' QAZI MUHAMMAD FAROOQ, J.---The facts giving rise to the abovementioned three connected petitions for leave to appeal may be highlighted at the outset. A public notice was issued on 1-3- 2000 in certain Newspapers through which applications were invited by the Pakistan Railways for pre-qualification of participants in an auction for grant of licences/contracts of Luggage Vans/Brake Vans for the following five Trains:--
1. 5-Up/6-Down Zulfiqar Express.
2. 9-Up/10-Down -- Allama Iqbal Express.
3. 11-Up/12-Down Chenab Express.
4. 21-Up/22-Down Chiltan Express.
5. 103-Up/104-Down -- Super Express.
2. In all, twelve applications were received by the target date which were opened by the Pre- qualification Committee and made over for scrutiny to the Vigilance Directorate, a body set up with the approval of the President of Pakistan pursuant to a decision taken on 29-12-1999 in a joint meeting of the National Security Council and the Federal Cabinet and charged with the duty to oversee and monitor the functioning of the Pakistan Railways. The Vigilance Directorate scrutinized the applications and recommended seven applicants. The five applicants who were not recommended included M/s. Syed Tasnim Hussain Naqvi, respondent No,1 herein. He was not recommended for the following reasons:- "(a) This company has a vast experience with Railways.
(b) During 1998 Mr. Tasneem Hussain Naqvi deposited bogus experience certificate with Railways authorities to get a contract.
(c) This party recently gave its bid in a contract of 60 (sixty) Goods Wagons each from Faisalabad to Karachi and Gujranwala to Karachi. But after the opening of the tenders this party declined the terms and conditions of the tender and demanded new conditions. Resultantly this tender was cancelled by the Railways authorities being afraid of unsuccessful bidders who could have gone to litigation against railways not abiding by the terms and conditions of the tenders.
(d) This party had acquired the contract of Lahore-Faisalabad Section during 1992-93 and had involved railways into litigation as this party tried to get undue claims from railways. The case is still in Supreme Court (Case No,CPSLA No,273-L of 1998 and 3- M&R/217-VI).
(e) The brief facts of this case are that the Railway Administration, decided to privatize the selling of tickets, booking of outward luggage and handling of inward parcels luggage on Lahore- Faisalabad Section. The contract was awarded to M/s. Syed Tasneem Hussain Naqvi being the highest bidder. The contractor did not honour his commitment and defaulted in depositing all due installments. In reply to notice the contractor filed a civil suit for rendition of Accounts. The matter was referred to the then. G.M. Who announced his award and the trial Court vide its order, dated 13- 4-1995 directed to make award the rule of Court. The Railways assailed this order before the High Court. The learned Single Judge of High Court dismissed Railways' appeal vide order, dated 31-7- 1997 railway has since gone in Supreme Court. Lastly this case was fixed on 16-5-2000. No further date has been fixed. Mr. Masood Mirza, Exh.S.L.A. Is conducting the proceedings."
3. The report of the Vigilance Directorate was approved by the Secretary Railways on 20-6-2000.
Thereafter, it was examined by the Pre-qualification Committee and applications of two recommendees were turned down for want of requisite documents. Ultimately, five applicants were approved by the General Manager Railways on 21-6-2000. The successful applicants were notified on 23-6-2000 for open auction to be held on 27-6-2000. On the said date the trains were auctioned in two groups and the bids amounting to Rs,6,22,00,000 offered by M/s. Ittehad Cargo Service and M/s. Scientific Engineering Corporation being the highest were accepted and confirmed. Contracts were awarded to both the successful parties accordingly and the charge of the Trains was handed over to them on 4-7-2000.
4. On the day the auction took place but sometime after conclusion of the auction proceedings and confirmation of bids M/s. Syed Tasnim Hussain Naqvi offered a sum of Rs,8,00,00,000 for all the five Trains through an application but without any success. Taking exception, he filed a writ petition in the Lahore High Court with the assertions, inter alia, that he was sidelined arbitrarily by a mechanical exercise of power without notice and hearing, the auction was held without a public notice, the contracts were awarded to selected parties in a clandestine manner for a meagre amount and the financial interest of the State was disregarded. The Writ Petition was allowed by a learned Single Judge of the Lahore High Court, Lahore in the following terms:- "The upshot of the above discussion is that the aforementioned auction, dated 27-6-2000 cannot be sustained on any ground and is hereby declared to have been made without lawful authority and of no legal effect. Respondents Nos.1 to 6 Pakistan Railway functionaries are directed to hold fresh auction immediately by making baseline of the same at Rs,8 crores (eight crores). In case the petitioner does not participate in the said auction. Rs,One Crore deposited by him in the form of pay orders with this Court shall be forfeited by the Pakistan Railways."
5. Feeling aggrieved, M/s. Ittehad Cargo Service, M/s. Scientific Engineering Corporation and Federation of Pakistan through Secretary/Chairman, Railways Board, Islamabad and five others have filed the abovementioned three petitions for leave to appeal against the judgment, dated 11- 8-2000 of the learned Judge in Chambers of the Lahore High Court, Lahore. We intend to dispose of all the petitions by this common judgment.
6. We have heard the learned counsel for the petitioners as well as the learned counsel for the Caveator at length and examined the entire material available on record with their assistance and considered the rival contentions carefully.
7. Before adverting to the points for determination it will be advantageous to refer to the reasons for acceptance of the writ petition recorded in the impugned judgment. The main reasons are that the respondent has got a vast experience of Railway contracts, the Vigilance Directorate had not recommended his case for pre-qualification simply on account of his involvement in litigation with Pakistan Railways, the Assistant Commercial Manager, Pakistan Railways present in the Court had conceded that the respondent's application was rejected merely on the report of the Vigilance Directorate and he was not confronted with the said report which meant that the competent authority had followed the recommendations of the Vigilance Directorate blindly and rejected the respondent's application in a mechanical manner without applying its independent mind, the discretion of the competent authority to accept or reject the pre-qualification application was exercised on whimsical ground, the respondent was condemned unheard, the offer of Rs,8 crores made by the respondent should not have been rejected simply on the ground that in case of success he would adhere to overloading and other illegalities in order to meet the expenses particularly when the Railways authorities had got ample power under the law to control the apprehended illegalities and terminate the contract, the contract in dispute on the face of it was neither open nor transparent, the competent authority approved and accepted the contract on the very day of auction in spite of the fact that according to the parawise comments the respondent's offer of Rs,8 crores had already reached before him alongwith the draft of R.10 lacs and the interest of the Exchequer was not kept in view.
8. The first contention urged in support of the petitions was that the High Court had no jurisdiction to entertain the respondent's writ petition as the contracts challenged therein were concluded contracts. We are afraid the contention cannot prevail as it tends to curtail the scope of judicial review by placing an uncanny fetter on the Constitutional jurisdiction of the High Court to test the validity of grant of a concluded contract on the touchstone of well-settled and well-known grounds of challenge. No doubt a concluded contract commands respect and its sanctity is to be preserved as a matter of public interest/public policy but this does not mean that the order in respect of its grant is sacrosanct and unassailable. The High Court in exercise of its Constitutional jurisdiction is possessed of power to examine the validity of the order in regard to grant of a concluded contract and strike it down on the grounds of mala fide, arbitrary exercise of discretionary power, lack of transparency, discrimination and unfairness etc. Provided the challenge is made promptly and contentious questions of fact are not involved. The view gets support from the following observations made in Messrs Airport Support Services v. The Airport Manager, Quaid-i-Azam International Airport, Karachi and others (1998 SCM R 2268):- "Further a contract, carrying elements of public interest, concluded by functionaries of the State, has to be just, proper, transparent, reasonable and free of any taint of mala fides, all such aspects remaining open for judicial review. The rule is founded on the premise that public functionaries, deriving authority from or under law, are obligated to act justly, fairly equitably, reasonably, without any element of discrimination and squarely within the parameters of law, as applicable in a given situation. Deviation, if of substance, can be corrected through appropriate orders under Article 199 of the Constitution. In such behalf even where a contract, pure and simple, is involved, provided always that public element presents itself and the dispute does not entail evidentiary facts of a disputed nature, redress may be provided."
' The question was also considered in Messrs Pacific Multinational (Pvt.) Ltd. v. Inspector-General of Police, Sindh Police Headquarters and 2 others (PLD 1992 Karachi 283) and it was observed:-- "There could be no cavil with the proposition that enforcement of a purely contractual obligation could not properly form the subject-matter of proceedings under Article 199 of the Constitution.
However, it could not be ignored that the State had a Constitutional obligation to act fairly even when performing an administrative function. Therefore, when a party complained before the Court that the State while awarding a contract to a party had acted in an unfair or arbitrary manner or had discriminated against one of the parties who contested for the award of the contract, such grievance could be looked into by superior Court in exercise of its powers of judicial review under Article 199 of the Constitution and if the Court was satisfied that the Government while entering into a contract had acted arbitrarily or in an unfair manner or had discriminated between the parties before it in matter of awarding the contract, it could interfere and strike down such action."
9. This brings us to the merits of the case and the first and the main question for determination in this context relates to the rejection of the respondent's application for pre-qualification. It was contended by the learned counsel for the petitioners that the process was transparent and fair as it had transpired from the scrutiny of the respondent's application carried out by the Vigilance Directorate as well the Pre-qualification Committee that he had involved the Pakistan Railways in litigation which was pending in this Court and resultantly his application was rejected in view of the declared policy of the Pakistan Railways that all those in litigation with Railways will not be pre- qualified until the cases have been withdrawn/decided. It was further contended by Mr. Abid Hassan Minto, learned counsel for M/s. Scientific Engineering Corporation, that independent application of mind by the Pre-qualification Committee was evident from the fact that it had rejected two applications which were recommended by the Vigilance Directorate. On the other hand, it was contended by Mr. Ashtar Ausaf Ali Khan, learned counsel for the caveator, that the respondent's application was rejected arbitrarily as he was neither aware of any litigation-related policy nor was provided an opportunity of hearing by the Vigilance Directorate or the Pre- qualification Committee, the condition of litigation was not spelt out by the pre-conditions and the Pre-qualification Committee had blindly followed the recommendations made by the Vigilance Directorate. The factum of litigation between the respondent and the Pakistan Railways was, however, not disputed by him.
10. The contentions urged by the learned counsel for the petitioners have got a definite edge over the submission made by the learned counsel for the caveator. The respondent's application for pre-qualification was scrutinized at two levels, namely, the Vigilance Directorate and the Pre- qualification Committee. The respondent has not questioned the setting up of the Vigilance Directorate or its power to scrutinize the applications for pre-qualification. However, it is necessary to point out that setting up of a Vigilance Directorate in Pakistan Railways to check corruption was proposed by the Ministry of Railways in a summary on restructuring/revamping of Railways. The summary was approved in the joint meeting of the National Security Council and the Cabinet held on 29th December, 1999 and thereafter the Vigilance Directorate was set up with the sanction of the President of Pakistan under the operational and administrative control of Secretary/Chairman Railways. An Organizational Set-up was also prepared on 2-2-2000 whereby the Vigilance Directorate was, inter alia, assigned certain functions including functions mentioned in paragraphs 5(a) and (e) which are relevant for the present purposes. The same are worded thus:-- "Functions: 5(a) Monitor and keep the Secretary/Chairman, Pakistan Railways informed on proper observance and implementation of the laid down procedures and systems in various departments, particularly the systems related to financial discipline, revenue, sales, customer services, stores and purchases.
(e) Carry out any special tasks assigned by the Secretary/Chairman, Pakistan Railways."
' The matter of awarding contract of Luggage Vans had nexus with 'Customer Services' and the task of scrutiny of the applications for pre-qualification had also been assigned to the Vigilance Directorate by the competent authority, therefore, there can be no dispute with the proposition that the Vigilance Directorate was competent to scrutinize the applications for pre-qualification and had not usurped the power.
11. The respondent was not recommended by the Vigilance Directorate on the grounds; firstly, that in the year 1998 he had deposited bogus experience certificate with Railways authorities to get a contract, secondly, that he had recently given a bid in a contract of 60 Goods Wagons each from Faisalabad to Karachi and Gujranwala to Karachi but after the opening of the tenders he had demanded new conditions as a result of which the tender was cancelled and, thirdly, he had involved Pakistan Railways into litigation and the case was pending in this Court. Grounds Nos.2 and 3 are supported by the documents available on record of C.P.L.A. No,2287-L of 2000 but there is no need to advert to Grounds Nos.1 and 2 as the same are not relevant to the present discussion.
The third ground is, however, significant as it has the backing of the policy instructions issued by the Ministry of Railways through Letter No,C-1/89-COT/57, dated 25th March, 2000 referred to in the letter, dated 25-4-2000 addressed to the General Manager/Operations and the Director Purchase and Procurement, Pakistan Railways by the Director Vigilance. It reads as under:,-- "Sub: Pre-Qualification of Contractors ' Ministry of Railways' Letter No,C-1/89-COT/57, dated 25th March, 2000 refers.
(1) The Secretary/Chairman Railways vide his above-quoted letter has directed that following policy guidelines will be strictly adhered to while pre-qualifying the contractors for participation in different bids for Pakistan Railways:--
(a) All those who have defaulted/black-listed in the past in dealings with Railways will not be pre- qualified.
(b) All those in litigation with Railway will not be pre-qualified until the cases have been withdrawn/decided.
(c) Proper care will be taken to guard against production of fake certification/document by the contractors for the purpose of pre-qualification.
(d) Reputation/credibility of all contractors will be scrutinized by the Vigilance Directorate before their pre-qualification.
(e) A similar ground check will be carried out regarding the reputation/credibility of all the existing pre-qualified contractors."
' It would thus follow that the Vigilance Directorate had not recommended the respondent on the strength of a declared policy of the Pakistan Railways and not on any whimsical ground or arbitrarily. It will be pertinent to mention here that no allegation of nepotisms or favouritism has been levelled against the Vigilance Directorate and the allegation of mala fide alluded to in the writ petition is vague and the High Court has not given any finding on the question of mala fide. It is true that the ground of litigation does not find mention in the advertisement and the terms and conditions for the guidance of participants in the auction but the respondent cannot draw any premium from the omission for two reasons. Firstly, that the advertisement and the terms and conditions for the guidance of the participants in the auction boldly spell out that the competent authority/Railway Administration can reject any application without assigning any reason and, secondly, the respondent was fully aware of the said declared policy/guidelines laid down for grant or refusal of contract as is evident from the following Affidavit, at page No,215 of the Paper Book of C.P.L.A. No,2313-L of 2000, filed by him on 3-5-2000.
"AFFIDAVIT ' I, Syed Tasnim Hussain Naqvi son of Syed Tasleem Hussain, resident of Main Awan Town Road, B- 7/438, Gulshan-e-Saddat, Lahore, do hereby solemnly affirm and declare as under:--
(1) That I am sole proprietor of the firm M/s. Tasnim Hussain Naqvi, Lahore.
(2) That I am not black-listed from any Government/Semi-Government or any other department of Pakistan.
(3) That I am not involved in any litigation from any Government department in Pakistan, except in Lahore-Faisalabad privatized section in which I was not the petitioner but defended the case. The appeal filed in the Supreme Court of Pakistan Railway was also dismissed.
(Sd.)
DEPONENT.
' VERIFICATION ' Verified on oath at Lahore Cantt. This 3rd May, 2000 that the contents of the above affidavit are correct and true to the best of my knowledge and belief.
(Sd.)
DEPONENT.
' It is hardly necessary to mention that it was frankly conceded by the learned counsel for the respondent that litigation between the respondent and Pakistan Railways is pending in this Court.
12. Adverting to the contention that the respondent was condemned unheard by the Vigilance Directorate as well as the Pre-qualification Committee we find that none of them was obliged to provide him an opportunity of hearing particularly when the third ground of his disqualification was fully supported by record and in any case the scenario would not have changed even if he had been heard because litigation between him and the Pakistan Railways is admittedly pending in this Court. The contention that the Pre-qualification Committee had rubber-stamped the recommendations made by the Vigilance Directorate is also not tenable because the applications of two recommendees of the Vigilance Directorate were rejected by the Pre-qualification Committee and this overt act clearly points to application of independent mind by the Pre- qualification Committee.
13. The contention raised by the learned counsel for the caveator that the auction was clandestine is misconceived. The record indicates that notwithstanding its peculiar nature on account of pre- qualification of the parties the auction was open by any standard. Letters for participation in open auction to be held on 27-6-2000 were issued to all the five pre-qualified parties on 23-6-2000 and a Press Release was also issued on 26-6-2000. Press clipping from the Daily 'Dawn' may be reproduced hereunder:-- "Auction of train carriage ' Lahore, June 26: Auction of luggage vans in five trains is scheduled to be held at the Railway Headquarters here on Tuesday.
' Parties have already been pre-qualified and no complaint has been received from any party, says a Press Release.
' The auction is expected to bring a "handsome" amount to the railways which will help to improve its financial health and reduce deficit.
' The auction will be supervised by representatives of the Vigilance Directorate as well as the army monitoring team."
' The Railways Authorities were not bound to intimate the respondent of the auction as he had failed to stand the test of pre-qualification.
14. The next question for consideration pertains to the offer of Rs,8 Crores made by the respondent.
It was contended by Mr. Ashtar Ausaf Ali Khan that the offer ought to have been accepted by the Pre-qualification Committee because it was made before the conclusion of the auction and would have augmented the public funds immensely. The contention has not impressed us. The respondent was not supposed to make an offer as he had not participated in the open auction on account of rejection of his application for pre-qualification. Similarly the Pre-qualification Committee was not obliged to consider an offer made by an outsider after conclusion of the auction. The offer was quite attractive but its acceptance would have not only made a mockery of the procedure prescribed for awarding the contracts but also opened floodgate of litigation being a blatant abuse of discretion. There is yet another aspect of this matter to which it is necessary to refer to it. The claim of the respondent that he had made the offer before the conclusion of the auction is an afterthought because the assertions made by him in paragraphs 10 and 11 of the writ petition were that he had made the offer after fifteen minutes of the conclusion of the auction. The said paragraphs read as under:--- "10. That thereafter within about 15 minutes they came out and stated that auction has been taken place and contract given for total sum of Rs,6,22,00,000 for all the five trains, to them.
11. That in a short time thereafter, the petitioner submitted his offer of Rs,8 Crores for the said five trains to the General Manager and all higher authorities of Pakistan Railways and a copy whereof is attached as Annexure F."
' The volte face is understandable because it was held in the impugned judgment that it had been admitted in the parawise comments furnished by the Pakistan Railways that the offer of Rs,8 Crores for the said contract made by the respondent had already reached before the General Manager Railways alongwith the draft of Rs,10 lacs. The paragraph in which the said admission is contained is not mentioned in the impugned judgment but as rightly pointed out Mr. Irfan Qadir it is paragraph No,11 of the comments which reads as under:-- "The petitioner submitted his over-stretched offer even before the result of the auction was announced. It is worth-mentioning here the petitioner's application consisted of 9 pages. It is not understandable that how he could draft such an application and submit it even before the recommendations of the Auction Committee was approved by the competent authority. In fact, the application had been got typed beforehand the lengthy proposal and only the column regarding the actual bid amount and the petitioners' offer were left blank and filled in by hand after the conclusion of auction proceedings."
' The aforementioned observation in the impugned judgment is based on the first two lines of the above paragraph whereas the contents of the entire paragraph in general and the last two lines in particular leave no room for doubt that the offer was made by the respondent some time after the conclusion of the auction proceedings. Its regards the question of augmentation of public funds we tend to agree with the learned counsel for the peititioners that the respondent had offered an exorbitant amount to defeat the auction, the benchmark of Rs,8 Crores fixed by High Court for the fresh auction was likely to keep other bidders at bay and thus create a situation of monopoly and that the Pakistan Railways is not a purely Commercial Organization in that it is not only required to protect its financial interests and generate funds but is also obliged to see the interest and welfare of the public. We also find some force in the contention raised by the learned counsel for the petitioners that the respondent was not entitled to the discretionary relief granted to him because his success in the fresh auction will become a nightmare either for the Pakistan. Railways or the general public as he is a chronic litigant, in view of the documents available on record, and it is not possible to earn an amount even near the benchmark/baseline if all the five trains run in full capacity.
15. We would conclude the above discussion with the observations that the impugned judgment is not sustainable as the administrative decision challenged by the respondent neither lacks transparency nor is tainted with mala fide or is unfair, unjust or unreasonable or based on bias or favouritism and the discretion vested in the Pakistan Railways having been properly structured by reference to objective standards cannot be said to have been exercised arbitrarily. The public interest would be best served if the concluded contracts in question are preserved.
' For the reasons stated above, all the three petitions are converted into appeals and by allowing the same the impugned judgment is set aside. Needless to mention that the respondent can withdraw the amount of Rs, One crore deposited by him in the form of pay orders in the Lahore High Court. Parties to bear their own costs.