Petitioner, a limited Company, has filed this Constitutional petition to call in question the termination of the two agreements, dated 18-9-1994 by respondent No.2, another Limited Company, in,which respondent No. 1 has the majority shares and in fact it is respondent No: l who is Managing respondent No.2.
2: The petition has been filed by the Company through one Nisar Ahmad, Liaiming to be its Director.
C.M. 4242 of 1997 was filed by one Faisal Sherjan under Order I, Rule 10 of the Code of Civil Procedure 1908, for being impleaded as party as, according to the applicant, he was entitled to the management of the petitioner-company. In its reply to this application, respondent No.1 has contested the status of the applicant and prayed for its dismissal. During the course of hearing, however, Mr. Aitzaz Ahsan, learned counsel for the applicant, supported the case of the petitioner - -company and in fact stated at the Bar that he was supporting the arguments of the counsel for the petitioner-company, namely, Mr. A.I Sibtain Fazli. Both the counsel were, therefore, heard in support of the petition. It may also be noticed that technically the case remains a motion case, however, as respondents have entered appearance, respondent No.2 has filed a written statement and all the parties have been heard in depth, the case is being disposed of finally as a Pacca matter.
3. The undisputed facts - are that respondent No.2, under authority/permission of respondent No.1, has established small television stations in various cities of the country. Under an agreement entered into with the petitioner-company, the respondent-company hired out its total transmission facilities for the Prime Time (7-00 p.m. To 11-00 p.m. For all the stations). This Prime Time has been described as "Air Time": Copy of the agreement is Annexure "B/1". Annexure "B" is another copy by which respondent-company agreed to grant the insertion of advertisement material outside the Air Time to the petitioner-company. Terms and conditions of the agreement have been stated in detail. According to the petitioner, the agreement was granted for a period of ten years w.e.f. 18-9-1994 and, although the 'petitioner-company has been fulfilling all the terms and conditions stipulated in the agreements, suddenly and without prior notice,. The respondent- company has discontinued broadcasting the programmes of the petitioner-company w.e.f. 10-11- 1997. It is stated that the petitioner-- company learnt of the termination/above refusal through publications made in the Press and Television. It has claimed that on account of the ten years' tenure of the agreements it has made investments into office equipments and programmes running into millions of rupees and on account of sudden unannounced termination, the petitioner-company has suffered immensely and all its operations have been jeopardised including the service of about 300 employees of the petitioner-company in various cities of the country. The prayer made is that impugned action of the respondent-company be declared as illegal and further that respondents be restrained from interfereing with petitioner's rights under the agreements dated 18-9-1994 to telecast its programmes and advertisements on the television in accordance with the terms and conditions of those agreements.
4. In. Its written statement respondent No.2, while admitting the existence of the agreements, has justified the cancellation of the agreements by relying on para.2.15 of the agreement. According to this para., as claimed by Mr. Hamid Khan, Advocate, learned counsel for respondent No.2, the initial period of agreement was three years and the petitioner-company was required to negotiate the charges and. The period afresh and because the parties could not agree on the rates and charges after the lapse of initial three years, respondent-company was justified in discontinuing the programmes and bringing an end to the agreements. Objections to the maintainability of the Constitutional petition has also been taken on the ground that the petitioner-company is seeking to enforce the rights it claims under a contract and this it cannot do. It is stated that if at all permissible, the petitioner --company will have to file a suit. The allegation that the termination - was unannounced and without notice, has not been admitted and it is maintained, by referring to the annexed correspondence/proceedings, that the petitioner --company was aware of proposed termination and in any case ought to have become aware that because the fresh agreement on charges was not coming forth, the original agreement may have to be cancelled.
5. In support of its objection to the maintainability of this Constitutional petition, Mr. Hamid Khan, Advocate, learned counsel for respondent No.2, has relied on Ch. Khushi Muhammad and others v.
Administrator District Council (Deputy Commissioner), Sheikhupura 1975 SCMR 189, Mir Rasool Bux Khan Sundrani & Co. v. People's Municipality, Sukkur and others PLD 1975 Kar. 878, which has followed Shamshad A.I Khan v. Commissioner, Lahore 1969 SCMR 122, Al-Mahmood Industries (Pak.)
Ltd. v. The Trading Corporation of Pakistan Ltd. And others 1974 SCMR 51, and finally Pakistan Mineral Development Corporation Ltd. v. Pakistan Water and Power Development Authority and others PLD 1986 Quetta 181. Both Messrs Aitzaz Ahsan and A.I Sibtain Fazli, learned counsel for the petitioner- company have relied on Messrs Abdullah & Co. v. The Province of Sindh and others 1992 MLD 293, Messrs Presson Manufacturing Ltd. And another v. Secretary Ministry of Petroleum and Natural Resources and others 1995 MLD 15 and Messrs Pacific Multinational (Pvt.) Ltd. v. Inspector-General of Police, Sindh Police Headquarters and others PLD 1992 Kar. 283 and cases like Messrs Motilal Padampat Sugar Mills Co. Ltd. v. The State of Uttar Pradesh and others AIR 1979 SC 621, Ramana Dayaram Shetty v. International Airport Authority of India and others 1979(3) SC Cases 489 and Harminder-Singh Arora v. Union of India and others 1986 (3) SC Cases 247, from across the border, to contend that the termination of -contracts can be set aside in Constitutional jurisdiction.
6. Mr. Aitzaz Ahsan further elaborated that respondent No:2 being a company in which Government of Pakistan has majority of shares and the Government is managing and controlling its affairs, respondent No.2 is, therefore, an agency or instrumental of respondent No. l and, therefore, is amenable to writ jurisdiction of this Court as respondent No.2 will be a person performing functions in connection with the affairs of respondent No. 1. He has, further emphasized that unfairness and arbitrariness of the action is always-liable to correction in exercise of judicial review irrespective of the fact that the relationship of the petitioner with a "person" within the meaning of Article 199 of the Constitution is arising out of and is governed by the terms of a contract. On merits of the case, learned counsel has emphasized that absence of prior notice is fatal to the action. He has also pointed out that there is no condition in the contract enabling respondent No.2 to cancel the contract on the allegation that the same was procured by exerting undue influence from the then Government of Pakistan on terms wholly detrimental to respondent No.2, and extremely favourable to the petitioner. He has urged that respondent-company could seek a recession of the contract under section 35 of the Specific Relief Act, 1877, but could not have on its own proceeded to cancel the contract on this ground. most important question which requires determination by question of maintainability of this petition. This question
(i) Whether respondent No.2 is amenable to Constitutional jurisdiction of this Court. In other words, whether in exercise of the power commonly known as judicial review, the action of respondent No.2 can be scrutinized and the directions in the nature of writs of certiorari and mandamus etc. Issue?
(ii) If answer to the above be in the affirmative, whether, as in the present case, this Court can interfere in disputes which are arising purely out of contractual relationship, and
(iii) What are the grounds on which this Court can interfere? In other words, whether arbitrariness, absence of notice, absence of reasons are valid grounds for this Court to hold the .Termination of agreements as without lawful authority?
8. There is no dispute that respondent-company is 'a Limited Company under the control of respondent No.1 as respondent No.1 is indirectly holding the shares to the extent of about 57 %O .
Respondent-Government is, therefore, controlling the affairs of respondent-company. The question whether Government is directly the shareholder, is not material.. The maintenance and operation of television station 'is a public purpose anti respondent-company is performing this purpose.
Respondent-company will therefore, be a "person" performing function in connection with the affairs of the Federation, -within the meaning of Article 199 of the Constitution. The reliance of Mr. Aitzaz Ahsan on Muhammad Aslam Saleemi, Advocate v'. The Pakistan Television Corporation and another PLD 1977 Lah. 852, a Full Bench judgment of this Court and Messrs Sandal Fibres Ltd. v.
Government of Pakistan and others PLD 1992 Lah. 400, a Single Bench judgment of this Court, is absolutely correct. In the Full Bench judgment, Pakistan Television Corporation, a Limited Company floated by Government of Pakistan, was held to be amenable to the power of judicial review of this Court. Similarly, in the other judgment United Bank Limited, again a Limited Company but nationalized under the Banks Nationalization Act, 1974, has been held to be such a person and subject to writ jurisdiction of this Court. The first question, therefore, is answered in the affirmative and it is held that respondent No.2, although a Limited Company but is connected with ale. Public purpose and as such its action can be judicially reviewed in exercise ofthe powers conferred by Article 199 of the Constitution.
9. Now I proceed to examine the other two questions. It is correct that by and large the principle that contractual rights and liabilities cannot be enforced through writ jurisdiction is well- established and judgments relied upon by Mr. Hamid Khan do affirm the said principle. However, there are indications that the Courts are not holding the above principle to be inflexible and of late there have been cases where interference has been made in Constitutional jurisdiction in respect of matters arising out of contract. Messrs Zesha Limited (Public) Limited Company, Lahore v.
Agricultural Development Bank of Pakistan, Islamabad and others PLD 1993 Lah. 914 is the case in point. For better appreciation of the problem, the contracts can be divided into two categories. In the first category the grant of contract by public functionaries is regulated by rules made under the statute or instructions which have assumed -the status of rules. In such cases the problem does not present much difficulty. Cases cited by Messrs Aitzaz Ahsan and A.I Sibtain Fazli, Advocates, mostly fall in this category. In these cases the question was whether award of contract by the Government or by. Local Council was in accordance with the rules or uniform instructions.
The judgments from Indian jurisdiction are also arising out of similar circumstances. In this category of cases the law is well-settled that in exercise of power of judicial review the Courts can examine the grant of contracts. Their validity and also enforce rights and liabilities accruing thereunder.
10. It is the other category which poses some difficulty. In this category the relationship is governed exclusively by the terms of contract and there are no statutory, rules governing the entering into such contentions barring of course the general rules of contract and possibly the instructions to the public functionaries and agencies. The present case falls in this category. Even though respondent No.2 is a person under the administrative control of respondent No. 1, the contracts entered into by it are purely under the normal and ordinary law of contract governing the entering into of contracts between the two citizens. The difficult question arising in such cases is whether in the event of breach or cancellation by a public person, the Court should refrain from reviewing the action in exercise of judicial review or to interfere or, if so, on what grounds. The answer in my view should be in the affirmative and power of judicial review can be exercised in favour of the aggrieved party where the impugned termination of the contract or breach of the same has taken place in violation of principles of natural justice like absence of notice or where the termination is arbitrary, fanciful and unconscionable or, repugnant to the conscience of Court.
11. For the above review, I respectfully borrow the logic/rule laid down in well-known case of Mrs. Anisa Rehman v. PIAC and another 1994 SCMR 2232. In this case an employee of Pakistan International Airlines Corporation was reduced in rank without prior notice and the question arose whether the employee could maintain a writ petition even though the service of the employee was not governed by statutory rules but by the ordinary law of master and servant. The Supreme Court held the rules framed by Pakistan International Airlines Corporation in exercise of section 29 of the Pakistan International Airlines Corporation Act, 1956, as non-statutory and therefore, writ was held to be not maintainable. However, as adverse action by a public corporation like P.I.A. Was taken without prior notice and hearing, the action was struck down and it was held that:--
7. From the above stated cases, it is evident that there is judicial consensus that the maxim audi alteram partem is applicable to judicial as well as to non-judicial proceedings. The above maxim will be read into as a part of every statute if the right of hearing has not been expressly provided therein. In the present case respondent No.1 in its comments to the writ petition (at page 41 of the paper book) admitted the facts that no show-cause notice was issued to the appellant nor she was heard before the impugned order, dated 6th August, 1991, reverting her to Grade VI from Grade VII was passed. In this view of the matter there has been violation of the principles of natural justice.
The above violation can be equated with the violation of a provision of law warranting pressing into service Constitutional ~ jurisdiction under Article 199 of the Constitution, which the High Court failed to exercise. The fact that there are no statutory service rules in respondent No.1 Corporation and its relationship with its employees is of that Master and Servant will not negate the application of the above maxim audi alteram partem. The above view, which we are inclined to take is in consonance with the Islamic Injunctions -as highlighted in the case of Pakistan and others v. Public at large (supra) wherein, it has been held that before an .Order of retirement in respect of a civil servant or an employee of a statutory Corporation can be passed, he is entitled to be heard.".
12. To the same effect is another judgment reported as Ch. Anwar Muhammad Khan and others v.
The Director of Industries and Mineral Development, Government of Pakistan, Islamabad Capital Territory, Islamabad and another PLD 1994 Lah. 70 by a Single Bench of this Court. Although in this case the lease contract was regulated by Pakistan Mining Concession Rules, 1960, but it was held that Constitutional jurisdiction was available against the public functionaries directing them to act strictly in accordance with law and further that if the adverse orders have been passed without issuing a show-cause notice, power of judicial review available to the High Court can be exercised even in cases where grievance be arising on account of violation of contractual obligations. As noted, in the case reported as Messrs Zasha Limited (supra), this Court in exercise of power of judicial review, directed the creditor to extend the credit facilities, as agreed to in the agreement.
13. Referring to the facts of this case, it is almost admitted that no show-cause notice in express terms was issued before terminating the contract. In fact the contention of the petitioner that it learnt of termination from the Press and from announcement on television has not been refuted in so many words. It is, however, contended by Mr. Humid Khan that such a notice must be inferred from the letters/correspondence annexed to written statement. I am afraid, this contention has no force. The perusal of the relevant letters . Shows that the petitioner was only making offers for enhancing rates in terms of para.2.15 of the agreement. Nowhere there is an iota of suggestion from the side of respondent No.2 that if the parties do not agree on the future rates and charges, the contract will be ,cancelled. The perusal of the agreement (Annexures "B" and "B/ 1 "), itself clearly shows that the period of agreement is for ten years w.e.f. 8-9-1994 to 7-9-2004, vide paragraph 3.
Under para. 4.01, in case of default by any party to any term of the agreement, the other party would give a notice in writing to the party to make amends within three months from the date of notice, failing which the agreement would stand terminated. Under this clause respondent No.2 was obliged to give a notice indicating the grievance and thereafter could proceed to decline further performance of its obligation or, in other words, terminate the contract. The assertion that keeping in view the duration of the contract, the petitioner-company has invested millions of rupees has not been expressly denied and in any case seems reasonable. The termination, therefore, can set at naught the entire investment of the petitioner-company and, therefore, the Court will have to insist on strictest compliance with the terms of the contract. In this case the termination does seem arbitrary, inasmuch as no order showing reasons for termination has been placed on record. This is besides the fact that refusal to further perform the contract/termination is without prior show-cause notice under general ` principles of natural justice or notice within the meaning of paragraph 4.01 of, the agreement. The principle laid down in Mrs. Anisa Rehman:s case, (supra), in my humble judgment can be safely extended to the present case where, although the parties are governed by contract, the impugned adverse action has been taken by a public functionary/respondent No.2 against the principles of natural justice.
14. For the above reasons, I would accept this petition and declare the impugned termination as without lawful authority and of no legal effect. Parties are left to bear their own costs.
15. Since the action is being struck down for lack of service of prior notice, it will be open to respondent No.2 to proceed in the matter in accordance with law and in the light of this judgment, if so advised. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.