1. Petitioner through this Constitutional petition has taken exception to the auction proceedings held on 27-6-2000 by the respondent Railway functionaries whereby a contract for 5 luggage vans/break vans has been granted to the respondents Nos. 7 to 11 in two groups for a total consideration of Rs.6,22,00,000.
2. Facts briefly are that through a public notice published on 1-3-2000 in various dailies, respondent No.3, Chief Commercial Manager invited applications for pre-qualification of licensees/contractors of luggage vans/break vans for the following 5 trains:--
(i) 5-Up/6 Down Zulfiqar Express,
(ii) 9-Up/10 Down Allama Iqbal Express,.
(iii) 11-UP/12 Down Chenab Express,
(iv) 21-Up/22 Down Chiltan Express and
(v) 103-UP/104 Down Super Express.
3. Petitioner submitted 5 separate pre-qualification applications complete in all respects in accordance with the terms and conditions of advertisement for participation by depositing fee of Rs.3,000 each total amounting to Rs.15,000. In the applications he gave details of the works earlier undertaken by him of Pakistan Railways on its different sections of catering services, running of passenger and luggage trains etc. Apart from this varied nature of work's has been undertaken by him at Lahore, Islamabad, Peshawar, Multan, Quetta and Karachi Airports. He, on coming to know about the forementioned auction immediately on that very day made a written offer of Rs.8 crores for the same to the General Manager respondent No. l . He deposited. Rs.10 lacs as an earnest money to show his bona fide. He has also reiterated his offer of Rs.8 crores before this Court and to show his bona fide presented two pay orders drawn at American Express Bank Ltd. For one Crore in the name of Deputy Registrar (Judi.).
4. Learned counsel for the petitioner has argued that the petitioner has been ousted from the contest in an arbitrary manner without application of independent mind in clear violation of principle of natural justice. He has not even been informed regarding the fate of his prequalification application. Another argument has been advanced that the contract has been dolled out to respondents Nos.7 to 11 through a paseudo auction proceedings causing tremendous loss to the exchequer in a hasty manner as no public notice whatsoever was given for holding of the public auction. In support of his contentions he has placed reliance upon different precedents from the superior Courts.
5. Syed Afzal Haider learned counsel alongwith Mr. Jehangir A. Jojha have parawise comments and report on behalf of respondents Nos. l to 6 Pakistan Railways. Respondents Nos.7, 8, 10 and 11 have also entered appearance. Since nobody appeared for respondent No.9 Messrs United Freight in spite of notice, as such, he was proceeded ex parte.
6. The case was firstly argued by Syed Afzal Haider learned-counsel in detail on 18-7-2000. Thereafter, Mr. Irfan Qadir who was not available on 18-7-2000 moved C.M. 876 of 2000 and he too argued on behalf of respondents Nos.. 8 and 11 on 20-7-2000 and filed parawise comments.
7. It is a common argument of the learned counsel appearing for respondents that 5 persons i.e. Respondents 7 to 11 pre-qualified out of the 12 applicants for the same, as such, they were called/invited to participate in the auction scheduled for 27-6-2000. A preliminary objection was taken that since the matter is of contractual in nature involving resolution of disputed question of facts, as such, the jurisdiction of this Court under Article 199 of the Constitution of Islamic Republic of Pakistan would not be attracted. It was argued that the auction was held in two groups so as to avoid monopoly but the petitioner by his offer of 80 millions of Rupees is trying to create the same.
8. He has stated that this offer is highly exaggerated as even at 100% capacity of all the 5 trains, the income would not be more than 76.181 millions of rupees. He, in case of success is bound to indulge in overloading to earn that much amount which certainly would become a safety hazard and may cause irreparable loss to human life as well as damage to the Railways assets. This offer is termed as unconscionable.
9. As far as the pre-qualification applications were concerned, learned counsel for the respondents have stated that 12 applications were received which were evaluated by the Vigilance Directorate, a body constituted/created with the sanction of the President of Pakistan for Pakistan Railway under the operational/administrative control of Secretary/Chairman Railways so as to weed out corruption and malpractice in the department. The Vigilance Directorate according to the learned counsel considered all these pre-qualification applications and submitted report regarding the petitioner and others. The Vigilance Directorate did not recommend the case of the petitioner. The respondents Nos.7 to 11 who were pre-qualified were intimated by the Pakistan Railways regarding the holding of auction which was scheduled for 27-6-2000. However, according to the learned counsel, the respondents are not bound under the law to intimate the decision of pre-- qualification to those whose applications have been rejected. Lastly it is argued that it is a concluded contract and successful bidder i.e. Respondents Nos.7 to 11 have already invested huge amount after acceptance of their bid besides incurring, heavy expenditure. In support of their contentions learned counsel have placed reliance upon certain precedents.
10. I have considered the contentions and, have gone through the documents appended with this petition. It is admitted and the same is also reflected from the documents appended with this Constitutional petition that the petitioner has got vast experience of Railways contracts and this factum has even been mentioned in the report of Vigilance Directorate. Directorate did not recommend the petitioner's case for pre-qualification simply because of his involvement in litigation with Pakistan Railways. The competent Authority blindly followed the said recommendations without appreciating the same in its true perspective. During the course of proceedings I specifically put question to Mr. Muhammad Fayyaz Assistant Commercial Manager Pakistan Railways present in Court whether the petitioner's pre---qualification was rejected simply on the re ort of Vigilance Directorate his answer was in the affirmative He was further asked whether the report of Vigilance Directorate was confronted to the petitioner his answer was in the negative.
11. This shows that the petitioner's pre-qualification applications have been rejected in a mechanical manner by the competent Authority without applying its independent mind and he was not even informed about the same. This assertion also gets supports from the parawise comments submitted by the Railways itself wherein it was mentioned as under:------ "(h) The pre-qualification Committee in its meeting held on 20-6-2000 scrutinized the documents of all the 7 parties recommended by the Vigilance Directorate and disqualified another two parties on account of failure to attach certain documents alongwith their applications. A total of five parties were recommended for pre---qualification which were approved by the General Manager on 21-6-2000."
12. It is not denied that the competent Authority has got ample discretion to accept or reject the pre- qualification application but the said discretion is no of personal nature attached to the holder of the office. He cannot exercise his discretion on whimsical ground. The law has laid down certain procedure for the exercise of discretion. Reliance in this respect is placed upon Chairman, Regional Transport Authority, Rawalpindi v. Pakistan Mutual Insurance Company Limited, Rawalpindi PLD 1991 SC 14 where it was held as under:-- "Wherever wide worded powers conferring discretion are found in Statute, there remains always the need and the desirability to structure the discretion and the need for this has been pointed out in the Administrative Law test by Kenneth Culpdavis in the following words-- 'Structuring discretion means regularising it organizing it, producing order in it, so that decisions will achieve a higher quality of justice . ... The seven instruments that are most useful in the structuring of discretionary power are open plans, open policy statements, open rules, open findings, open reasons, open precedents, and fair informal procedure ... When the Legislative bodies delegate discretionary power without meaningful standard, administrators should develop standards at the earliest feasible time, and then, as circumstances p6imit, should further confine their own discretion through principle and rules, the movement from vague standards definite standards to broad principles to rules may be accomplished by policy statements in any form, by adjudicatory opinions, or by exercise of the rule-making power ... When Legislative Bodies delegate discretionary power without meaningful standards, administrators should develop standards at the earliest feasible time and then, as circumstances permit, should further confine their own discretion through principles and rules'. "
13. Here in this case admittedly the petitioner's applications for pre-qualification, were rejected without any intimation simply on the ground that he had some litigation with the Railways in the earlier contracts. I have noticed that award was given in petitioner's favour by General Manager, Railways and the trial Court vide its order, dated 13-4-1995 directed to make it rule of the Court. The Railways assailed that order before the High Court and a learned Single Judge dismissed this appeal vide order, dated 31-7-1997. Railway functionaries have since approached the Honourable Supreme Court where the matter is pending adjudication. In this background the action of the respondent Railways in rejecting the pre-qualification applications of the petitioners particularly so when he has got vast experience of contracts with the Railways cannot be sustained. Reliance is placed upon Dawood Corporation (Private) Limited and another v. The Director-General Department of Supplies, Government of Pakistan Ministry of Industries, Karachi and 2 others 1988 CLC 788 where it was held as under:-- "As regards the second letter whereby the petitioners have been blacklisted, it may be observed that it is an admitted position that before the passing of the impugned order the petitioners were not heard nor they were issued any show-cause notice. Mr. Nasim Farooqi learned counsel for the petitioner, has referred to the case of Joseph v. Executive Engineer (P.W.D.) reported in AIR 1978 SC 930, in which it was held that the appellant was entitled to the opportunity of being heard before he was blacklisted as a Government Contractor. We are also inclined to subscribe to the above view and hold that before the petitioner could have been blacklisted, they should have been issued a show-cause notice and should have been heard. "
14. Reference is also made to Mahabir Auto Stores and others v. Indian Oil Corporation and others AIR 1990 SC 1031 where it was held as under:-- "It is well-settled that every action of the State or an instrumentality of the State in exercise of its executive power, must be informed by reason. In appropriate cases actions uninformed by reason may be questioned as arbitrary in proceedings under Article 226 or Article 32 of the Constitution.
15. Reliance in this connection may be placed on the observations of this Court in Messrs Radha Krishan Agarwal v. State of Bihar (1977) 6 SCC 457 (AIR 1977 SC 1496)."
16. It was further observed as under:-- "It appears to us that rule of reason and rule against arbitrariness and discrimination, rules of fair play and natural justice are part of the rule of law applicable in situation or action by State instrumentality in dealing with citizens in a situation like the present one. Even through the rights of the citizens are in the nature of contractual rights the manner, the method and motive of a decision of entering or not entering into a contract are subject to judicial review on the touchstone of relevance and reasonableness fair play, natural justice equality and non-discrimination in the type of the transactions and nature of the dealing as in the present case. (Underline is mine).
17. Reference is also made to Messrs M.Y. Electronics Industries (Pvt:) Ltd. Through Manager and others v. Government of Pakistan through Secretary Finance, Islamabad and others 1998 SCMR 1404.
18. A further ground of the learned counsel for the respondents that in case of grant of contract to the petitioner for Rupees 8 crores, there are possibilities of his involvement in malpractice as the maximum turn out of this venture cannot be more than Rs.76.181 million, even on the basis of full capacity of the carriages is devoid of any force. This offer of Rs.8 crores cannot be rejected simply on the ground that the petitioner in case of his success in order to meet the expenses would adhere to overloading and other illegalities. The respondent Railways have got ample 'power under the law to control all these apprehended illegalities, provided they are sincere in their object. In case of indulgence in any fraud, the contract can be terminated., Simply on the ground that the petitioner has given a higher offer in thepresent contract would not deprive him of his right particularly so when the contract under dispute on the face of it is neither open nor transparent: At the cost of repetition, the petitioner in case of his success in securing the contract can still be hauled up and taken to task in accordance with law if he violates any term and condition of the contract. Reliance is placed upon Tata Cellular v. Union of India AIR 1996 SC 11 where it was held as under:------ "It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review.
19. Government is the guardian of the finances of the State. It is expected to protect the financial interest of 'the State. The right to refuse the lowest or any other tender is always available to the Government. But the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course if the said power is exercised for any collateral purpose the exercise of the power will be struck down. "
20. Reference is also made to Syed Sarfraz Hussain Bukhari v. District Magistrate, Kasur and another PLD 1983 SC 172. In Messrs Muhammad Safdar & Co. v. The Province of the Punjab PLD 1996 Lah. 22 it was held that simply because the bidder therein was given possession by Zila Council through work order before execution of formal contract and -had embarked upon collection of tax by spending some money would not detract this Court in the exercise of Constitutional jurisdiction to declare the confirmation of such bid as having been done without lawful Authority. Fresh order of auction in that case was directed with the base line of Rs.3 crores 47 lacs as offered by the writ petitioner in that case. It was further ordered that in case of non-participation of the said petitioner in the bidding process, the amount of Rs.25 lacs deposited by him would be forfeited.
21. The forementioned judgment of this Court was approved by the Honourable Supreme Court in a case reported in Javaid Iqbal Abbasi & Co. v. Province of Punjab and 6 others 1996 SCMR 1433. While approving the judgment the Honourable Supreme Court observed as under:-- "Where any Government 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 contractor 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 whichrender it reasonable and in public interest to do so." (Emphasis supplied).
22. The conduct of the respondent in approving the contract in a hasty manner can also not be appreciated. It is reflected from the file that the respondents 7 to 11 were only informed regarding the holding of auction scheduled for 27-62000 through letters on 23-6-2000. A news for the same was also flashed in the daily "Dawn" and the "Sun" on 27-6-2000, the day on which the alleged auction was held. The competent Authority accepted/approved the contract on that very date in spite of the fact and the same is also admitted in the parawise comments that the petitioner's offer of Rs.8 Crores for the said contract had already reached before him alongwith the draft of Rs.10 lacs. This shows that the respondent Railways functionaries without taking into consideration the interest of the exchequer in a very hasty manner has dolled out the contract for Rs.6 crores.
23. Reliance in this respect is placed upon Muhammad Shafiq Khan v. Secretary to the Government of the Punjab Local Government and Rural Department, Lahore and 2 others 1996 CLC 2045 wherein a contract for the collection of goods export tax was given for a consideration of Rs.5,30,00,000 without proper publication wherein the other side showed willingness to secure the same for an amount of Rs.7,30,00,000. This Court set aside the contract and directed for holding of fresh auction with a base line of Rs.7,30,00,000 with a rider that in case of non-participation the amount of Rs.73 lacs deposited by the challenger would be forfeited. It was further held in that case as under:-- "The other ground that the petitioner has got no locus standi has also got no force as he being the prospective bidder has been deprived of participation due to the notice published without taking due care. There is another aspect of this case which cannot be lightly ignored due to this limited publication of the advertisement, the national exchequer has suffered a minimum loss of two crore rupees. The Government functionaries are custodian of the State property and it is their bounden duty to protect and preserve the interest of State. They shall take all measures to ensure transparency of the auction proceedings."
24. A reference is also made to the argument of the learned counsel for the respondents that the petitioner submitted a false affidavit. I have gone through the same. The petitioner has clearly mentioned regarding the pendency of the case before the Supreme Court, as such, it cannot be said that the petitioner camouflage his conduct by giving a false affidavit., Further the impugned auction, dated 27-6-2000 of the respondent Pakistan Railways cannot be sustained on another ground as the same is also violative of the categorical undertaking given by the then Chief Commercial and Terminal Manager before the Honourable Supreme Court in a case that all licenses would be open and transparent with the pre-requisite of experience in the business and all would be allowed to participate in the open auction.
25. The upshot of the above discussion is that the forementioned 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. l to 6 Pakistan Railways 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. There shall be no order as to costs in the circumstances of the case.