1. This order shall dispose of the C.M.A. No,8190 of 2001, filed by the plaintiff under Order 39, rules 1 and 2, C.P.C. Wherein it has been prayed on their behalf that till final disposal of the suit, the defendants Nos, 1 and 2 be retrained from awarding the contract to defendant No,3.
2. The application is supported by affidavit, counter-affidavits by defendants and rejoinder/counter- affidavit by plaintiff.
3. The averments/contentions canvassed through same would be referred as and when necessary.
4. In order to appreciate the contentions canvassed, it is necessary to have short and swift facts leading to the filing of the application and suit, which are as follows.
5. Under the Government of Pakistan policy of privatization and deregulation of the economy, Ports and Shipping, an important and significant sector of the economy, has been opened up to the Private Sector. In pursuance of said policy, the Port Qasim Authority, to encourage all private entrepreneurs and sponsors both Pakistanis and foreigners, interested in the Liquid Cargo Terminal at Port Qasim were invited to participate in the said project on Build, Operate and Transfer (BOT) basis and advertised inviting tender in the year 1995 and subsequently re-advertised in the year 1996-97, which remained unresponded. The project was re-advertised in the press on 7-6-1998 and its validity period was subsequently extended up to 15-9-1998. The plaintiff, who is engaged in the business of, inter alia, construction and operation of liquid and re-qualified storage submitted the bid, which was duly approved after scrutinizing by the relevant authorities. Letter of Intent (LOI), dated 5-11-1999 was issued by defendant No,2 (the Port Qasim Authority). In pursuance of Letter of Intent, the implementation agreement was executed by the plaintiff, but for the reasons known to defendant No,2, they did not execute the said implementation agreement. Instead defendant No,2 once again vide public notice, dated 5-6-2000 re-invited bids for construction of liquid cargo terminal on Build, Operate and Transfer basis. The plaintiff without prejudice to its right, as an abundant precaution, vide its letter, dated 8-8-2000 requested the defendant No, 2 to issue tender documents to enable the plaintiff to submit bid documents. Defendant No,2 for ulterior and mala fide reasons did not issue the tender documents to the plaintiff and after exchange of legal notice, the same was issued to plaintiff on 30-11-2000. It is also the case of the plaintiff that re-invitation of tenders/proposals was mala fidely extended by defendant No,2 from time to time, without assigning any reason and finally vide Public Notice, dated 12-12-2000 of daily Dawn, time for submission of proposal was extended up to 17-1-2001, only to accommodate the defendant No,3, who was incorporated on/or after 17-1-2001, for the reason that Chief Executive of defendant No,3, namely, Muhammad Bashir Jan Muhammad is also on the Board of defendant No,2 and the dates for submission of bids were extended from time to time to accommodate the defendant No,3 to participate in the bidding, which was then being incorporated. A pre-bid conference was held by defendant No,2 on 10-8-2000 where several participants were present, the defendant No,3 were not present and NESPAK (The consultant of defendant No,2) explained that there were no fixed/written criteria for evaluation and selection/acceptance of proposal. However, three factors will be considered as major factor while carrying out evaluation of the bids, which were:---
(i) The suitability of technical proposal (Best technical proposal).
(ii) Tariff structure and parameters of financial model (Best financial proposal).
(iii) Royalty offered to PQA.
6. It is the case of the plaintiff that plaintiff submitted bid documents on 17-1-2001, which were opened by defendant No,2 alongwith the bid documents of defendant No,3. The main features of the bids of both were as follows:-- S. No.Name of ParticipantsCost of Project (USS)Tariff (USS)Royalty (USS)
1. I Puri Terminals Ltd.13.5 Million 2.36 per MT3.75% of Revenue
2. FWQ ENT (Pvt.)
7. Ltd.12.5 Million 2.59 per MT2.75% of Revenue It is the case of the plaintiff that its bid was, prima facie, much better than of defendant No,3 but both the bids were referred for detailed evaluation to NESPAK, the consultants of defendant No,2. It is the case of the plaintiffs that. NESPAK, the consultant of defendant No,2 after evaluation, recommended defendant No,2, to consider the bid of the plaintiff and negotiate with the plaintiff as to the financial parameters vis-a-vis the revised rates of Tariff and royalty submitted subsequently by defendant No,3. Though there was no term in tender documents for revision of bids. The defendant No,2 have not approved the plaintiff's bid for ulterior and mala fide reasons. The case of the plaintiff was that entire process of evaluation of the bids by defendant No,2 was mala fide and non-transparent inasmuch as Bashir Jan Muhammad, the Chief Executive of defendant No,3 was also on the Board of defendant No,2 and was in a position to influence the decision of defendant No,2 and the other members of the Board to appease Bashir Jan Muhammad have acted unfairly, arbitrarily and mala fidely in the process of evaluation of contract. Defendant No,2 in a clandestine manner placed the revised bids for evaluation without giving an opportunity of the same to the plaintiff. The defendant No,2 has deliberately and contrary to the recommendation of NESPAK maneouvred unscrupulously and eventually to award the contract to defendant No,3. During the final presentation held on 16-10-2001 to the defendant No,2, it became crystal clear by the attitude of the officers of defendant No,2 that they were not even interested to hear the final presentation as being made by the plaintiff and defendant No,2 was bent upon to deprive the plaintiff of its legal right for award of contract. The defendant No,2 being a Government Controlled Organization is bound to protect the financial interest. Thus the suit with the following prayer:--
(i) Declare that the bids submitted by the plaintiff were the best and therefore, defendants Nos,1 and 2 are specifically liable to award of the contract to the plaintiff as invited by the defendant No,2.
(ii) Declare that defendant No,2 has acted arbitrarily, unfairly and illegally and the procedure adopted by defendant No,2 in evaluating the bids and in particular the revised bids of defendant No,3 was not fair, equitable and transparent.
(iii) Permanently restrain defendants Nos,1 and 2 from awarding the contract to defendant No,3 on the basis of the revised bids submitted by defendant No,3.
(iv) Grant mandatory injunction directing defendants Nos,1 and 2 to award contract in a fair, equitable and transparent manner on the basis of original bids submitted by the parties.
(v) Grant mandatory injunction directing defendants Nos,1 and 2 to do all further and necessary acts so as to enable the plaintiff to revise its bid submitted by defendant No,3 and/or in the alternative to re-invite the tenders afresh.
(vi) Grant mandatory injunction directing the defendants Nos,1 and 2 to give cogent reasons for not awarding contract to the plaintiff in terms of Letter of Intent, dated 5-11-1999 issued in favour of the plaintiff.
(vii) In the alternative, if this Hon'ble Court comes to the conclusion that the contract cannot be specifically awarded to the plaintiff for any lawful reason then to grant cost, compensation and damages amount to Rs,1,500,000,000 to the plaintiff against defendants Nos,1 and 2 jointly and severally.
(vii) Grant costs of the suit; and
(ix) Grant any other or better relief(s), which this Hon'ble Court deems fit and proper in favour of the plaintiff.
8. The application has been contested by defendants Nos,2 and 3 by filing separate counter- affidavits. The defendant No,2 have admitted inviting tender as maintained by the plaintiff as well as letter of intent in favour of the plaintiff but maintained that such proposal was subject to approval of the Government of Pakistan. In terms of para.13 of the Letter of Intent. This stood terminated in March, 2000. The proposal was not approved by the Government of Pakistan and bid was re-invited under directive of the Government. They have denied the allegation of ulterior motives and mala fide for delay in issuance of guidelines and pleaded that guidelines (booklet) was not issued immediately as Mr. Puri's case had gone to NAB. They have admitted that Muhammad Bashir Jan Muhammad is member of the Board of the defendantsauthority but did not participate in the meeting when the said contract was evaluated on merits. The plaintiffs proposal was conditional and plaintiff made no firm commitment regarding investment of funds, who has no experience in the field. Extension was allowed at the request of the plaintiff and other prospective biddeRs, They have also denied the allegation that the defendant No,3 has not participated in the pre-bid meeting and maintained that the guideline was purchased in the name Mapak but later made a new company and became directors and sponsors of defendant No,3. The technical and financial proposals of plaintiff were definitely not best proposal. The consultant had pointed out deficiencies. Defendant had given detailed guidelines which mention the important and relevant factors like experience, funding, etc. They have maintained that there was no need to seek clarification regarding tariff and royalty from any of the parties. Certain other technical clarifications were sought from the plaintiff and competitor. NESPAK did not recommend the plaintiff. In fact they pointed out serious deficiencies of plaintiff. However, the NESPAK suggested that plaintiff may give revised part of bid if defendant No,3 was to be entertained. The defendant authority, however, has not accepted revised part of the defendant No,3 bid and that was not the basis of evaluation and thus is irrelevant. The relevant factors were whether bids are conditional or unconditional, experience of the party and firm commitment of funds/investment. None of the factors weighed in favour of the plaintiff who in fact made futuristic uncertain plans to raise money from public through Stock Exchange and not invest its own ready money. The plaintiff has made deliberately false statement in the plaint regarding in operation of terminal and jetty. The Construction of Port Terminal and its operation is highly specialized job. The construction work on the project needs to be started as early as possible to support and boost the edible oil industry in Pakistan. The plaintiff will not suffer any loss. The balance of convenience is in favour of defendant No,2. The claim of injunction cannot be granted as plaintiff itself has made money assessment in prayer clause of its imagined loss seeking specific amount thus negating irreparable loss and need for injunction. The carrying out of public works and particularly construction cannot be stopped by injunction. The plaintiff has no experience at all in the subject field. Grant of application of plaintiff will seriously prejudice the interest of the Authority, public and the Government and delay in economic regeneration activity and subsequently result in rise in costs of project.
9. The defendant No,3 through affidavit of Muhammad Meher Alam has controverted the plea taken by the plaintiff and maintained that the plaintiff is operating storage terminal but they intend to convey the impression as if they are operating Liquid Cargo Terminal (or Jetty/Berth), which is the subject of the tender in question. This appeals to have been necessitated by them in order to prove that, contrary to the factual position., one they fulfil of the paramount conditions under clause 4.2.15 of the guidelines, which stipulates:- The project sponsors must have experience in the design construction, operation and management of Jetty and Terminal handling liquid cargoes.
10. The defendant No,3 is the only party, who fulfils the terms and conditions and stipulations of the tender in question, inter alia, following stipulations:---
(A) The condition of experience (as Sponsors of defendant No,3 FELDA Group of Companies of Malaysia own and operate jetties and terminals at Pasar Gudang Johor, Malaysia and Sabah, East Malaysia).
(B) The status of their bid is clean and unconditional, as against the plaintiff's bid which has various conditions and re-openers, rendering their bid rejectable under general norms of tendering.
(C) Financial strength, having 60% of project cost as equity guaranteed from sponsors sources, as against plaintiffs 40% equity with no guarantee as it is intended to be raised from Stock Exchange/Bank loans, etc.
(D) 40% portion of the Project cost to be met out from bank loan, duly substantiated by commitment letters of the bank whereas the plaintiff have failed to provide such commitment letter-this being one of the conditions of the tender terms.
11. The bidders have no right and/or authority to question the wisdom of the defendants Nos,1 and 2 inviting fresh tenders/bids/offeRs, One of the reasons that defendants Nos,1 and 2 did not find it appropriate to award or to sign agreement with the plaintiff is attributable to the fact of reported investigations that were being undertaken by the authorities for certain irregularities committed by the plaintiff which ultimately resulted in re-invitation of the bids. They have also denied that defendant No,3 were not represented in pre-bid conference, their case was that representative of defendant No,3 (4 Malaysian Nationals) Joint Venture Partners in defendant No,3 and 3 representatives of local sister concern-Mapak Edible Oils (Pvt.) Limited) were present in pre-bid Conference. The basic parameters/criteria for selection/acceptance of proposal also included certain conditions of the bidding like factors of "experience" and the best financial proposal (and financial strength) of the biddeRs, Mere submitting of bids does not constitute a right to a contract.
12. The authorities having evaluated bids of the parties have to take the decision on long term basis taken into consideration various factors pertaining to the business involved including the integrity and status of the parties of the bidding. They have disputed the comparison made by the plaintiff on the basis of throughput, the estimated income of defendant No,2 in shape of Royalty and Port Dues is much higher over Rs,29 Million under the proposal of defendant No,3 than the proposal of plaintiff, who have also admitted that the throughput is higher than their figures. There is no compulsion for revision of the tariff and/or royalty. The discretion exercised by the defendants is not personal but of the nation requiring minute and strenuous application of mind, wisdom, knowledge.
13. In rejoinders the allegations/pleas raised through counter-affidavits were controverted.
14. I have heard Mr. Tufail H. Ebrahim, learned counsel for the plaintiff and Messrs Muhammad Arif Khan and Ghulam Muhammad Ebrahim, learned counsel for the defendants Nos,2 and 3 respectively. Learned counsel for the plaintiff has canvassed the following points in support of the application:---
(1) That the defendant No,2 delayed the issuance of guideline to the plaintiff and their action of re- invitation, its extension of time from time to time was only to accommodate the defendant No,3, thus mala fide act of the defendant No,2.
(2) In pre-bid conference held by the authority on 8-10-2000, the defendant No,3 was not even present in the said conference.
(3) The defendant No,3 was allowed to revise its proposal whereas, the plaintiff was not given opportunity thus discriminated.
(4) The plaintiff was given bias treatment as the Chief Executive of defendant No,3 was member of the Board of defendant No,2. Thus defendant No,2 in order to appease its member, namely, Muhammad Bashir Jan Muhammad have acted unfairly, arbitrarily and mala fidely in the process of evaluation of the contract.
15. Before considering the respective contentions, it would be advantageous to refer the case-law, on Court's power of judicial review in respect of the matter involving award of contract/tender by Government or its owned or controlled authority or entity. Broadly speaking the principles are that the Government shall act fairly, reasonably, justly and not arbitrarily and in a discriminatory manner. The entire process of tendering and a subsequent award should also be transparent, fair and reasonable. In Pacific Multinational (Pvt.) Ltd. v. I.-G. Police (PLD 1992 Karachi 283), a Division Bench of this Court accepted the proposition that the State has a Constitutional obligation to act fairly even when performing administrative functions; when a party complains to 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 judicially reviewed and the Court could strike down such action, which was found to be unfair or arbitrary or discriminatory. Dadabhoy Investment (Pvt.) Ltd. v. Federation of Pakistan (PLD 1995 Karachi 33) is also relevant to this subject. The petitioners were the highest bidders and they were subsequently asked to raise the bid to the maximum reserved price. Once that was done by the petitioners, their bid was cancelled without assigning any reason. It was held that Government had the discretion to accept or reject the bid however, that discretion could only be exercised fairly, justly, reasonably and honestly. The petition could not be rejected without assigning any reason. The rejection of petitioner's bid without assigning any reason was struck down and the direction to the Government not to auction the subject property except to the petitioner: In Port Services (Pvt.) Ltd. v. Federation of Pakistan (PLD 1995 Karachi 374), another Division Bench of this Court has held that though. The Court would be reluctant to substitute its discretion with that of the authority, however, such discretion could not be exercised in an arbitrary unjust and unreasonable manner. Arif Builders and Developers v. Government of Pakistan (PLD 1997 Karachi 627) is another important decision in which a learned Single Judge of this Court has held that the Government would not have unfettered powers to deal with its properties or to award contracts, licences or other benefits and unlike other private individuals it could not arbitrarily pick and choose persons for bestowing favours Government action should be based on reasonable and rational procedure, which was nondiscriminatory and aimed at, on one hand to provide equal opportunity to eligible persons and of the other to avoid loss to exchequer, discretion vested in the State functionaries must be exercised judiciously not arbitrarily and should be based on sound principles of justice and fairness.
16. In Balochistan Construction Company v. Port Qasim Authority (2001 CLC 1412), a Division Bench of this Court after following the above judgment allowed the petition and the petitioner was allowed time to file further documents or material with the respondent to establish that it complies the four requirements mentioned by the respondent. In case the respondent finds the petitioner to be eligible, it may permit the petitioner to participate in the tender and further process the tender without delay, strictly in accordance with law, fairly, justly, reasonably and without fear or favour.
17. In Petrosin Products Pakistan (Pvt.) Ltd., Islamabad v. Federation of Pakistan (2001 YLR 2716), the Division Bench of Lahore High Court observed that it is also true that no vested right accrues to a person whose bid is not approved. The bids are usually rejected when they do not represent adequate market considerations for the State largess. However, while doing so, the Government has to act fairly and not arbitrarily. And where the Government acts arbitrarily, the cause of action arises. Reliance was palced on (i) Shir Harminder Singh Arora v. Union of India and others (AIR 1986 SC 1527), (ii) Javed Hotel Ltd. v. CDA (PLD 1994 Lahore 315), it was further observed that the Branch of the Government has to perform the judicial function i,e, the Courts have also to ensure that the discretion which is vesting in the Executive Branch of the Government was exercised fairly and not arbitrarily and wherever the discretion by the Executive Branch of the Government smacks of arbitrariness, discrimination or unfairness, a need arises for judicial review of administrative actions. The discretion should fulfil the following requirements (1) open plans; (ii) open policy statement, (iii) open rules; (iv) open finding; (v) open reasons; (vi) open precedent and fair informal procedure.
18. In Pak Shaheen Container Services (Pvt.) Ltd. v. Trustees of Port of Karachi and others (PLD 2001 Karachi 30), after reviewing the case-law, the learned Single Judge of this Court summarized the duties of the administrative organ of the State and its functionaries as follows:--
(i) It is duty of the State which includes a Department of the Government or a Statutory Corporation to act fairly even while performing an administrative function.
(ii) The functionary must not act in the unfair, arbitrary or in discriminatory manner while awarding contract to one party or the other.
(iii) In a civilized country and specially in a democratic society a public functionary cannot lay down arbitrary and capricious standards for the choice of persons with whom alone it will deal.
(iv) The discretionary power of the Government/ Department in the matter of grant of jobs, contracts, quotas, licences, etc. Must be based upon rational, relevant, reasonable and non- discriminatory standards and norms.
(v) In case the Government/Department/Statutory Body acts arbitrarily, discriminately, with malice or in an unfair and unreasonable manner, the superior Cc arts would have the power to interfere, strike down the action and rectify the impropriety unless it is established that the departure from the standard or norm was not arbitrary but was based upon valid reasons acceptable in and by civilized democratic societies.
19. I may point out that the position in Indian Jurisdiction is somewhat similar. The Supreme Court of India in Ramana Dayaram Shetty v. International Airport Authority of India (AIR 1979 SC 1628) has observed as follows:--- "It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or guaranteeing other forms of largess, the Government cannot act arbitrarily at its sweet will and like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norm, which is not arbitrary, irrational or irrelevant. The discretion of the Government in the matter of grant of largess including award of jobs, contracts, quotas, licences, etc., must be confined and structured by rational, relevant and non-discriminatory standard or norm and if the Government deviates from such standard or norm in any particular case or cases, the action of the Government would be liable to be struck down unless it can be shown by the Government that the departure was not arbitrary but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory."
20. In Sterling Computers (Pvt.) Ltd. v. M & N Publication (Pvt.) Ltd. (AIR 1996 SC 51), the Indian Supreme Court while dilating upon the powers of judicial review in this area observed that the Court is primarily concerned with any infirmity in the decision-making process and that by way of judicial review the Court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State as the Court has inherent limitation on the scope of such enquiry, but at the same time the Court can examine whether the decision-making process was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution, guaranteeing fundamental rights and further observed as follows:-- "If the contract has been entered into without ignoring the procedure, which can be said to be basic in nature and after objective consideration of different options available taking into account the interest of the State and the public, then the Court cannot act as an appellate authority by substituting its opinion in respect of selection made for entering into such contract. But once the procedure adopted by an authority for purpose of entering into a contract is held to be against the mandate of Article 14 of the Constitution, the Court cannot ignore such action saying that the authorities concerned must have some latitude or liberty in contractual matters to encroachment on the exclusive right of the executive to take such decision.
21. In TATA Cellular v. Union of India (1994) 6 Supreme Court Cases 651), the Supreme Court of India held 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, there are inherent limitations in exercise of that power of judicial review. 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 that power will be struck down. Judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide matters whether contractual or political in nature or issues of social policy, thus they are not essentially justiciable and the need to remedy any unfairness. Such an unfairness is set right by judicial review, which is exercised to rein in any unbridled executive functioning. The restraint has two contemporary manifestations. One is the ambit of judicial intervention; the other covers the scope of the Court's ability to quash an administrative decision on its merits. These restraints bear the hallmarks of judicial control over administrative action. Judicial review is concerned with reviewing not the merits of the decision in support of which the application for judicial review is made, but the decision-making process itself. It is thus different from an appeal.
22. When hearing an appeal, the Court is concerned with the merits of the decision under appeal.
23. Since the power of judicial review is not an appeal from the decision, the Court cannot substitute its own decision. Apart from the fact that the Court is hardly equipped to do so, it would not be desirable either. Where the selection or rejection is arbitrary, certainly the Court would interfere. It is not the function of a Judge to act as a super board, or with the zeal of the pedantic schoolmaster substituting its judgment for that of the administrator. The duty of the Court is thus to confine itself to the question of legality. Its concern should be:--
(1) Whether a decision-making authority exceeded its powers?
(2) committed an error of law;
(3) committed a breach of the rules of natural justice;
(4) reached a decision which no reasonable Tribunal would have reached, or
(5) abused its poweRs, Shortly put, then grounds upon which an administrative action is subject to control by judicial review can be classified as under:---
(i) Illegality: This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it.
(ii) Irrationality, namely, Wedsbury unreasonableness. It applies to a decision which is of outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at. The decision is such that no authority properly directing itself on the relevant law and acting reasonably could...
(iii) Procedural impropriety.
24. The test to be adopted is that the Court, should, "consider whether something has gone wrong of a nature and degree which requires its intervention."
25. The principles deducible are:--
(2) The modern trend points to judicial restraint in administrative action.
(3) The Court does not sit as a Court of Appeal but merely reviews the manner in which the decision was made.
(4) The Court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.
26. There is no cavil with all of the above. The defendant No,2 is a statutory body performing functions under the Port Qasim Authority Act. Being a State functionary, the defendant No,3 in awarding contracts must act fairly, reasonably; honestly and justly. The Court cannot substitute its opinion with that of the State functionary, yet it certainly has the power to judicially review administrative actions to check their reasonableness:--
(2) Must be made at the proper place.
(3) Must conform to the terms of obligation.
(4) Must be made at the proper time.
(5) Must be made in the proper form.
(6) The person by whom the tender is made must be able and willing to perform his obligations.
(7) There must be reasonable opportunity for inspection.
(8) Tender must be made to the proper person.
(9) It must be of full amount.
27. Now reverting to the contentions raised by the plaintiff s counsel, while elaborating first contention, contended that the defendant No, 3 in spite of letter of intent, issued in favour of the plaintiff has not given the contract for the construction of the liquid cargo terminal to the plaintiff and re-invited the tender only to accommodate the defendant No,3 and also delayed the issuance of tender documents.
28. Mr. Muhammad Arif Khan, learned counsel for the defendant No,2 controverted these facts by maintaining that no doubt the letter of intent was issued to the plaintiff, the proposal was subject to the approval of the defendant No,1 and Government has not approved the proposal of the plaintiff and directed the defendant No,3 to re-invite the tender, wherein the plaintiff also participated as such, the plaintiff cannot raise the plea of mala fide or unfairness on the part of the defendant No,2. Mr. Muhammad Arif Khan contended that the bid documents were issued to the plaintiff with delay but before the date of tender and delay was due to the plaintiffs own fault as Mr. Puri was negotiating with National Accountability Bureau and referred the letter, dated 15-2-2000, Ministry of Communication, whereby the approval of CCOI has been withdrawn due to action taken by the National Accountability Bureau against Messrs I. Puri Terminal Limited.
29. Mr. Tufail H. Ebrahim, learned counsel for the plaintiff has not disputed that Messrs Pqri was tangled with National Accountability Bureau and a settlement was reached between the National Accountability Bureau and Messrs Puri by bargain but his contention was that the plaintiff is a company and was not involved in any matter of accountability. The fact cannot be ignored that Mr. Puri is not only the Chief Executive of the plaintiff but also of plaintiffs group of companies.
30. Therefore, the contention of Mr. Tufail. H. Ebrahim has no ground that the non-grant of the contract to the plaintiff by the defendant No,3 and delay in issuance of tender of documents was with mala fide intention.
31. The second ground has been urged by Mr. Tufail H. Ebrahim was that the extension was granted from time to time only to accommodate the defendant No,3, who was under the process of incorporation, has also been disputed by the defendantscounsel by referring the minutes of pre- bid meeting and contended that on the request of the bidders, the submission of proposal was deferred by the end of current year in the meeting held on 10-8-2001. Para. 20 of the minutes was referred by Mr. Muhammad Arif Khan, who had contended that plaintiff deliberately has not given the full text of Annexure C (minutes of the meeting), para. 20 at page 4 of the minutes of the meeting, dated 10-8-2001, the following minutes were recorded:--- "The bidders were of the opinion that submission of proposal may be deferred by end of current year Government of Pakistan has not yet announced its agriculture policies. Incentives are being offered to the farmers to enhance the local production of edible oil. The bidder would like to have Government of Pakistan policy about edible oil announced before they submit a comprehensive proposal. The bidders requested that submission of proposal for LCT may be deferred by two-three months. PQA informed that it will consider the biddersrequest and communicate decision of the Authority much before the opening date."
32. From the perusal of the minutes referred to above, the time was extended at the request of the bidders as the Government of Pakistan had not yet announced its agriculture policies, wherein incentive was excepted to the farmers to enhance the local production of edible oil. Therefore, the plea raised on behalf of the plaintiff that extension of time was only to accommodate the stand falsified and it may be observed that the plaintiff though annexed the minutes of the meeting (Annexure C) but purposely avoided to place the full text of the meeting so that the reason for extension could not be brought to the notice of the Court.
33. The third ground canvassed by the learned counsel for the plaintiff was that Muhammad Bashir Jan Muhammad, the Chief Executive of defendant No,2 is on the Board of defendant No,2 and who influences on the decision of Board for the grant of project to the defendant No,3. The plaintiff and defendant No,3 both have vehemently denied that Muhammad Bashir Jan Muhammad has influenced the Board and maintained that Muhammad Bashir Jan Muhammad is the Chief Executive/Director of the defendant No,3 but has not participated in the process of evaluation or grant of tender and referred the minutes recorded by the Board. Annexure D-2/5 has been referred, which was held on 8-9-2001. Para. 3 of the minutes contains that Bashir Jan Muhammad PQA did not attend the Board meeting for this particular item as his firm has Joint Venture in FWQ with FELDA, Malaysia, whose bid was being considered against this agenda.
34. There is no dispute that Bashir Jan Muhammad is a member of the Board of the Authority, whose firm has interest in defendant No,3 for the reasons that Joint Venture of Messrs FELDA Malaysa and Messrs Westbury Pakistan Pvt. Limited Pakistan in 65% and 35%.
35. Now the question is whether Bashir Jan Muhammad's presence on the Board, who has not participated in the process of the evaluation of the tender the grant thereof would be a ground of disqualification of the defendant No,3 from participating or grant of tender would be a favour.
36. Similar ground of attack of bias was taken in TATA Cellular v. Union of India (1994) 6 Supreme Court Cases 651) that B.R. Nair, Member of Production in the Telecom Commission, who was Member (Service) participated in the process. The note of Mr. Nair is, dated 21-5-1992. He agreed with the recommendation of TEC that four firms which had some deficiencies should be included in the short cut. They were BPL Systems and Projects, Mobile Telecom, Mobile Communications and Indian Cellular. Therefore, BPL was approved by M. Nair. Admittedly, Mr. Nair's son is employed in BPL Systems and Projects. The High Court concluded: "We do not think in a case like this the mere fact that Nair was part of machinery to make selection was enough to show that there could be reasonable suspicion or real likelihood of bias in favour of BPL."
37. The Supreme Court viewed that Mr. Nair's involvement did not vitiate the selection on the ground of bias as Mr. Nair was not a decision-maker at all. He was one of the recommending authorities. As a Director-General of Communication as Telecom Authority his involvement in the approval and selection of tender was indispensable. Therefore, Mr.. B.R. Nair could not disassociate himself from the decision-making process. It is in these circumstances the High Court rightly applied the doctrine of necessity. This Court in Charan Lal Sahu v. Union of India, dealt with the doctrine in the following words:-- The question whether there is scope for the Union of India being responsible or liable as joint tortfeasor is a difficult and different question. But even assuming that it was possible that the Central Government might be liable in a case of this nature, the learned Attorney-General was right in contending that it was only proper that the Central Government should be able and authorized to represent the victims. In such a situation, there will be no scope of the violation of the principle of natural justice. The doctrine of necessity would be applicable in a situation of this nature. The doctrine has been elaborated,. In Halsbury's Laws of England, 4th Edn., page .89, paragraph 73, where it was reiterated that even if all the members of the Tribunal competent to determine a matter were subject to disqualification, they might be authorized and obliged to hear that matter by virtue of the operation of the common law doctrine of necessity. An adjudicator who is subject to disqualification on the ground of bias or interest in the matter which he has to decide may in certain circumstances be required to adjudicate if there is no other person who is competent or authorized to be adjudicator or if a quorum cannot be formed without him or if no other competent Tribunal can be constituted."
38. In the present case as recorded above, Bashir Jan Muhammad, who has interest in the defendant No,3 had himself disassociated from the process, therefore, the plea of bias cannot be taken to vitiate the process of tender.
39. Much emphasis has been given by the plaintiff that the bid of the plaintiff was financially and technically were sound and responsive. This has been disputed by both the counsel for the defendants, who have contended before me that the bid of the plaintiff was conditional and the plaintiffs financial position was also not sound, as such, their bid was not accepted by the authority.
40. The consultant, namely, NESPAK had evaluated the bids of plaintiff and the defendant No,3. The NESPAK in its report, para. 3.5 has noted that the financial proposal of the plaintiff listed following factors, which in an adverse circumstance will affect the project, which reads as folrows:-- 3.5. Project Cost Re-openers: PT, in their financial proposal have listed following factors which in adverse circumstances, will affect the Project Cost:
(a) Any change in the proposed location of the Project site.
(b) Delay in issue of LOI beyond the validity date and finalization of implementation agreements delaying the Project Schedule.
(c) Delay in allocation of the land and water front area by PQA.
(d) Any charges/costs paid by IPT for the work and services which falls in PQA's scope and for which PQA is responsible to carry out free of charge.
(e) Delay in providing utilities and services by PQA resulting in additional costs.
(f) Revision in rates of changes and facilities to be provided by PQA and Government Agencies.
(g) Levy of additional taxes, duties or fee by the Federal Government, Sindh Provincial Government, Local Authorities or Port Qasim Authority or revision of rates currently applicable in respect of duties, taxes and fees.
(h) Levy of import duties or taxes of temporary import of construction equipment.
(i) Any change in the design basis and/or scope of the Project by PQA.
(j) Changes or additional requirement by PQA and Government authorities of any Environmental Protection facilities.
(k) Non-provision or navigational aids, pollution control equipment pilotage and tug boats, fire fighting and infrastructure facilities by PQA.
(1) Any change due to revision upon subsequent review by Sponsor's Consultants, which may affect the cost.
(m) Any addition in the dredging requirement. Besides regarding cost is dependant on availability of dredging contractor's equipment in the vicinity.
(n) Final project cost depends on amount and terms of the loans. Interest during construction depends on actual amount and disbursement schedule.
41. In addition, the estimates are based on assumption that PQA will provide following services and facilities as contained in the guidelines:--
(a) Water of potable quality as specified in the Technical Proposal pipe lined to the Project site for construction phase as well as for the operating facility.
42. (b)Electric Power at 400 V at the project site limit for the construction phase as well as the operating facility.
(c) Fire fighting services during construction and allow extension of fire water main to the facility.
43. (d)Infrastructure services.
(e) Telephone lines.
(f) Deepening and widening of inner channel outer channel, vessel manoeuvring area and the turning basin and maintaining these at the required depths, capable of handling up to 35,000 DWT oil and molasses tankeRs, (g)Any additional navigation aids and night navigational facilities.
44. (h)Pilotage and tug boat facilities during the operation of the terminal and terminal facilities.
(i) Berthing facilities at Marginal Wharves for unloading the plant and machinery, construction equipments and material for the Project.
45. 0) Site for construction yard and storage/lay down areas for the project material. Drainage and Sewerage facility during construction period.
(k) Expeditious approval of plants and drawings (within fifteen days) for the Project.
(1) Free access to IPT, their employees and agents, contractors, their work force, equipment and material for the construction work of the Project at the site.
(m) Environment and Pollution Control Equipment, if required, will be provided by PQA.
46. Further, following factors have been quoted in the proposal which may change the tariff structure: Interest rate: Change in royalty to PQA Change in rate and/or imposition of new duties, taxes or levies by the Government.
47. Change in the Project Capital Cost Estimates.
48. Responding to the post bid clarification sought to above condition, IPT termed them as reservations/ exceptions included as normal practice with intention to avoid dispute in case of any significant deviations.
49. FWQ's proposal does not provide for any specific, re-openers for project costs.
50. 4.0 Conclusion and recommendations 4.1. Outstanding issues to be resolved.
51. 4.2. Technical proposal.
52. The technical proposals of both the bidders are generally in compliance with PQA's Guidelines.
53. However, following issues, as noted under para. 3.2.2 needs to be resolved as proposed hereunder.
54. IPT proposals:
(a) It is proposed to install second MLA when the thruput of molasses reaches 0.25 million tons/year. However, the proposal envisages an increase in the annual thruput by 0.28 million tons during 30 years project period for all liquid cargoes. Thus it seems unlikely that the second MLA will be installed during the project lease period of 30 yeaRs, As such, it is recommended that the proposal be based on installation of one MLA only and the Project Cost may be amended accordingly. Alternatively, in case of the cost of two MLAs are retained in the Project Cost, time frame for second MLA may be established irrespective of increase in thruput.
(b) The proposal envisages initially two mooring dolphins. However, the Sponsors have agreed to install four dolphins, if required during detail design phase, without increasing the Project Cost.
55. It may be noted that NESPAK's design is based on four mooring dolphines which we feel are essentially required to handle complete range of tankers from 6000 DWT to 35,000 DWT.
56. Hence it may be advisable to instruct IPT to base their proposal on four mooring dolphins which will facilitate operation of the Terminal.
(c) The Group for its (subsidiaries) do not possess experience in operation and management of the Jetty/Terminal. It has been proposed to counter the handicap by hiring services of expatriates to develop necessary procedures. If agreeable to PQA, necessary details regarding CV of expatriates, duration, training programme etc. Must be finalized to issuance of LOI.
57. FWQ Proposal:
(a) FWQ have proposed an alternate arrangement to MLA, comprising of marine hydraulic crane mounted an elevated platform. This arrangement as claimed by FWQ has been functioning efficiently in Malaysia. However, it is difficult at present to fully evaluate this arrangement due to non-availability of details.
58. FWQ have agreed to install MLA if insisted by PQA. In this regard, it is PQA's Consultant will be final and binding regarding the option to opt for MLA or proposed marine crane arrangement.
(b) FWQ have proposed to construct four interchanges at various locations to facilitate connection of tank farm operations pipelines while the exact location can be finalized during detail design stage. PQA may review and confirm their agreement on proposed locations. In addition, both the bidders have suggested to allow handling of derivatives and by-products of edible oil and molasses, PQA will have to resolve this issue with other terminal operators before issue of LOI.
59. 4.1.2. Financial proposal: Both the bidders have submitted detailed financial proposals and have responded to queries on financial parameters of their proposals. Based on evaluation of their proposal and response to post bid clarifications, it has been observed that following issues need to be discussed and resolved prior to arriving at final decision. IPT proposal:
(a) As discussed under para. 3.3.1 the Project Cost and cost of construction needs to be negotiated and revised downward.
(b) The interest rate of 12% on FCY loan seems to be on the higher side.
(c) An amount of USD 2.70 million has been provided in the 16th year for major refurbishment of the terminal. The provision seems to be on the higher side, particularly when the protect designed for 30 years project life.
(d) The bidder may be advised to remove all re-openers listed under para. 4.6. Further, the provisions of various services and utilities (by PQA) may be reviewed and resolved keeping in view the possibility/availability of the same with PQA.
60. The Board on detailed presentation by the bidders in the meeting held on 8-9-2001 recorded the following minutes. Paras. 5, 6 and 7 in respect of the plaintiff and in respect of the defendant No, 3 paras, 9, 10 and 11 and reached the conclusion para.. 15 and decision para. 17:-- "5. On a query from the Board, they informed that they do not possess any past experience in design, construction, operation and management of jetties. They have experience only in operation of tank farm terminal for storage and distribution of edible oil as land side which they are running at PQA since 1997, with storage capacity of 54,000 m. Tones. However, they explained that qualified and experienced personnel would be engaged by them in this regard.
6. On another query regarding their equity in financing the project, they informed that they will float the shares to the general public through stock exchange and also approach financial institutions as mentioned in the proposal and in case they do not succeed, they will arrange finances through their own sources. They, however, cannot disclose such sources during the meeting. On another query regarding having any commitment from bank to provide funds. Messrs I Puri informed that they will get in due course of time.
7. They further apprised that earlier proposal was approved by PQA. However, it could not receive Government's approval. They further explained that they have quoted lower tariffs to attract more business of the port and offered higher royalty to PQA which should be considered basis for acceptance of their guarantee of the volume of cargo. They have mentioned minimum quantity of cargo and shall further improve it.
9. Mr. Rasheed Jan Muhammad alongwith team of FWQ Enterprises (Pvt.) Ltd. Gave detailed presentation of their technical and financial proposals submitted to PQA and replied various queries similar to those which were put to IPTL by the Board.
10. He apprised the Board that FWQ is a joint venture of FELDA Palm Industries, Malaysia and Westbury (Pvt.) Ltd. Pakistan having 65% and 35% shares respectively.
11. They informed that presently 90% of total edible oil imports in the country is handled at PQA, out of which 45% is being handled by their joint venture company. Their group is handling edible oil and molasses at both the Ports to the tune of 1.08 million tones annually. Messrs FWQ further apprised that nobody can provide throughput guarantees. However, the volume of cargo projected by them is achievable and based on very conservative estimates.
12. They further apprised the Board that companies of their joint venture partners have vast experience in operation of Liquid Cargo Terminals i,e, operation of Liquid Cargo Terminal at Sabah, Malaysia. They informed that FELDA has also vast area under cultivation in Malaysia for oil palm and rubber commodities.
13. The Board after going through details of the proposals, discussions and replies of queries of bidders observed that:--
(I) Sponors and subscribers to FWQ. Joint Venture have experience in design, construction, operation and maintenance of such terminals. This was a mandatory requirement as per PQA guidelines whereas Messrs I Puri do not fulfil this requirement. They possess experience only in handling of storage facilities at land in PQA.
(II) Messrs FWQ have submitted proposal involving FELDA Malaysia's participation to the tune of 65% of the project cost as foreign investment and WESTBURY Pakistan's as local investment 35% of the project cost with 60% equity guaranteed from sponsor's sources and 40% loan committed by the banks. This shows the confidence of the investors in the project. They have also submitted confirmation letter from bank whereas Messrs I. Puri are putting in 40% equity and that too after envisaging raising funds partly from public through Stock Exchange (25%) and financial institutions (24%). They have not produced requisite confirmation letter from the bankeRs,
(III) Messrs I Puri's proposal contains many conditions imposing liability on PQA for various works and supports like channel dredging etc. The project cost was also made subject to revision by sponsor's consultants over whom PQA could not have any authority or check. Their conditions could have serious implications on the project cost, tariff and royalty which are thus not finally determinable on the basis of present proposal FWQ on the other hand, have not laid any such conditions.
17. Decision:
(i) It was decided to recommend to Government of Pakistan for according approval of the Competent Authority for award of the project of Establishment of Liquid Cargo Terminal on BOT Basis at a cost of USS 11.4 to FWQ a joint, venture of FELDA Malaysia and WESTBURY (Pvt.) Ltd.
61. Pakistan.
(ii) Tariff and royalty shall be USS 2.00 and 5% respectively as finally offered by them.
62. It may be pointed out that liquid cargo terminal on Built, Operate and Transfer (BOT) basis has to be established for which the sponsors must be of sound financial position. The plaintiff though claimed that its financial position is sound. The plaintiff was represented by none other than Irfan Puri, who gave reply to a query regarding their in financing the project, they informed that they will float the shares to the general public through stock exchange and also will approach the financial institutions as mentioned in the proposal and in case they do not succeed, they will arrange finances through their own sources. They could not disclose such sources during the meeting. On query regarding having any commitment from banks to provide funds, Messrs I Puri informed that they will get it in due course of time, whereas, financial status regarding defendant No,3 entire foreign exchange component 65% of the project costs to be arranged by FELDA Malaysia and local component to be arranged by WESTBURY Pakistan. They have also produced letters from banks guaranteeing to provide required loan and thereafter does not contain any condition.
63. ' As already observed that the tender must be , unconditional and the person by whom the tender is made I must be able and willing to perform his obligations. In the present ,case, the plaintiffs tender is conditional though the counsel for the plaintiff contended that such are "reservation" and "exception". The expression "exception" means operates to take something out of thing granted which would otherwise pass or be included, according to the Black's Law Dictionary "reservation" a clause in a deed or other instrument of conveyance by which the grantor creates, and reserves to himself, some right, interest, or profit in the estate granted, which had no previous existence as such, but is first called into being by the instrument reserving it, "Reservation" occurs where granting cause of the deed operates of exclude a portion of that which would otherwise pass to the grantee by the description in the deed and reserves" that portion unto the grantor The reservation may be temporary or permanent. Therefore, the connotation "reservation" and "exception" would amount to condition, therefore, the tender by the plaintiff cannot be an unconditional and from their own documents, their financial status is not sound. Learned counsel for the plaintiff tried to argue that plaintiff can arrange the finance from the market. Such plea if accepted would putting the project to uncertainty, which is on "BOT" basis, the party's financial condition must be sound.
64. In Javed Hotel (Pvt.) Ltd. v. C.D.A. (PLD 1994 Lahore 315), learned Single Judge of the Lahore High Court after extensively reviewing the law on the subject had come to the conclusion that the highest bidder could not have a vested right to have his bid accepted, however, this bid could not be rejected arbitrarily without considering the documents given by him.
65. ' In the light of the dictum referred to above on the examination of the plaintiff's case whose bid is a conditional and has no sound financial status and depending on finance for Project by loathing of shares through stock exchange and borrowing from the market, it cannot be argued that the plaintiff has a case for interference in executive power/order. The NESPAK in detail examined the proposal of the plaintiff on the criteria laid down in tender documents its financial and technical as well as expert, etc. All these factors were again examined by the Board of defendant. In a situation like the present one when the evaluation of proposal was termed on the basis of willing information provided by the contesting parties. The personal hearing at the every stage of the examination of those proposals was also done, one by NESPAK and another by the Board. Thus it is not a case (1) where a decision-making authority exceeded its power, (2) committed an error of law, (3) committed a breach of rules of natural justice, (4) reached a decision which no reasonable person/authority would have reached. Therefore, I am of the view that the plaintiff has failed to make out a prima facie case for grant of injunction, nor the balance of convenience lies in favour of the grant of injunction. The public project would be put in jeopardy for considerable period of time, during which the possibility excavation of costs cannot be ruled out. The plaintiff itself has quantified the damages, therefore, the plea of irreparable loss is not available in this case.
66. As consequence of the above discussion, I am of the view that the application has no merits, the same is dismissed, however, with no order as to costs. Interim order passed on 2-11-2001 is hereby vacated.