MUHAMMAD MUJEEBULLAH SIDDIQUI, J.--- By this petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973, the petitioner has sought the following relief: "This Hon'ble Court may graciously be pleased to:-
(a) declare that the petitioner has a legal and vested right for taking delivery of lot No. E-62 January, 1993 consisting of 1008 bags of parafine wax because of his having given the highest hid in an auction held on 19th April, 1994 and his having .Deposited more than 25% of such bid amount on the spot and hereafter on payment of balance amount of his bid in accordance with the Rules, 1980;
(b) declare that the impugned acts of the respondents Nos. 1 to 3 of fixing re-bidding on 26th April, 1994 for the subject lot and entertaining application with pay order of Rs.2,50,000/- from the respondent No. 6 and accepting his bid and display the same on 28th April, 1994, to the detriment of the petitioner ar illegal, male fide and without lawful authority, and cancel delivery order, if any, issued in favour of the said respondent No. 6 for the subject lot;
(c) order delivery of the aforesaid lot to the petitioner as its highest bidder against, payment of Rs.7,73,000/- being the balance amount of the said bid given by him on 19th April, 1994;
(d) Costs."
2. The facts giving rise to this petition as stated in the memo . Of petition are that the petitioner is a business-man carrying on business of auction bidding and general merchandise. In the regular course of his business as a bidder he purchased lot No. E-62 January, 1993, consisting of 1008 bags of parafine wax in the auction held and conducted by the respondents No. 1 to 4 on 19th April, 1994, under the Registration of Auctioneers and Auction Procedure Rules, 1980. The petitioner was the highest bidder at a total amount of Rs.10.,31,000/- in open auction and at once deposited an amount of Rs.2,58,000/-, on the spot, which was more than 25% of the bid amount. This earnest money/advance payment was made vide Voucher No. C-4965, in the National Bank of Pakistan, Custom House Branch, :arachi in accordance with the auction Rules. The petitioner then became entitled to take delivery of the aforesaid lot on payment of the balance amount of Rs.7,73,000/-.
The petitioner was however, surprised to see the notice affixed on Notice Board in the auction house of respondents Nos. 1 to 3 dated 21st April, 1994, notifying that the afore-mentioned lot was to be put to re-bidding on 26th April, 1994. The petitioner was orally informed that the respondent No.
6. Mr. Nafis-ur-Rehman's had offered about rupees one lac more than the highest bid amount of Rs.10,31,000/- given by the petitioner. It was further informed that the respondent No. 6, gave a pay order of Rs.2,25,000/- to the respondents Nos. 1 to 3 along with an application praying that the earlier highest bid given by the petition in open auction be set aside. The petitioner has averred that it was absolutely illegal and in contravention of the auction rules.
3. The petitioner has placed reliance on Rules 11, 14 and 18 of the AuctiOn Rules, 1980 and clause (v) of the Standing Order No. 3 of 1991 dated 23rd April, 1991, which reads as follows: "Rule 11:- Value of goods which may be auctioned.-- All goods, the aggregate appraised value or the reserved price of which does not exceed one lac rupees, may be sold by public auction conducted departmentally at the discretion of the Collector, and all goods, the aggregate appraised value or the reserved price of which exceeds one lac rupees, shall be sold by public auction through an auctioneer."
"Rule 14: Duties of auctioneer nominated--
(1) The auctioneer nominated under Rule shall--
(a) make or cause to be made under his supervision and in the presence of an Officer authlorised by the Collector a detailed inventory of all the goods to be auctioned;
(a) notify, at least fifteen days in advance f the date of auction , at least twice on the front or the back page of two or moral local dailies,-
(i) the date, time and place of auction in block letters, and
(ii) the generic description of goods to be auctioned;
(c) send a complete list of such goods to all Chambers of Commerce and Industry, and;
(d) display such goods or samples thereof at a place or places and in the manner acceptable to the Collector.
(2) All expenses incurred on publicity or display shall be borne by the auctioneer."
"Rule 18:- Earnest money payable-- Twenty-five percent of the amount of the highest bid giver at an aUchcn shall be payable by the bidder in cash as earnest money immediately after the fall of the hammer: Provided that if the earnest money is not paid, the hid shall be cancelled and the goods put to auction again."
"Clause V": Standing Order No. (3) 1991 (A). . "Private offers can be submitted only 24 hours before the auction to the concerned Assistant Collector. The post-auction private offers shall be entertained by Collector of Customs (Appraisement) if the offer is 25% more than the highest bid received in the Open Auction and must accompany pay order equal to total of both."
4. It is contended by the petitioner that the highest bid given by him became final after deposit of more than 25% of the bid and the respondents Nos. 1 to 3 cannot put the auction lot to re-bid and the impugned auction was totally iilegal and hence this writ petition seeking the relief, re-produced earlier 5. In their parawise comments respondents Nos. 1 to 3 have taken plea that the petitioner was not the purchaser of lot No. E-62, January, 1993, but he was merely the highest bidder subject to acceptance/rejection by the competent authority. It is not denied that the petitioner was the highest bidder and he deposited Rs.2,58,000/- which was more than 25% of the bid amount immediately after bid, but it is averred that.The petitioner was not entitled to take delivery of the goods because the bid was yet to be submitted to the competent authority for decision. It is further contended on behalf of the respondents Nos. 1 to 3 that under Rule 24(2) of the Registration of Auctioneers, and Auction Procedure Rules, 1980, the Collector of Customs is empowered to take such decision and issue such general or special orders as he deems fit to regulate auction. Under these powers. Standing Order No. 2/99(A), dated 13.1.1992 was issued whereby on receipt of a higher offer by at least 10%, re-bidding of a lot can be conducted among the highest bidder and the person giving the offer, According to them a notice to that effect was placed on the notice board for information of the highest bidder and the person making offer to take part in re-bidding.
It is further stated in the comments that in fact re-bidding was conducted for few other lots on the same date It is further stated that the petitioner, who is a regular bidder, has on many occasions in the past, given 10% higher offers and taken part in re-biding of lots which were auctioned earlier.
The respondents Nos. 1 to 3 have maintained that the rebidding was in accordance with the Standing Order No. 2/1 992(A) and that after re-bidding the highest bid was Rs.14,18,000/- which is 37.5% higher than the bid received in the open auction. A further plea has been taken that the re- bidding is conducted in the best national interest to get maximum price for the auctioned goods under the auction rules and procedures. It is further pleaded that the Standing Order No. 3/1991(A), dated 23.4.1991, was superseded by Standing Order No. 2/1992(A), dated 13.1.1992, whereby Assistant Collector (Auction) is empowered to entertain 10% higher offer after auction with or without 25% deposit. In the instant case, 10% higher offer was entertained which was received alongwith pay order for Rs.
2,50,000/- and thereafter re- bidding was conducted as per Standing Order No. 2/1992. It is further stated that the highest bid in re-bidding at Rs.14, 18,000/- has been accepted and the successful bidder has deposited 100% of the bid along with Income Tax and KMC charges. He has already been issued delivery order under the rules and is entitled to take delivery of the goods. The respondent No. 6 has stated that similar facts in his counter-affidavit.
6. Head Mr. Abdul Qadir Khan, learned counsel for the petitioner, Mr. Raja Muhammad Iqbal, learned counsel for respondents Nos. 1, 2 and 3 and Mr. Fida Muhammad Khan, learned counsel for respondent No. 6.
7. The learned counsel for the petitioner has placed reliance on the rules and the provisions contained in Standing Order No. 3 of 1991 which have already been re-produced in the earlier part of this judgment.
8. On the other hand, the learned Advocates for the respondents have placed reliance on Rule 24 of the Auction Procedure Rules, 1980, which read as follows:- "24. Power of Collector to cancel auction, etc.-- (1) Notwithstanding anything contained in these rules, the Collector may, without assigning any reason, at anything before delivery of the goods auctioned is given to the successful bidder, accept or reject any bid or offer given at any auction, regulate, restrict or refuse the entry of persons to the premises where an auction is held or their taking part in the auction.
(2) The Collector may issue such general or special orders regulating the auction as he thinks necessary." and,Standing order No. 2/1 992(A).
9. A perusal of Rule 24(1) of the Auction Rules shows that, the Collector is empowered without assigning any reason, at any time before delivery of the goods auctioned is given to the successful bidder to accept or reject any bid or offer given at any auction . The main contention of the learned Advocates for the respondents was that by virtue of the authority vested under Rule 24(1) the Collector rejected the highest bid given by the petitioner.- However, when asked to show any order rejecting the highest bid given by the petitioner, they had no option but to concede that the Collector at no point of time rejected the highest bid given by the petitioner and no such order was communicated to the petitioner. Thereafter they placed reliance on para 5 of Standing Order No. 2/92(A), dated 13.1.1992 which read as follows:- "5. The bidder shall be allowed to offer 10% or higher of the bid received in public auction by depositing the full offered amount by pay order or through adjustment in the current account.
However, Assistant Collector (Auction) may accept highest offer without deposit on case to case basis, provided that the successful bidder/buyer shall deposit the full amount within three days of the acceptance of such higher offer/bid."
10. A perusal of the above para shows that a provision has been made in the Standing Order, that after the public auction, another bidder may offer 10% or higher of the bid received, by depositing the full offered amount by pay order or through adjustment in the current account. The Assistant Collector (Auction) has been empowered to accept higher offer without deposit on case to case basis, provided that the successful bidder/buyer shall deposit the full amount within three days of the acceptance of such higher offer/bid. As already observed, the Standing Orders are issued by the Collector of Customs (Appraisement) in pursuance of Rule 24(2) of the Registration of Auctioneers and Auction Procedure Rules, 1980, which provides that Collector may issue such general or special orders regulating the auction as he thinks necessary. Thus while issuing Standing Orders the Collector of Customs is to remain strictly within the parameters of the provision in the Customs Act, 1969 and the rules framed by the C.B.R. If there is nay provision in the Standing Order which is in violation/contravention of the provisions contained in Section 201 of the Customs Act, 1969 or is in contravention/violation or in excess of the provision contained in the rules, such provision to the extent of contravention/excess shall be invalid and of no legal effect.
11. We will examine, if the provision contained in para 5 of the Standing Order (3)/1991(A), dated 23rd April, 1991 to the effect that the post auction private offers shall be entertained by Collector of Customs (Appraisement) if offer is 25% more than highest bid received in the open auction and must accompany pay order equal to total of both and the provision contained in para 5 of Standing Order No. 2/1992(A), dated 13.1.1982, which has already been re-produced, is within the parameters of the provisions contained in Section 201 of the Customs Act, 1969 and the rules framed by the C.B.R.
12. Section 201(1) of the Customs Act, 1969 reads as follows:- "201. Procedure for sale of goods and application of sale proceeds , (1) Where any goods, other than confiscated goods, are to be sold under any provision of this Act, they shall be sold after due notice to the owner by public auction or by tender or by private offer or, with the consent of the owner in writing in any other manner."
13. The rules contain detailed procedure for the auction and the relevant terms and conditions. For the sake of convenience rules 11,12,14,16,17,18,19,20,21 and 22 are reproduced below:- "Rule 11: Value of goods which may be auctioned. -- All goods, the aggregate appraised value or the reserved price of which does not exceed one lac rupees, may be sold by public auction conducted departmentally at the discretion of the Collector, and all goods, the aggregate appraised value or the reserved price of which exceeds one lac rupees, shall be sold by public auction through an auctioneer.
Rule 12:- Collector to approve goods for auction.-- (1) As soon as the goods detained at any place in the custody of any person have reached the stage of being sold under the Act, or in the opinion of such person are required to be sold, by auction shall be brought to the notice of the Collector of the area concerned by that person giving a list of such goods.
(2) The Collector shall, on receipt of such information, or on his on motion pass orders directing the sale of goods referred to in sub-rule (1) by public auction either departmentally or through an auctioneer, and shall cause the reserved price of the goods to be auctioned to be determined in accordance with the provisions of Section 25 of the Act, any duties or taxes which would have been payable under clause c of sub-section (2) of that section on the date of delivery of such goods to the importer or the purchaser thereof shall be added to this value: Provided that where the condition of the goods has, for any reason, deteriorated, the reserved price shall be the value as is re-appraised by the appraising authorities of the Customs Department and approved by the Assistant Collector.
Rule 14: Duties of auctioneer nominated.-- (1) The auctioneer nominated under rule 13 shall--
(a) make or cause to be made under his supervision and in the presence of an officer authorised by the Collector a detailed inventory of all the goods to be auctioned:
(b) notify, at least fifteen days in advance of the date of auction, at least twice on the front or the back page of two or more local dailies,-
(i) the date, time and place of auction in block letters, and
(ii) the generic description of goods to be auctioned;
(c) Send a complete list of such good to the Chambers of Commerce and Industry, and;
(d) display such goods or samples thereof at a place or places and in the manner acceptable to the Collector.
(2) All expenses incurred on publicity or display shall be borne by the auctioneer.
Rule 16: Goods, may be auctioned in lots.-- All goods may be put to bid in convenient lots so as to obtain the highest possible bid.
Rules 17: Bid subject to acceptance by Collector.-- (1) A bid given at an auction shall be subject to acceptance by the Collector or the Deputy Collector or an officer specifically authorised in this behalf, as the case may be, but the bidder shall have no right to withdraw his bid without the permission of the officer supervising the auction.
(2) Where the amount of the highest bid given at an auction is not less than the reserved price, the Collector or the authorised officer may accept the highest bid.
(3) Where the amount of the highest bid given at an auction is less than the reserved price, the orders of the Collector or the Deputy Collector shall be specifically obtained: Provided that such orders shall be passed within five days of the date of the auction: '
Rule 18: Earnest money payable.-- Twenty-five per cent of the amount of the highest bid given at an auction shall be payable by the bidder in cash as earnest money immediately after the fall of the hammer: Provided that if the earnest money is not paid, the bid shall be cancelled and the goods put to auction again.
Rule 19: Earnest money to be adjusted.- The amount of the earnest money shall be adjusted towards the final payment of the whole amount of the bid, but where a bid is not accepted by the appropriate authority, the amount of the earnest money shall be refunded to the bidder .
Rule 20: Amount of bid to be paid in office.- The balance of the amount of bid shall be paid by the successful bidder in cash or through bank draft in the office of the Collector within a period of four days excluding holidays, of the final acceptance of the bid: Provided that an officer not below the rank of Deputy Collector may extend the period by not more than ten days.
Rule 21: Earnest money to be forfeited.-- If the balance of the amount of the bid is not paid within the period or extended period specified in rule 20, the earnest money shall be forfeited in favour of the Collector, and the goods may be sold by auction or otherwise.
Rule 22: Auctioneer to issue delivery order.-- (1) The auctioneer shall, on receipt of a certificate issued by the Collector or an officer authorised by him in this behalf to the effect that the whole amount of the bid has been realised, issue under his seal a delivery order giving the name and address of the successful bidder. General Index Register number and identity card number of the bidder, the date and place of the auction, the number of the lot, full description of the goods in respect of which bid was accepted and the price at which such goods were sold.
(2) The successful bidder shall present the delivery order issued to him under sub-rule (1) to the person who is in custody of the goods auctioned, and that person shall give delivery of the goods specified in that delivery order against a receipt from the successful bidder.
(3) Where a bid is accepted at the auction and the whole amount of the bid is paid to the officer present at the auction in full, the auctioneer may issue a delivery order and the delivery of the goods may be given immediately after the auction."
14. A perusal of the above provision shows that under Section 201 of the Customs Act, the goods are to be sold after due notice to the owner by public auction or by tender or by private offer or with the consent of the owner in writing in any other manner. Except the consent of the owner the Legislature has provided only three methods for the sale of goods, first; by public auction, secondly; by tender and thirdly by private offer. No other manner has been provided/prescribed by Legislature. Coming to the rules, we find that under Rule 14 the auctioneer is to notify at least fifteen days in advance of the date of auction, at least twice on the front or the back page of two or more local dailies giving the details as specified in the rules. Under Rule 17 a bid given at an auction shall be subject to acceptance by the Collector or the Deputy Collector or an officer specifically authorised in this behalf. Under sub-rule (2) of Rule 17, where the amount of the highest bid given at an auction is not less than the reserved, price, the Collector or the authorised officer may, accept the highest bid. According to proviso to Rule 17 the order for acceptance or otherwise is to be made within five days of the date of the auction. Although the consequences of making no order for acceptance or rejection under Rule 17 have not been provided, but we can legitimately infer that if no order is made within five days of the auction it would be deemed that the highest bid has been accepted. It is provided in Rule 18 that twenty-five percent of the amount of the highest bid given at an auction shall be payable by the bidder in cash as earnest money immediately after the fall of the hammer and according to Rule 19 the amount of the earnest money shall be adjusted towards the final payment of the whole amount of the bid. It is further provided in Rule 19 that where a bid is not accepted by the appropriate authority, the amount of the earnest money shall be refunded to the bidder. It is further indicative of the fact that the order of acceptance/rejection is to be made within five days of the date of auction and if no order is made the highest bid shall be deemed to have been accepted. The manner of delivery of goods auctioned is given in Rule 22. Sub-rule (3) of Rule 22 provides that where a bid is accepted at the auction and the whole amount of the bid is paid to the officer present at the auction in full, the auctioneer may issue a delivery order and the delivery of the goods may be given immediately after the auction. This provision is further indicative of the fact, that the highest bidder whose bid is accepted at the auction is entitled to take the delivery of the goods auctioned on payment of total amount and thus the acceptance of highest bid creates a very strong vested rights in favour of such bidder. In Rule 24 the Collector has been empowered to accept or reject any bid in spite of anything to the contrary contained in the rules. However, as already observed earlier the Collector has not issued any rejection order in this case.
15. A perusal of the provisions contained in Section 201 of the Customs Act and in the rules shows that everything has been clearly and meticulously prescribed under the statute law and the rules framed thereunder. There is no indication of any procedure of post auction private offers or receiving of any higher bid as provided in the two Standing Orders 3 and 2 of 1991-92. It is thus abundantly clear that the Collector of Customs has exceeded his jurisdiction in making provision for post-auction bids, thereby contravening the provisions contained in Section 201 of the Customs Act and in the rules framed by the C.B.R. It is established principle of law that the things should be done as they are required to be done are not at all. No body can be allowed to contravene, flout or violate the statutes or the rules framed thereunder in the name of national interest or any other so- called high or sub-lime idea or ideal. The rule of law requires that every person in execution of law should follow strictly the law as laid down and should not exceed the limit of law for any reasons whatsoever. It is therefore, held that the provisions for post auction bids/offers contained in Standing Orders (3) of 1991 and (2) of 1992 are invalid, in operative and bad in law. It is further declared that anything done or acted upon in pursuance of the said provision has no legal validity.
It is further declared that the petitioner after giving the highest bid and depositing 25% of the bid amount was possessed of the vested right and he could be deprived of the said right by re-course to Rule 24(1) of the Registration of Auctioneers and Auction Procedure Rules, 1980 and not otherwise. Since the Collector has not exercised the authority vested in him under Rule 24(1) and the highest bid given by the petitioner was not rejected under Rule 17, within the period of limitation provided in the said rule therefore, the highest bid given by the petitioner is held to have been accepted. It is specifically declared that the re-bidding by the respondent No. 4, at the behest of respondents Nos. 1, 2 and 3 and acceptance of bid given by respondent No. 6, is illegal and void.
16. Consequent to the above declarations the respondents Nos. 1, 2 and 3 are directed to issue the delivery order to the petitioner in respect of lot under consideration against the payment of Rs.7,73,000/- being the balance amount of the bid given by the petitioner on 19th April, 1994.
17. The petition is allowed as above with cost of Rs. 25000/- (Rupees twenty-five thousand) to be paid to the petitioner by the respondents Nos. 1, 2 and 3.
18. After hearing the learned Advocates for the parties, the petition Was allowed by short order dated 11.10.2001, and these are detailed reasons in support thereof. 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.