arbitrary discretion or at its sweet will. It is insisted, as pointed out by Professor Reich in an especially stimulating article on "The New Property" in 73 Yale Law Journal 733, "that Government action be based on standards" that are not arbitrary or unauthorized". The Government cannot be permitted to say that it will give jobs or enter into contracts or issue quotas or licences only in favour of those having grey hair or belonging to a particular political party or professing a particular religious faith. The Government is still the Government when it acts in the matter of granting largess and it cannot act arbitrarily. It does not stand in the same position as a private individual."
' This rule came up again before the Supreme Court of India in Shri Vallabharaya Swami Varu (Deity) of Swarma v. Deevi Hanumancharyulu and others AIR 1985 SC 1147 on somewhat analogous situation. Delivering the opinion on behalf of the Bench, Justice D.A. Desai "Let us put into focus the clearly demarcated approach that distinguishes the use and disposal of private property and socialist property. Owner of private property may deal with it in any manner he likes without causing injury to any one else. But the socialist or if that word is jarring to some, the community or further the public property has to be dealt with for public purpose and in public interest. The marked difference lies in this that while the owner of private property may have a number of considerations which may permit him to dispose of his property for a song. On the other hand, disposal of public property partakes the character of a trust in that in its disposal there should be nothing hanky panky and that it must be done at the best price so that larger revenue coming into the coffers of the State administration would serve public purpose viz. The Welfare State may be able to expand its beneficent activities by the availability of larger funds. This is subject to one important limitation that socialist property may be disposed at a price lower than the market price or even for a token price to achieve some defined constitutionally recognized public purpose, one such being to achieve the goals set out in Part IV of the Constitution. But where disposal is for augmentation of revenue and nothing else, the State is under an obligation to secure the best market price available in a market economy. An owner of private property need not auction it nor is he bound to dispose it of at a current market price. Factors such as personal attachment, or affinity, kinship, empathy, religious sentiment or limiting the choice to whom he may be willing to sell, may permit him to sell the property at a song and without demur. A welfare State as the owner of the public property has no such freedom while disposing of the public property. A welfare State exists for the largest good of the largest number more-so when it proclaims to be a socialist State dedicated to eradication of poverty. All its attempt must be to obtain the best available price while disposing of its property because the greater the revenue, the welfare activities will get a fillip and shot in the arm. Financial constraint may weaken the tempo of activities. Such an approach serves the larger public purpose of expanding welfare activities primarily for which the Constitution envisages the setting up of a welfare State. In this connection, we may profitably refer Ramana Dayaram Shetty v. The International Airport Authority of India (1979) 3 SCR 1014: AIR 1979 SC 1628 in which Bhagwati, J. Speaking for the Court observed (at pages 1637 to 1638):--- 'It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largess, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norms which is not arbitrary, irrational or irrelevant. The power or discretion of the Government in the matter of grant of largess including award of jobs, contracts, quotas, licences etc. Must be confined and structured by rational, relevant and non-discriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action of the Government would be liable to he struck down, unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory."
' At another place it was observed that the Government must act in public interest, it cannot act arbitrarily or without reason and if it does so, its action would be liable to be invalidated. It was further observed that the object of holding the auction is generally to raise the highest revenue. The Government is entitled to reject the highest bid if it thought that the price offered was inadequate.
But after rejecting the offer, it is obligatory upon the Government to act fairly and at any rate it cannot act arbitrarily. Following this line of thought, in Kasturi Lal Lakshmi Reddy v. State of Jammu and Kashmir (1980) 3 SCR 1338: AIR 1980 SC 1992 while upholding the order of the Government of Jammu & Kashmir dated April 27, 1979, allotting to the second respondent 10 to 12 lacs blazes annually for extraction of resin from the inaccessible Chir forests in Poonch, Reasi and Ramban Divisions of the State for a period of 10 years on the terms and conditions set out in the order, observed as under (at p.2000):--- "Where any Governmental action fails to satisfy the test of reasonableness and public interest discussed above and is found to be wanting in the quality of reasonableness or lacking In the element of public interest, it would be liable to be struck down as invalid. It must follow as a necessary corollary from this proposition that the Government cannot act in a manner which would benefit a private party at the cost of the State, such an action would be both unreasonable and contrary to public interest. The Government, therefore. Cannot for example give a contract or sell or lease out its property for a consideration less than the highest that can be obtained for it.
Unless of course there are other considerations which render it reasonable and in public interest to do so."
(Emphasis supplied)
' At one stage, it was observed that the Government is not free like an ordinary individual, in selecting recipient for its largesse and it cannot choose to deal with any person it pleases in its absolute and unfettered discretion. The law is now well-settled that the Government need not deal with any one, but if it does so, it must do so fairly and without discretion and without unfair procedure. Let it be made distinctly clear that respondent No,4 was not selected for any special purpose or to satisfy any Directive Principles of State Policy. He surreptitiously ingratiated himself by a back-door entry giving a minor raise in the bid and in the process usurped the most undeserved benefit which was exposed to the hilt in the Court. Only a blind can refuse to perceive it."
' The examination of the above case-law will not be complete without referring to rule laid down in Miss Asma Jilani v. The Government of the Punjab and another PLD 1972 SC 139. His Lordship Mr. Justice Hamoodur Rahman, the Chief Justice of Pakistani (as he then was), while dealing with the Muslim heritage held as under:--- "In any event, if a ground norm is necessary for us I do not have to look to the Western legal theorists to discover one. Our own ground norm is enshrined in our own doctrine that the legal sovereignty over the entire universe belongs to Almighty Allah alone, and the authority exercisable by the people within the limits prescribed by Him is sacred trust. This is an immutable and unalterable norm which was clearly accepted in the Objectives Resolution passed by the Constituent Assembly of Pakistan on the 7th of March, 1947. This Resolution has been described by Mr. Brohi as the "cornerstone of Pakistan's legal edifice" and recognized even by the learned Attorney-General himself "as the bond which binds the nation", and as a document from which the Constitution of Pakistan "must draw its inspiration". This has not been abrogated by any one so far, nor has this been departed or deviated from by any regime, Military or Civil. Indeed, it cannot be, for it is one of the fundamental principles enshrined in the Holy Qur'an. {{ARABIC TEXT}} ' Say, '0 Allah, Lord of sovereignty Thou givest sovereignty to whomsoever Thou pleasest; and Thou takest away sovereignty from whomsoever thou pleasest. Thou exaltest whomsoever Thou pleasest and Thou abasest whomsoever Thou pleasest. Thou exaltest whomsoever Thou pleasest and Thou abasest whomsoever Thou pleasest. (Pt. 3, Ch. 3, Al Imran, Ay. 27)
' The basic concept underlying this unalterable principle of sovereignty is that the entire body politic becomes a trustee for the discharge of sovereign functions. Since in a complex society every citizen cannot personally participate in the performance of the trust, the body politic appoints State functionaries to discharge these functions on its behalf and for its benefit, and has the right to remove the functionary so appointed by it if he goes against the law of the legal sovereign, or commits any other breach of trust or fails to discharge his obligations under a trust. The functional Head of the State is chosen by the community and has to be assisted by a Council which must hold its meetings in public view and remain accountable to public. It is under the system that the Government becomes a Government of laws and not of men, for, no one is above the law. It is this that led Von Hammer, a renowned orientalist, to remark that under the Islamic system "the law rules through the utterance of justice, and the power of the Governor carries out the utterance of it".
' This trust concept of Government filtered into Europe through Spain and even as early as 1685 John Locke rejected Hobbes' leviathan and propounded the theory that sovereignty vested in the people and they had the right not only to decide as to who should govern them but also to lay down the manner of Government which they thought to be best for the common good.
Government was, therefore, according to Locke, essentially moral trust which could be forfeited if the conditions of the trust were not fulfilled by the trustee or trustees as the case may be.The trustees under this concept of ours are referred to those who are in authority among you' and (Pt. 4, Ch. 4, Ay. 60, Al-Nina P.207) which again negates the possibility of absolute power being vested in a single hand, for, the reference is clearly to a plurality of persons and to an authority properly constituted by law."
' From the foregoing discussion, the following principles of law are clearly deducible:---
(1) Wherever the functionaries of State are dealing with public at large, whether by way of giving jobs or entering into contracts or issuing quota or licences or with any grant of State largess, these functionaries are required to act reasonably, impartially and without any arbitrariness. These functionaries are required to act strictly within the defined sphere of their powers.
(2) Our Governments are the Governments of Laws. The functionaries of the State derive their powers from the Constitution or laws and are enjoined to act clearly within the defined parameters of law. Further-more, the Governmental power residing in State functionaries is sacred trust and perform their duties as trustees. Whenever the actions/orders/decisions done/passed/made by State functionaries are contrary to above principle, this Court has power under Article 199 to strike down such orders. In short, the Constitutional scheme leaves no room for arbitrariness, capriciousness, nepotism and jobbery.
Applying these principles to the circumstances of the case, I have no option but to hold that after meeting the claim of National Highway Authority and after carving out a new licensing area i,e, Block 4-A, the Licensing Authority had no power, whatsoever, to make an offer of the newly carved out licensing area to fourth respondent. This act was clearly beyond the power of the Licensing Authority. He could only lease out the new licensing area by only mode of unrestricted public auction. This being the position, the acts/actions of Licensing Authority commencing from 26-9- 1992. And culminating work order dated 1-4-1992 were clearly coram non judice and cannot be sustained.
As a result of the above discussion, this petition succeeds. The actions of Licensing Authority commencing from 26-9-1992 culminating in work order, dated 1-10-1992 are declared to have been done without any lawful authority. Resultantly, the Licensing Authority is directed to resume the disputed area from the fourth respondent forthwith and make arrangements for its reauction within two months from the receipt of this order. This order shall not preclude the Licensing Authority from recovering lease money from the fourth respondent for the period he has been in possession of licensing order under the above acts which have been declared void under section 65 of the Contract Act. The fourth respondent shall bear the costs of proceedings throughout.