' MIAN ALLAH NAWAZ, J.--- This judgment will govern three Intra- Court Appeals/bearing Nos.12, 13 and 18 of 1998. I.-C.A. No,12 of 1998 is by Messrs Huffaz Seemless Pipes Industries Ltd. (shortly stated as Messrs Huffaz), 1.-C.A. No,13 of 1998 is by Sui Northern Gas Pipe Lines Ltd. (briefly described as S.N.G.P.L.) and I.-C.A. No,18 of 1998 has been preferred by Messrs Ramna Pipe Lines and General Mills (Pvt.) Ltd. (hereinafter stated as Messrs Ramna Ltd.). All of these have arisen out the order passed by the learned Single Judge, dated 23-12-1997 in Writ Petition No,13164 of 1998. The aforesaid order was passed in following terms:-- "Resultantly for what has been stated above the payment of sales tax to the tune of Rs,3,83,00,000 in this manner by respondent corporation is transgression of their duty and accordingly the letter of intent issued on 21-7-1996 to respondent No,2 is declared to have been issued without lawful authority and of no legal effect. There shall be no order as to costs.
' Office is directed to send a copy of this order to Secretary, Ministry of Petroleum and Natural Resources, Government of Pakistan, Islamabad for information and taking appropriate action under the law."
2. In order to understand the competing claims of Messrs Huffaz Ltd., Messrs Ramna Ltd. And S.N.G.P.L., it is expedient, at the outset, to recount the events leading to institution of Writ Petition No,13164 of 1996. Vide an advertisement appearing in daily "Jang", dated 13-1-1996/11-1-1996, the S.N.G.P.L. Invited tenders for supply of 4,76,000 metres Steel Line Pipe (Size 4" x 0.188") at store of purchaser known as Manga Uttar Lahore. The tenders were to be opened on 11-2-1996. However, the purchaser extended the said date to 14-4-1996. The four parties namely Messrs Huffaz Ltd., Messrs Ramna Ltd., Pioneer Steel Mills Ltd. And Messrs Glamour Pipe Ltd., submitted their tenders which were opened on 12-4-1996. Since the tenders submitted by Messrs Pioneer Steel Mills Ltd. And Messrs Glamour Pipe Ltd. Were on high side, there was no competition between them and Messrs Huffaz Ltd. And Messrs Ramna Ltd. From the record it appears that Messrs Huffaz Ltd. And Messrs Ramna Ltd., quoted their offers in following terms:- Messrs Huffaz Ltd. Messrs Ramna Ltd.
' Rs, 362.60 per metre at Manga Uttar Store. This was inclusive of all taxes.
' The tender had a note at Serial No,3 wherein it was stated that any new levy imposed by the Government shall not be included as tender could not be submitted in that regard.
' The rate of tender shows that no break up of quoted price was given.
' Rs,381.75 per metre. This bid gave the complete break up. It stated that the pipe to be supplied was double length 12 diametres as per A.D.R.P.2 standard; 10% was to be added for jointer and it was clerified that if jointer was not acceptable please add 5% to quoted price.
3. The purchaser, instead of accepting or rejecting the aforesaid offers, started clarificatory negotiations with aforesaid two Companies. Consequently, the offers of both were put before the Bid Evaluation Committee and thereafter, before the Finance Committee on 25-6-1996. The Finance Committee agreed with the assessment of Bid Evaluation Committee and noted that offer made by Messrs Huffaz Ltd. Was only technically responsive with only one deviational conditions that taxes/levies, if increased, will not be applicable to it. The Finance Committee so recommended to Board that the offer of Messrs Huffaz Ltd. Be accepted in following terms:-- ".... ORDER Messrs Huffaz Seamless Pipe Industries (Pvt.) Ltd., Karachi Prices: Column 2 - Appendix "A" {{TABLE}} Item No, Description Quantity Steel Linepipe required (Detailed specifi- (Metres) cations as per tender enquiry). Rate F.O.R. Manga Total Autar per metre value F.O.R.
(including all Manga Autar Taxes) P/Mtr.
(Rs,) (Rs,) {{TABLE}} 4" x 0.188" Wt. 571,200 372.60 212,829,120 12.96 Kg./M (double random length)
Total value F.O.R. Manga Autar Rs,212,829,120 (including all taxes)
' Pursuant to this report, the Board of S.N.G.P.L. Held a meeting on 21-7-1996 and approved the report of Finance Committee in following terms:-- "6.2 - It was resolved:-- ' That the award of contract for the supply of 571,200 metres of 4" x 0.188" Wt.
12.96 Kg./H (double random length) @ Rs,372.60 per mile at a total value F.O.R. Manga Autar of Rs,212,829,120 on Messrs Huffaz Seamless Pipe Industries (Pvt.) Ltd., Karachi be and is hereby approved.
6.3 - On query of a Director the management informed the Board that as envisaged under section 64-A of the Sale of Goods Act, 1930 it is obligation of the vendee to pay the sales tax liability. The Board was further informed that the Company will discharge sale tax liability subject to the condition that documentary evidence of payment of sales tax to the relevant Government authority is presented.
6.4 - That the Managing Director be and is hereby authorised to take or cause to be taken all the necessary steps to give effect to this resolution."
' Resultantly on 21-7-1996 the letter of intent in favour of Messrs Huffaz Ltd. Was issued with following terms:-- ' However, as per your Letter No,10210, dated 19-6-1996, S.N.G.P.L. Accepts to pick-up the liability of sales tax subject to the condition that documentary evidence of sales tax having been paid to the relevant ' Government authority will be submitted by you alongwith each invoice of supply of pipe."
' Feeling aggrieved, Messrs Ramna Ltd. Invoked the Constitutional jurisdiction of this Court by filing Writ Petition No,13164 of 1996 which was allowed by impugned order, dated 23-12-1997. This is how these three I.-C.As. Have come to this Court.
4. Mr. Aftab Ahmad, Advocate, entered appearance on behalf of Sui Northern Gas Pipe Lines Ltd. Ch. Khurshid Ahmad alongwith Malik Muhammad Nawaz, Advocate espoused the cause of Messrs Huffaz Ltd., while Mr. A.K. Dogar, Advocate, presented the claim of Messrs Ramna Ltd. At the conclusion of their arguments, the learned counsel for the parties submitted, their written notes which have been placed on record. The submissions made by the learned counsel for the parties can be conveniently summarised below:-- Submissions made on behalf of S.N.G.P.L.
' Firstly; that S.N.G.P.L. Was/is a private enterprises incorporated under the Companies Ordinance, 1984; that neither it performs any function of the Federal Government nor of Provincial Government, nor it is a local authority. On the strength of above contention, it was suggested that S.N.G.P.L. Was not amenable to the Constitutional jurisdiction of this Court. Reference was made to Karachi Electric Supply Corporation v. Deputy Custodian of Enemy Property 1989 ALD 501(2), National Fertilizer Marketing Ltd. v. Secretary, Local Government 1992 MLD 1203 and Salahuddin v. Frontier Sugar Mills and Distillery Ltd. PLD 1975 SC 244.
' Secondly; that the dispute, in the instant litigation, pertains to contractual obligation which cannot be enforced through writ jurisdiction of this Court. Reliance was placed on Memin Motor Co. v. R.T.A., Dacca PLD 1962 SC 108, Muzaffar-ud-Din v. Chief Settlement Commissioner 1968 SCMR 1136, Pakistan Mineral Development Corporation Ltd. v. Pakistan WAPDA PLD 1986 Quetta 181, Gul Hassan & Co. v. Federation of Pakistan 1995 CLC 1662, Sharafatullah v. Federation of Pakistan 1995 CLC 1790, Ghulam Mohyuddin v. Secretary, Industries, Punjab 1996 CLC 2041, Tauheed Traders (Pvt.) Ltd. v.
Government of Punjab 1995 MLD 912, Associated Provincial Picture House Ltd. v. Wednesbury Corporation (1948) 1 KB 223, Secretary of State for Education and Science v. Tamside Metropolitan Borough Council 1977 AC 1014, Chief Constable of the North Wales Police v. Evans (1982) 3 ER 141, Council of Civil Services Union v. Minister for Civil Services (1985) I AC 374, R.V. Panel (1990) 1 QB 146, R. v. Monopolies Commission (1986) 1 WLR 763, Fasih Chaudhry v. Director-General, Doordarshan AIR 1989 SC 157, G.B. Mahajan v. Jalgaon Municipal Council AIR 1991 SC 1153, AIR 1993 SCW 683, AIR 1994 SCW 643 and AIR 1996 SC 11 Headnote "B".
' Thirdly, that the invitation to offer were called for on 11-1-1996; that the tenders were opened on 19- 4-1996; that SRO.No,669(1)/94 was issued on 4-7-1994; that this notification was supplemented by another Notification Nos.367(1)/94 on 9-5-1994; that aforesaid were rescinded vide SRO No,473(1)/96, dated 3-6-1996; that the latter notification of 1996 so annulled SRO No,669(1)/94, dated 4-7-1994; that the Board of Governors of S.N.G.P.L. Resolved to accept the offer of Messrs Huffaz Ltd. On 21-7-1996; that S.N.G.P.L. Issued the letter of intent on the same date. On the strength of above events, it was canvassed that it was the purchaser who was liable to pay the sales tax and not the seller.
Submissions made on behalf of Messrs Huffaz Ltd.
' The learned counsel for Messrs Huffaz supported the line of argument of the learned counsel for S.N.G.P.L. In addition to what was argued by that learned counsel, he contended that the Government of Pakistan had issued a Petroleum Policy in March, 1994; the clause 7.82 of this policy outlined that the Central Board of Revenue. Ministry of Commerce/other Ministries shall issue SROs/saving enumerated item from levy of sales tax, import duty, fees. Continuing, the learned counsel stressed that at page 54 of that policy, exemptions were specified. Pursuant to the aforesaid policy, the SRO No,367(1)/94 and SRO.669(1)/94 were issued on 9-5-1994 and 4-7-1994 respectively. These notifications provided exemptions from sales tax on material which was locally manufactured and which was so certified by the Central Board of Revenue from time to time; that Notification No,669(1)/94 was to be read with Petroleum Policy and SRO No,367(1)/94; that Regulatory Authority was defined in the policy. According to the learned counsel, the perusal of Annexure "C" of Petroleum Policy indicated that till the Regulatory Authority prepared a general indicative list, shall notify and certify to Central Board of Revenue whether a Company or any items of goods were within the ambit of exemptions; that these items were to be supplied to gas pipe lines companies. On the above lines, it was maintained that Messrs Huffaz Ltd. Were not liable to pay the sales tax on the supply of pipes to S.N.G.P.L. And that their offer was not inclusive of sales tax.
' Secondly; that the Messrs Huffaz Ltd. Have completed the contract; that they had supplied the pipes to the extent of 71.1% which has been utilized by the purchaser so it was highly unjust to cancel the contract.
Arguments on behalf of Messrs Ramna Ltd.
' Firstly, that the offer of Messrs Huffaz Ltd. Was vague and did not relate to double-rendum length pipe (12 metres); that the offer of Messrs Ramna Ltd. Was certain and it gave the complete break- up; that if calculation was made scientifically then the offer made by Messrs Huffaz Ltd. Comes to Rs,408.86 per metre which was higher than the offer of Messrs Ramna Ltd. i,e, Rs,381.75 per metre; that Messrs Ramna Ltd. Had, in order to drive its point, given break-up of both offers in following terms:, {{TABLE}} 315.76 - without sales tax. 1 56.84 - sales tax being 18%. 1 439.66 67.06 - 372.60 sales tax 18% 1 again. 1 {{TABLE}} ' The break-up of Messrs Ramna Ltd.'s offer was as follows:-- 323.51 - price of pipe without sales tax.
58.24 - sales tax = 381.75 ' On this score, it was submitted that the offer of Messrs Ramna Ltd. Was lower than the offer of Messrs Huffaz.
' Secondly, that the Board of Directors of S.N.G.P.L. Comprised of twelve persons out of which ten belonged to Government or Government-controlled institutions; all the loans obtained by the S.N.G.P.L. Were guaranteed by the Government of Pakistan; that the Chairman of the Board of the Company was the Secretary of the Federal Government. On these factors, it was suggested that the Sui Northern Gas Pipe Lines Ltd. Was a Company which was funded and controlled by the Federal Government and so was subject to Constitutional limitation as any other functionaries of Federation/Provinces.
5. From the foregoing narration of facts, circumstances of the case and submissions made by the learned counsel for the parties, the following questions emerge for consideration:--
(1) Whether S.N.G.P.L. Is a limited Company registered under the Companies Ordinance, 1984 and is, so, not amenable to jurisdiction of this Court under Article 199 of the Constitution of Pakistan (1973)?
(2) Whether the disputes, raised in the instant litigation, pertain to contractual obligations and so no writ could be issued by this Court to enforce such obligations?
(3) Whether the Stores supplied by Messrs Huffaz Ltd. To S.N.G.P.L. Were exempt from liability of payment of sales tax?
6. In so far question No,1, it is necessary to note that this flows from expression "a person performing, within the territorial jurisdiction of the Court, functions in connection with the affairs of the Federation, a Province or a local authority" embodied in Article 199 of Constitution of Pakistan.
This Article is one of the most fundamental provision in the Constitution. It enshrines what is known as doctrine of judicial review/due process of law. It empowers the Court to issue writ in the nature of mandamus, certiorari, prohibition, quo warranto and habeas corpus to functionaries of State and local authorities. This Article recognizes the powers of High Court to come to rescue of any person who is not being treated in accordance with law and is subjected to excesses or abuse by Governmental authorities. The scope of this Article was examined by a Division Bench of this Court in Flying Board Paper Production Ltd. v. Messrs Lab. A.I.D.S. Corporation, Lahore 1996 MLD 1238. After taking into consideration the rule enunciated in Romaana Dayaram Shertty v. The Internatipnal Airport Authority of India and others AIR 1979 SC 1628 and Miss Asma Mani v. The Government of the Punjab PLD 1972 SC 139. It was held:-- "(i) With the march of time the sphere of Governmental powers has been considerably widened.
Public functionaries had to perform multidimensional activities i,e, giving jobs, entering into contract issuance of quotas, licences, so on and so forth, dealing with State largesse. These functionaries are the actual trustees of State and are enjoined under the law to act with reasonableness, neutrality and without any tint of arbitrariness. They are to safeguard the State largesse and must not squander/waste it by their capricious unfair actions. Their such actions are subject to judicial review of this Court.
(ii) Our Governments are the Government of Laws. The State functionaries derive their powers from the Constitution and laws and are enjoined to act clearly within the sphere of their powers.
Furthermore, the Governmental power, residing in such functionaries, is a sacred trust. Whenever the action/order or decision of State functionaries do not conform 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. The jurisdiction embodied in Article 199 of the Constitutions sparkling jewel in the Scheme of balancing the various organs of State. It is designed to keep the mighty functionaries of the State within the ambit of their authority.
In the word of Alpheus Thomas Mason, it brings the might officers of the State how high sever may be, to their heels. See Judicial Activism: 55 Virginia Law Review 411(1969). It is designed to foster justice between the parties and is not aimed to help unscrupulous, greedy persons who might invoke this jurisdiction with ulterior motive. "
7. Having examined the underlying scheme of Article 199, now we turn to core question as to whether S.N.G.P.L. Is a Company registered under the Companies Ordinance, 1984 and is not subject to judicial review. This question is not free from difficulty. Who are the persons against whom a writ can be issued, under Article 199 (ibid)? This point was considered by the Supreme Court of Pakistan in Salahuddin v. Frontier Sugar Mills and Distillery Ltd. PLD 1975 SC 244. In this case, Frontier Sugar Mills Distillery Ltd./respondent was registered as a Company under the Companies Act, 1913. The Board was headed by the Chief Minister of Province, who was later on succeeded by the Chief Secretary of Government of West Pakistan and one Director was nominated by the Government. On 23-4-1950, the shareholders of this Company added Article 139 in the Articles of Association whereby Taj Muhammad Khanzada, was appointed as the Managing Director. On 15-1- 1972, the President of Pakistan promulgated the Companies (Managing Agency and Election of Directors) Order, 1972 (President's Order 2 of 1972). On 24-1-1972, a meeting of shareholders resolved that Mr. Taj Muhammad Khanzada shall remain Managing Director for a term of three years and one Khan Sadullah Khan was also-appointed as Director. The Board of Directors' meeting held on 10-3-1972 fixed its number as nine. On 31-3-1972, the shareholders were informed that seven Directors of Company had offered themselves for re-election. The Board of Directors were elected and unanimously appointed Khan Fida Muhammad Khan as Chairman of the Board of Directors for a period of three years and by resolution annulled the appointment of Taj Muhammad Khanzada as Managing Director. Mr. Salahuddin Khan was appointed as Chief Executive while Taj Muhammad Khanzada as Resident Director. Against this resolution, Taj Muhammad Khanzada sued for seeking a declaration that the proceedings of a general meeting of shareholder, dated 31-3-1972 were null and void. Alongwith the suit, an application for grant of temporary injunction was moved which was dismissed. In this scenario Mr. Taj Muhammad Khanzada requisitioned the extraordinary general meeting of shareholders on 31-3-1972. Now Salahuddin Khan filed a suit on 7-6-1972 for grant of perpetual injunction and moved an application for grant of temporary injunction. The said application was dismissed by the first Court as well as by the Appellate Court and by the learned Single Judge of the Peshawar High Court on 9-3-1973. Feeling aggrieved, Salahuddin Khan filed a Civil Appeal No,8/P of 1974. This was not sufficient. Salahuddin Khan and others filed a Writ Petition No,116 of 1972 which was also dismissed by the Division Bench of Peshawar High Court on 13-12-1972. Against this order another Civil Appeal No,7/P of 1974 before the Supreme Court was filed. The Supreme Court accepted Civil Appeal No,7/P of 1974 and dismissed Civil Appeal No,8/P of 1974 as infructuous.. Taking into consideration the expression "persons used in Article 199 (ibid)" his Lordship Mr. Justice Anwarul Haq, while speaking for the Bench, said:-- "However, private organizations or persons, as distinguished from Government or semi- Government agencies and functionaries cannot be regarded as persons performing functions in connection with the affairs of the Federation of a Province simply for the reason that their activities happen to be regulated by laws made by the State. Accordingly, a joint stock company incorporated under the Companies Act, for the purpose of carrying on commercial or industrial activity for the benefit of its shareholders cannot be regarded as a person performing State functions, just for the reason that its functioning is regulated by law or that the distribution of its manufactured products is subject to Governmental control in the public interest. The primary test must always be whether the functions entrusted to the organization of person concerned are indeed functions of the State involving some exercise of sovereign or public power; whether the control of the organization vests in a substantial manner in the hands of Government; and whether the bulk of the funds is provided by the State. If these conditions are fulfilled then the person, including a body public or body corporate may indeed be regarded as a person performing functions in connection with the affairs of the Federation or a Province; otherwise not.
' Now, the Frontier Sugar Mills and Distillery Ltd., is a public limited company, incorporated under the Companies Act, 1913, like a large number of other such Companies in Pakistan. Although the Provincial Government holds preferential shares in the Company to the extent of Rs,two lacs, yet the bulk of its paid up capital of Rs, ten lacs has come from private shareholders. At one time, the Chief Minister of the Province or the Chief Secretary may have been the ex officio Chairman of the Board, but at that time of filing the writ petition the management was clearly vested in the elected Board of Directors functioning through a private person appointed as the Managing Director by the Board of Directors. In fact, under Article 139, as added in 1950, respondent Taj Muhammad Khanzada appears to have been appointed to this position for an indefinite period. In these circumstances, the Company obviously remains under its own management irrespective of the Government's right to nominate one of the Directors. The Company is not an organization or corporation created by a special statute nor is it substantially financed and controlled by the Government. The Government control is limited to those regulations which apply to all similar concerns engaged in the sugar industry. Such Governmental control of commercial or industrial activities cannot be regarded as investing joint stock companies with the character of a person performing functions in connection with the affairs of a Province or a Federation. The High Court, was, therefore, clearly right in holding that the Company was not amenable to the issuance of writ under clause (2)(a)(i) of Article 201 of the Interim Constitution.
' Continuing his Lordship said:-- "The final position which, therefore, emerges in the case is that while the High Court was right in thinking that the Frontier Sugar Mills and Distillery Ltd., Takht Bhai, was not a person performing function in connection with the affairs of the Federation, a Province or a local authority and, therefore, not amenable to the jurisdiction of the High Court under clauses (2)(a)(i) and (2)(a)(ii) of Article 201 of the Interim Constitution, yet clause (2)(b)(ii) of the said Article to issue a writ in the nature of quo warranto requiring the respondents to show under what authority they were holding the office of Chief Executive and Director of the Company respectively, as these offices are public offices, as distinguished from ordinary employment or service. However, while granting a declaration under clause (a)(b)(ii), referred to above, the High Court would not be in a position to order the reinstatement or restoration to office of the rightful claimant."
' The view taken in Salahuddin's case (supra) was followed by a Full Bench of this Court in Muhammad Aslam Saleemi v. Pakistan Television Corporation PLD 1977 Lah. 852, wherein it was held therein that Pakistan Television Corporation was amenable to the jurisdiction of this Court. This view was followed in Ahtramullah v. Pakistan Television Corporation 1981 PLC (C.S.) 726.
8. From the above it clearly follows that Salahuddin's case (supra), is not authority for the proposition that a Company registered under Companies Ordinance, 1984 'is insulated from judicial scrutiny. Answer to this question depends upon variety of circumstances. Clearly, with the march of time the activities of the State had multiplied manifolds. Today, the Government is the regulator and dispenser of special services, large number of benefits including jobs, contract, licences, quotas, mineral rights, leases of State lands and utility services to its citizens. The Government had assumed the role of even entrepreneur. Normally, the State does not involve itself entrepreneurial activities through its beaurocracy, but enters these fields with the help of Corporations/instrumentalities which might be created under some statute or might be registered under the Companies Ordinance, 1984. This increases the largess of State and enhances the magnitude of range of Governmental functions. Should these activities/functions of such instrumentalities be immune from principles of check and balance embodied in the Constitution?
This question was attended to by famous American Judge Frankfurter in Viteralli v. Saton 359 US 535 Second Series 1012 who forcefully evolved following rule:-- "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 was approved by the Supreme Court of India in Ramana v. I.A. Authority of India AIR 1979 SC 1628. It is really interesting to note that this rule of administrative law was evolved and fully developed in United States of America. See Kerr v. Eneek Pratt Free Library 149 F.2d.
212. In this case, Library System was established by a private donations in 1882. However, 99% of the system's budget was supplied by the city. On the basis of above, it was held that although the library system was established and run by private person yet it was under the control of State and was funded by it and this system was subject to control of judicial scrutiny. The aforesaid rule was followed in Sukhdev v. Bhagatram (1975) 3 SCR 619, V. Putman Themes v. State of Kerala AIR 1969 Ker. 81, MacCullengh v. Maryland 4 Wheat 315-1819, Jackson v. Metropolitan Edison C. 419 US 345, Pfizer v. Ministry of Health 1 All ER 590, New York v. United States 326 US 572, Marsh v. Alabama 326 US 501 and Praga Tool Corporation v. C.A. Immanuel (1969) 3 SCR 773 approved in R.D. Shetty v.
International Airport Authority (1979) 3 SCC 489. See also Andi Mukta S.M. v. S.S.J.M.S. Trust v. V.R.
Rudani (1989) 2 SCC 691. In this case the Court issued a writ of mandamus directing the payment of dues of teachers employed by private college registered under the Gujarat University Act, 1949. At this stage we are tempted to quote paragraph 19 from the report of Ramana v. I.A. Authority of India AIR 1979 SC 1628. It runs as under:-- "It will thus be seen that there are several factors which may have to be considered in determining whether a corporation is an agency or instrumentality of Government. We have referred to some of these factors and they may be summarized as under: Whether there is any financial assistance given by the State, and if so, what is the magnitude of such assistance whether there is any other form of assistance, given by the State, and if so, whether it is of the usual kind or it is extraordinary, whether there is any control of the management and policies of the corporation by the State and what is the nature and extent of such control, whether the corporation enjoys State conferred or State protected monopoly status and whether the functions carried out by the corporation are public functions closely related to Governmental functions. This particularization relevant factors is, however, not exhaustive and by its very nature it cannot be because with increasing assumption of new tasks, growing complexities of management and administration and the necessity of continuing adjustment in relations between the corporation and Government calling for flexibility, adaptability and innovative skills, it is not possible to make an exhaustive enumeration of the tests which would invariably and in all cases provide an unfailing answer to the question whether a corporation is Governmental instrumentality or agency. Moreover, even amongst these factors which we have described, no one single factor will yield a satisfactory answer to the question and the Court will have to consider the cumulative effect of these various factors and arrive at its decision on the basis of a particularised inquiry into the facts and circumstances of each case. 'The dispositive question in any State action case', as pointed out by Dougles, J., in Jackson v.
Metropolitan Edison Co. (1974) 419 US 345 (supra) is not whether any single fact or relationship presents a sufficient degree of State involvement, but rather whether the aggregate of all relevant factors compels a finding of State responsibility. It is not enough to examine seiatim each of the factors upon which a corporation is claimed to be an instrumentality or agency of Government and to dismiss each individually as being insufficient to support a finding to that effect. It is the aggregate or cumulative effect of all the relevant factors that is controlling.
9. From the foregoing, it is, thus, clear that the Companies/Corporations registered under the Companies Ordinance, 1984, which are funded by Federal or Provincial Government and which are under dominative control of State (Federal Government/Provincial Government) and which provide the amenities of life to citizen, are in substance instrumentalities/agencies of the State which discharge the functions, which fall within the area of Police Power of State. Action/orders of such institutions are administrative action and are so subject to judicial review of this Court.
Applying these principles to the factual background of this litigation, it is, thus, manifest that Board of Directors of S.N.G.P.L. Comprises of ten Directors; that it is headed by Secretary, Ministry of Petroleutri and Natural Resources. The composition of the Board is as follows:-- Mr. Javaid Hameed Managing Director, S.N.G.P.L.
Mr. Abdul Sattar Financial Advisor, Ministry of Petroleum and Natural Resources, Islamabad.
Mr. M.T.K. Sharwani Director-General, Gases Ministry of Petroleum, Islamabad.
Mr. Salauddin Qureshi National Investment Trust, Government of Pakistan, Karachi.
Mr. Ahsanullah Khan Secretary, Industries, Government of N.-W.F.P., Peshawar.
Mr. Azhar I. Jafri Chairman, P.I.D.C. (Now transferred to Establishment Division, Islamabad.
Mr. Khursheed Akhtar Ansari Managing Director, Sui Southern Gas Co. Ltd.
Mr. Kamran Rasool Secretary, Industries and Mineral Division, Punjab.
Mr. Behram Hassan Deputy Managing Director, Investment Corporation of Pakistan, Karachi.
' Note.--- Composition was provided to us by the learned counsel for Messrs Ramna Ltd. And was agreed by the learned counsel for S.N.G.P.L.).
'More than 60% shares of this Company are held by the Federal Government or Federally controlled/run financial institutions. It is not in dispute between the parties that the Federal Government provides sovereign guarantee for repayment of any loan or debt advanced to S.N.G.P.L. Although this Company is registered under the Companies Ordinance, 1984 yet it carries gases from one place to another and makes it available to the citizens of this State. Seen from the above angle, we are clear in our mind that this Company possesses all the attributes of State instrumentality/agency of the State and so is subject to Constitutional limitations as other functionaries of Federal and Provincial Government, while performing their functions in connection with affairs of Federation or a Province. We are, therefore, in complete agreement with the findings of the learned Single Judge that this Company is subject to jufliciat review under Article 199 of the Constitution. The authorities cited by the learned counsel for S.N.G.P.L. And Messrs Huffaz Ltd.
Proceed on dissimilar facts and are not relevant. The first question is accordingly answered.
10. As regard to second question, we feel it necessary to reiterate a well-known rule that the enforcement of Constitutional obligation is not permissible in writ jurisdiction of this Court. It is also equally well-settled that functionaries of Government/State Instrumentalities/Local Authorities are bound to follow the rules of fairness and neutrality while awarding contracts to citizens; that if such Authorities act arbitrarily, unfairly and discriminately, this Court had the power to strike down such orders/administrative actions and contracts. See Pacific Multi-national v. I.G. PLD 1992 Kar. 283, Abdullah & Co. v. Province of Sindh 1992 MLD 293, Jones v. Swansea (1989) 3 All ER 162, Blackpool Flyde Aero Club Ltd.. v. Black Pool Borogh Council (1990) 25 All ER, Guruswamy v. State of Mysore AIR 1954 SC 592, Ras Bibari v. State of Orissa AIR 1969 SC 1081, D.F.O. South Kheri v. Ram Shone AIR 1973 SC 205, Remana v. I.A. Authority AIR 1979 SC 1628 and Port Services (Pvt.) Ltd. v. Pakistan PLD 1995 Kar.
374.
11. Applying these rules to case in hand, it is quite clear that this Court had powers to examine the vires of letter of intent, dated 21-7-1996 on the touchstone of the approval of Board of Directors incorporated in Resolution, dated 21-7-1996. We have seen the letter of intent and resolution conjunctively. A bare look at resolution reveals that Board approved the recommendations of Finance Committee and accepted the offer of Messrs Huffaz embodied in their tender that on the point of liability of payment of tax, the Board did not make any decision and that it was management which had made a recommendation that the liability of payment of sale tax be shouldered by S.N.G.P.L. When confronted with his position, even the learned counsel for S.N.G.P.L.
Frankly submitted that Board had made no such decision which was incorporated in letter of intent. On these facts we are left in no doubt that the letter of intent was in patent excess of approval of Board of Directors embodied in Resolution, dated 21-7-1996. This part of the letter of intent, so in our humble opinion, was without any lawful authority and was correctly declared so by the learned Single Judge. We further find that the competent Authority did not make this vital decision and left it to whims of the management. Manifestly, the letter of intent, to that extent cannot be upheld. It is agreed between the parties that the Board of Governors of S.N.G.P.L. Was only authority to accept the offer of tenderers. The evaluation committee and finance committee were technical committees to send their assessment to the Mud. The aforesaid committee was mere conduits to forward the offers of parties with their assessment to the Board. On this juncture we find it apt to note that even finance committee had noted that offer of Messrs Huffaz Ltd. Was technically responsive and there was no necessity for re-tender. On the above analysis we, therefore, hold that the condition of payment of sales tax to Messrs Huffaz incorporated in letter of intent was clearly without lawful authority and of no lawful consequence.
12. The only surviving contentions relate to point No,3. The claim of Messrs Huffaz, precisely stated, is that stores supplied by it were exempt from the liability of the payment of sales tax on the premises that petroleum policy was given by the Federal Government in the month of March, 1994; that S.R.O.
No,367(1)/94 'was issued on 9-5-1994; that the said S.R.O. Was supplemented by another Notification No,S.R.O.669(1) of 1994; that these notifications were withdrawn on 13-6-1996; that on the date of calling for tenders and on the date of acceptance of these tenders, the above notifications were in field and so Messrs Huffaz were not entitled to pay the said sales tax to the Sales Tax Department; that section 64-A of the Sales of Goods Act (III of 1930) was applicable to the case in hand. The Sui Northern Gas Pipe Lines also supported the claim of Messrs Huffaz. The learned counsel for Ramna, however, controverted the above contention and firmly stated that offer of Messrs Huffaz and offer of Messrs Ramna were inclusive of 18% of sales tax. This point, clearly, is built upon two-fold arguments. The first argument is that section 64-A of Sale of Goods Act was applicable to this case. We are afraid, we are unable to accept this contention. A bare reading of section 64-A of Sale of Goods Act demonstrates that this provision is designed to safeguard the interest of parties to a contract wherein there is some increase or decrease or levies after the finalization of contract. The essential condition is that such increase and decrease takes place after the conclusion of the contract. Reference be made to Gulshan Spinning Mills Limited v.
The Government of Pakistan and another 1988 MLD 2436. Speaking for the Bench his Lordship Mr. Justice Ajmal Mian (as he then was the Judge of Sindh High Court):-- "We are tentatively of the view that the above case is distinguishable from the instant cases, inasmuch as in the above case the appellant could not have claimed the recovery of the amount involved from any party under the contract or under any law, whereas in the present case the petitioners are not exposed to any unforeseen loss but by virtue of the terms in the contracts and/or because of section 64-A of the Act, the petitioners are entitled to recover the amount from their buyers after making the payment of the same to the respondents. However, it was submitted by the learned counsel for petitioner that practically it will be impossible for the petitioner to recover any amount as the buyer was foreigner and even if the petitioners succeed in obtaining decrees in their favour from Pakistani Court, it would not be possible to execute the same as they would have to go to the foreign country concerned for execution. It was also submitted by them that factually buyers are not willing to pay any amount on account of export duty and on the other hand Federal Government is insisting that the petitioners should fulfil their commitment with the foreign buyer, even without charging the export duty. In support of the former submission reference has been made Mr. Muhammad Ali Saeed to a few telexes which his client has allegedly sent; whereas in support of the later submission reference has been made to some press cuttings of daily English ' Dawn' and 'Business Recorder'."
' The same point came up for consideration before the apex Court in Army Welfare Sugar Mills Limited v. Federation of Pakistan 1992 SCMR 1652. It was held therein:-- "It may also be observed that section 64-A of the Sale of Goods Act, 1930, entitles a vendor to recover from a purchaser any duty or custom or excise or tax on any goods being imposed or increased after the conclusion of any contract for sale of such goods, if the contract does not contain any provision contrary to it."
13. On the touchstones noted above, it is thus, clear that the benefits, embodied in section 64-A of the Sale of Goods Act, 1930 were not available to Messrs Huffaz. It -is not in dispute between the parties that the tenders were called on 11/13-1-1996 and these tenders were accepted on 21-7-1996.
As already noted, the aforesaid notification had been withdrawn on 13-6-1996. Thus, at the time of the acceptance of offer, the aforesaid notification did not occupy the field and the S.N.G.P.L. Had no basis to rely upon section 64-A of Sale of Goods Act, 1930 to repay sales tax deposited by Messrs Huffaz to them.
14. As regards the second argument, the learned Single Judge received the report of Mr. Junaid Akram, Additional Collector, Sales Tax, on 15-10-1997; that the said officer had clearly stated that the stores supplied by the Messrs Huffaz were not exempted from the levy of sales tax and that their claim had been rejected by the Department. Furthermore, the bare reading of S.R.O.No,669(1)/94 and SRO No,367(1)/94 clearly show that the items mentioned in those notifications were exempted from the payment of sales tax provided they were certified by regulatory authority through the mechanism of Central Board of Revenue. The authority mentioned in this notification was Director-General, Petroleum and Gas. Thus, the above notifications provided and in-built mechanism for granting exemption to items/stores which were to be supplied to Gas Projects. The certification of regulatory duty through Member, Central Board of Revenue was a condition precedent for such exemption. The learned counsel for Messrs Huffaz did not show any such certification and claimed that the exemption contained in the above notification were automatic and did not need certification from regulatory authority. This contention, in our opinion, is completely bereft of any legal efficacy and runs contrary to relied notifications. It is a well-known rule that notification relating to fiscal matters, are to be construed strictly. We further find that Messrs Huffaz, in their offer, had put up a note that they will not be liable to pay any duty/tax which was imposed by the Government after the date of calling tenders. Messrs Huffaz did not rely upon notifications at all. Be that as it may, that this case was set up in the negotiation which started between the S.N.G.P.L. Management and Messrs Huffaz after the submissions of that tender. This stand was neither accepted by Bid Evaluation Committee nor by the Finance Committee nor by approving Authority. Actually the Finance Committee had observed that the aforesaid stand was contrary to the requirement of tender. We, therefore, on a critical view of the offers, are very clear in our minds that the quoted offers of Messrs Huffaz were inclusive of Sales Tax and Messrs S.N.G.P.L.
Was under obligation to pay it to Sales Tax Department. In view of the above, we have reached the conclusion that the decision of the learned Single Judge is eminently correct, just and is consonance with the offers made by Messrs Ramna and Messrs Huffaz. The order of the learned Single Judge is in our estimation unexceptionable.
15. The only question, now, is as to what relief be granted in these appeals. The Resolution of Board of Directors, dated 21-7-1996 was not put up before the learned Single Judge. The parties were content with letter of intent issued on the same date and it was found to be illegal. We have also found that the Management had no authority whatsoever to open negotiation with the tenderers. It is settled that this Court in Constitutional jurisdiction had no power to substitute its decision if it is found that the order/action of administrative authorities, Tribunals and Courts are without jurisdiction and traditionally it remits the case to authorities for redecision. It is clear from the record that 80% of the contract has been executed and Messrs Huffaz Ltd. Had supplied the contracted pipes to S.N.G.P.L.; that the same had been utilized by the purchaser I in the project; that the remaining pipe is also on the door-steps of buyers. The theory of the accomplished/past and closed transaction is so attracted to this II case. We are not inclined to cancel the approval of Board of Directors, dated 21-7-1996. The net result is that the order of Single Judge is hereby affirmed in above terms. The Intra-Court Appeal filed by Messrs Huffaz, Messrs Ramna and Messrs Sui Northern Gas Pipe Lines Ltd., are hereby dismissed. Resultantly the resolution cf Board of Directors of S.N.G.P.L., dated 21-7-1996 and letter of intent, dated 21-7-1996 shall remain in field excepting that the letter of intent with regard to the payment of sales tax to Messrs Huffaz is declared to have been issued without lawful authority and of no legal effect. We also direct that the amount of the sales tax paid or refunded to Messrs Huffaz shall be recovered from them by S.N.G.P.L. The net result is that the order of the learned Single Judge impugned in these appeals, is hereby affirmed subject to the above modifications. All the three Intra-Court Appeals, are hereby dismissed. No order as to cost.
(Sd.) Sharif Hussain Bokhari, (Sd.) Mian Allah Nawaz, Judge. Judge.
' SHARIF HUSSAIN BOKHARI, J.--- I agree with the conclusion of my learned brother Mian Allah Nawaz, J. However, in view of the peculiar circumstances of the case I would like to add my separate note.
2. After narrating the relevant facts which I need not recapitulate, my learned brother, Mian Allah Nawaz, J. Formulated the following questions for consideration:--
(1) Whether S.N.G.P.L. Is a Limited Company registered under the Companies Ordinance, 1984 and is, so, not amenable to jurisdiction of this Court under Article 199 of the Constitution of Pakistan (1973)?
(2) Whether the disputes, raised in the instant litigation, pertain to contractual obligations and so no writ could be issued by this Court to enforce such obligation?
(3) Whether the Stores supplied by Messrs Huffaz Ltd. To S.N.G.P.L. Were exempt from liability of payment of sales tax?
3. However, in my opinion for proper adjudication of this matter, the following question also arises which requires determination:-- (4), Whether the price quoted by Messrs Huffaz was inclusive of al' the prevailing taxes and duties, therefore, refund of the amount of sales tax by S.N.G.P.L. To Messrs Huffaz was not warranted?
4. With regard to question No,1 above, the admitted position is that S.N.G.P.L. Is a Company incorporated under Companies Ordinance, 1984. However, apart from the fact that S.N.G.P.L. Is directly or indirectly managed and controlled by Federal Government, which also owns or controls majority shareholding thereof, on lifting the 'veil of incorporation', S.N.G.P.L. Clearly appears to be an extension of a Government Department performing functions of the State. The S.N.G.P.L. Is engaged in supplying natural gas to the domestic and industrial consumers in Pakistan. In similar circumstances the Supreme Court of Pakistan in Central Board of Revenue v. S.I.T.E. PLD 1985 SC 97 while deciding the question of exemption of the S.I.T.E., a company incorporated under the Companies Act, 1913, from income-tax, made the following observations:-- "But as stated earlier, the facts found by the High Court and its conclusions on the questions raised by learned counsel are unexceptionable. The respondent-company was carrying on the function of industrial development and the trade and business connected therewith for and on behalf of the Government. The truth is that the lifting of veil, has revealed that for the relevant purposes in this case it was doing so just like a department of the Government, notwithstanding the incorporation; which as explained earlier will not make any difference regarding the relevant Constitutional provision on exemption from Federal Taxation."
' In West Pakistan Road Transport Board v. The Commissioner of Income-tax, Lahore 1973 PTD 499 a learned Division Bench of this Court while discussing the taxability of the West Pakistan Road Transport Board held that the Road Transport Board was not 'liable to income-tax as its income was that of the Provincial Government. The following observations are relevant for the present purpose:-- "The Road Transport Board is in fact nothing other than a Government Department or Agency performing one of its essential functions having been given the cloak or garb of incorporation for facility of working."
' Following the above rule, I sitting singly, while dealing with the same objection raised by S.N.G.P.L., in Muhammad Ilyas v. Sui Northern Gas Pipe Lines Limited and others 1998 CLC 600 held as follows:- - "In the light of the observations of the Honourable Supreme Court in Central Board of Revenue v.
S.I.T.E. PLD 1985 SC 97, on lifting the veil of incorporation it becomes clear that the business and affairs of the Company are being controlled by th'e Government of Pakistan and the company itself is dealing with the supply of the Gas, essential for the industry, business and domestic consumption, therefore, performs functions in connection with the affairs of the Federation and as such is amenable to the jurisdiction of this Court."
Thus, there is no doubt that Sui Northern Gas Pipe Lines Ltd. Is amenable to the jurisdiction of this Court under Article 199 of the Constitution of Pakistan, 1973.
5. Regarding question No,2 above, generally speaking, contractual obligation cannot be enforced through Constitutional jurisdiction of this Court. But where the contractual obligation flow from statutory provisions or where the performance of these obligations vest in a public functionary or statutory body, Constitutional jurisdiction can be invoked for its enforcement. It was held by a learned Division Bench of Sindh High Court in M.H. Abidi v. State Life Insurance Corporation 1990 MLD 563 that:-- "However, where rights are based on statutes law or rules framed thereunder or when an obligation or duty vests in a public functionary as a statutory body, performing functions in relation to the affairs of the Federation or a Province or a local authority Constitutional jurisdiction can be attracted. In such and allied situations even contractual rights and obligations may be enforced in Constitutional jurisdiction. This, however, is subject to the important rider of corresponding absence of an adequate remedy. In point are the decisions in Estate Officer v. Tahir Hussain PLD 1962 SC 75, Anjuman-e-Ahmadiya v. Deputy Commissioner, Sargodha PLD 1966 SC 639, Muniruddin Kidwai v.
K.D.A. PLD 1972 Kar. 521, Rashid A. Khan v. West Pakistan Railway Board PLD 1973 Lah. 733 and Masjid- i-Intizamia Jama Masjid v. Secretary, Government of West Pakistan because a contract is involved in a Constitution petition is not by itself sufficient to oust the Constitutional jurisdiction under Article 199 of the Constitution."
6. As observed above, S.N.G.P.L. Is performing functions, relating also to the industrial development of the country and is an instrumentality of the State, rights, and obligations arising under a contract executed by such a body like S.N.G.P.L., can be enforced in exercise of Constitutional jurisdiction of this Court. Besides, the present dispute relates to obligations to pay sales tax by the contracting parties, which has to be determined after proper appreciation of the relevant provisions of the contract documents and their interpretation.
7. Now, dealing with the question of prices, reference to some of the tender documents is relevant.
Alongwith Tender Enquiry, dated 11-1-1996, Appendix "A" and Appendix "B", containing detailed conditions, were supplied to the bidders. Appendix "B" required the bidders to quote firm and irrevocable price in the following terms:-- "(a) Please quote price for free delivery at our Stores Hanga Autar, 38-Km., Multan Road, Lahore including all prevailing Government taxes/duties including sales tax, transportation, octroi, Zila tax etc. And unloading/stacking at our abovementioned site. No increase in the price(s) will be agreed after bid opening.
(b) You are required to indicate separately breake-up of your quoted prices giving cost of raw material, conversion charges, taxes, duties, sales tax, transportation charge, octroi, Zila tax etc. Unloading and stacking. Sales tax/duties included in your quoted price should be supported with documentary evidence.
(c) In addition to above, ex-factory price inclusive of Government taxes, duties and sales tax should be indicated separately."
' Messrs Huffaz submitted quotation, dated 13-4-1996 and, inter alia, stated:- "1. Price ' Rs,372.60 per Mtr. Ex-S.N.G.P.L. Stores Manga Autar. (Rupees three hundred seventy-two and paisas sixty only).
' Prices are inclusive of all the taxes." It was further stated therein that:-- "Any new levy imposed by the Government is not included as it neither can be predicted nor calculated at the time of tendering."
8. It appears that thereafter rethinking started. On 19-6-1996, Messrs Huffaz sent a letter to S.N.G.P.L.
Stating that:-- "As regards to price quoted to you we have already confirmed that those are ' firm and irrevocable'.
We were exempted from sales tax when we quote our price. Now the position is still not clear about exemption of sales tax in the coming financial year. In case the exemption facility is withdrawn the matter will have to be taken up with the Government as per rule."
' In this letter although Messrs Huffaz had suggested that in case of withdrawal of exemption of sales tax, the matter would be taken up with the Government, yet S.N.G.P.L. Proved more loyal than King by responding in the following manner through letter of intent, dated 21-7-1996:-- "However, as per your Letter No,IU210, dated 19-6-1996, S.N.G.P.L. Accepts to pick-up the liability of sales tax subject to the condition that documentary evidence of sales tax having been paid to the relevant Government authority shall be submitted by you alongwith each invoice of supply of pipe."
9. The letter, dated 19-6-1996 of Messrs Huffaz was only a pretext to get the amount of sales tax refunded after the conclusion of the contract. This is what exactly happened, otherwise it was known to Messrs Huffaz that the pipes in question were not exempt from the payment of sales tax. It appears that this device was adopted by the parties to increase the contract price, which otherwise was not possible. Thus, the management of S.N.G.P.L. And Messrs Huffaz found this device, which they presented as requirement of law under section 64-A, Sale of Goods Act, to increase the price corresponding to the amount of sales tax.
10. The letter of intent to the extent of accepting liability of sales tax was without express authorization of the competent body, i,e, the Board of Directors. The Resolution of the Board, dated 21-7-1996 shows that the Management had only informed the Board that under section 64-A of the Sale of Goods Act, 1930 it was the obligation of the vendee to pay the sales tax and that the Company (S.N.G.P.L.) would discharge sales tax liability. This was deliberate misrepresentation of factual and legal position before the Board. Section 64-A, Sale of Goods Act, 1930 covers only duty of custom and excise, if imposed, decreased or remitted after making the contract for the sale of such goods. Even this provision of law is subject to the terms of contract executed by the parties. As observed above, Messrs Huffaz specifically stated that the price quoted by them included the sales tax. Besides, at the time of execution of the contract the goods in question were not exempt from the payment of sales tax. Accordingly, there was no legal justification for S.N.G.P.L. "to pick-up the liability of sales tax" which otherwise was payable by Messrs Huffaz. Thus, the repayment/refund of the amount of sales tax by S.N.G.P.L. To Messrs Huffaz was rightly held by learned Single Judge as without lawful authority and transgression of the duty on the part of S.N.G.P.L.