1993 M L D 1112

[Karachi]
Before Syed Haider Ali Pirzada and Mukhtar Ahmed Junejo, JJ
Haji GHULAM MUHAMMAD SOOMRO---Petitioner
versus
KARACHI METROPOLITAN CORPORATION through its Mayor and
another---Respondents
Constitutional Petition No.D-1228 of 1991, decided on 27th June, 1992.
(a) Sindh Local Government Ordinance (XII of 1979)---
----Ss.45 & 51(8)---Constitution of Pakistan (1973), Art.199---Collection of fee on behalf of
Metropolitan Corporation on the cattle imported for sale--Petitioner being admittedly the highest
bidder was called upon to deposit bid amount and other ancillary amounts, which he did---Mayor
of Corporation refused to hand over the contract to petitioner---Validity---Cumulative effect of
all such facts was that petitioner had acquired a legal and vested right for his bid being
considered for approval by the appropriate body and not to be guillotined under verbal orders of
the Mayor, whose only duty was to report the matter to the concerned body (K.M.C. Council) in
terms of S.45(2)(b), Sindh. Local Government Ordinance, 1979 which was to be done after
execution of the agreement---Petitioner had, thus, the legal right to insist for execution of
agreement before his bid was approved by the concerned body (K.M.C. Council).
M/s. Abdullah & Co v. The Province of Sindh and others 1992 MLD 293; Commissioner of
Income-tax, Central Zone "C" v. M/s. Muhammad Amin- Muhammad Bashir Limited 1990 PTD
151; Ubaidullah and another v. Municipal Committee, Chiniot and another 1992 MLD 135;
Munshi Muhammad and another v. Faizanul Haq and another 1971 SCMR 533; Rahmat Ali and
others v. The Revenue Board, West Pakistan, Lahore and another 1973 SCMR 342; Moinuddin
v. Negotiating Committee for Disinvestment of AKMIDC Units, Muzaffarabad and others PLD
1987 SC (AJ&K) 99; Fawwad & Fareen Enterprises Limited v. Director of Industries,
Government of Sindh, Karachi and others PLD 1983 Kar. 340; Karachi Municipal Corporation v.
Moosa M. Adam and others PLD 1972 Kar. 571; Dr.
Fazal Din v. Municipal Committee, Lyallpur PLD 1956 Lah. 916 and Dr. Azeem Shad v.
Municipal Committee, Multan PLD 1968 Lah. 1419 ref.
(b) Locus poenitentiae---
----Statutory and executive authorities have locus poentientiae to recall an order only if no
effective step had been taken in implementation thereof.---[Administrative decision].
Ch. Muhammad Iqbal for Petitioner.
Yasin Mayani for Respondents.
Dates of hearing: 25th and 26th February, 1992.
JUDGMENT
MUKHTAR AHMED JUNEJO, J.---Petitioner Haji Ghulam Muhammad Soomro has invoked
Constitutional jurisdiction of this Court, against refusal by the Mayor Karachi Metropolitan
Corporation (K.M.C.) to hand over to him the contract for collection of fee on cattle imported for
sale in the cattle `Piries' at Landhi and Malir for the year 1991-92 ending with 30-6-1992.

According to the petition and the counter-affidavit filed by Ashiq Rauf Chohan, Assistant
Accounts Officer, an open auction was held by the Director Health Services, K.M.C. (respondent
No.2) on 24-9-1991 inter alia for awarding contract for collection of fee on behalf of the K.M.C.
on the cattle imported for sale at cattle `Piri' Landhi and at cattle `Piri' Malir Karachi for the year
1991-92 (1-10-1991 to 30-6-1992). Petitioner Haji Ghulam Muhammad as one of the
participants in the open auction, gave highest bid of Rs.5,50,000 for being granted the contract to
collect fee on cattle imported for sale in the cattle `Piri' Landhi and in the cattle `Piri' Malir,
Karachi. He was adjudged as the highest bidder and he was called upon to deposit bid amount
and other ancillary amounts. In response the petitioner deposited in account of the K-M.C. with
bankers of K.M.C. Rs.2,00,000 on 25-9-1991 and Rs.3,50,000 on 30-9-1991 and Rs.16,500 as
advance income-tax on 30-9-19991. These facts were not disputed. It is also an admitted position
that the petitioner was issued the impugned fetter dated 30-9-1991 by the respondent No.2. Said
letter reads as below:
"As per verbal order of the Mayor, Karachi it is to inform you that the above-cited
contract cannot be handed over to you till further orders."
Case of the petitioner was that after signing of the terms and conditions of the contract by the
parties and after completion of all the formalities, no powers were vesting in the K.M.C.
(respondent No.l) to cancel the contract and that the Mayor K.M.C. could not have passed orders
depriving the petitioner of his lawful right and as such the impugned order passed by the Mayor
was illegal, unlawful, mala fide, arbitrary and unjustified and it was violative of the terms and
conditions settled between the parties.
Case of the respondents, as per the counter-affidavit filed on their behalf by Ashiq Rauf Chohan
was, that the petitioner was provisionally adjudged as highest bidder of the contract in question
and hence he was called upon to deposit bid amount and other ancillary amounts, but the final
approval was to be accorded by the K.M.C. Council. That pending final approval, the matter
was, placed before the Mayor K.M.C. who had passed the impugned order. Present petition was
challenged to be premature because the matter is yet to be referred to the K.M.C. Council. It was
added that in case the petitioner's bid was accepted by K.M.C. Council a proper agreement
would be drawn and executed between the parties, and thereafter the petitioner would be
inducted into the possession and authorised to collect the fee in question for the remaining period
till 30-6-1992:
Mr. Chaudhari Muhammad Iqbal, Advocate was heard for the petitioner, while Mr. Yasin
Kiayani, Advocate was heard for the respondents.
Mr. Ch. M. Iqbal learned counsel for the petitioner referred to the terms and conditions of the
contract (copy Annexure `H') and argued that aforesaid terms and conditions of the contract had
culminated into a legal contract after deposit of bid money by the petitioner. Learned counsel for
the petitioner referred to the provisions contained in section 45 of the Sindh Local Government
Ordinance, 1979 (hereafter to be mentioned as the Ordinance) and argued that it was statutory
duty of the Mayor to report the matter to the K.M.C. Council, about the highest bid having been
given by the petitioner. It was also argued that the Mayor had no power or authority to pre-empt
rejection of petitioner's highest bid by the Council or to decline handing over of a contract to the
highest bidder. It was next argued that if the K.M.C. Council had not accepted petitioner's
highest bid it had to obtain approval in writing of the Government of Sindh for non-acceptance
of the highest bid. Reference was made to subsection (8) of section 51 of the Ordinance about
communication of Council's decisions to the Government of Sindh. Reference was also made to
Sindh Councils-(Contract) Rules, 1980. In support learned counsel for the petitioner cited the
cases of:
(i) M/s. Abdullah & Co v. The Province of Sindh and others 1992 MLD 293.
(ii) Commissioner of Income Tax, Central Zone "C" v. M/s. Muhammad Amin -
Muhammad Bashir Limited 1990 PTD 151.
(iii) Ubaidullah and another v. Municipal Committee, Chiniot and another 1992 MLD 135.
Mr. M. Yasin Kayani learned counsel for the respondents argued that the terms and conditions
mentioned in the Annexure `H' Cannot be enforced against statutory provisions contained in the
Ordinance. It was further argued that mere fact that the petitioner was adjudged to be the highest
bidder, did not entitle him to claim enforcement of the contract for which the bids were invited.
That the highest bid cannot circumvent the power of competent authority to accept or reject such
bid. It was next argued that the highest bid given by the petitioner had no legal sanctity unless it
was approved by the K.M.C. Council. K.M.C. Council was said to have been delegated the
powers exercisable by the Sindh Government under section 45(4) of the Ordinance. In support
learned counsel for the respondents cited the cases of:
(i) Munshi Muhammad and-another v. Faizanul Haq and another 1971 SCMR 533.
(ii) Rahmat Ali and others v. The Revenue Board West Pakistan, Lahore and another 1973
SCMR 342.
(iii) Moinuddin v. Negotiating Committee for Disinvestment of AKMIDC Units,
Muzaffarabad and others PLD 1987 SC (AJ&K) 99.
(iv) Fawwad & Fareen Enterprises Limited v. Director of Industries Government of Sindh,
Karachi and others PLD 1983 Kar. 340.
(v) Karachi Municipal Corporation v. Moosa M. Adam and others PLD 1972 Kar. 571.
(vi) Dr. Fazal Din v. Municipal Committee, Lyallpur PLD 1956 Lah. 916.
(vii) Dr. Azeem Shad v. Municipal Committee, Multan PLD 1968 Lah. 1419.
Admittedly petitioner participated in the public auction held on
24-9-1991 and gave highest bid for being given contract for collection of fee on the cattle
imported for sale at cattle `Piri' Landhi and at cattle `Piri' Malir for the year 1991-92 (1-10-1991
to 30-6-1992). It is also an admitted position that the petitioner was adjudged as the highest
bidder by the authority conducting the auction. Till then the petitioner was not clothed with any
right in subject-matter of the contract, as held in the case of Munshi Muhammad and another
1971 SCMR 533. In the instant case there was something more than mere acceptance of the
highest bid. The petitioner was called upon to deposit bid money and other ancillary amounts in
pursuance of being adjudged as highest bidder and in anticipation of final approval of his bid. In
consequence of such direction the petitioner deposited with bankers of the K.M.C. Rs.2,00,000
on 25-9-1991 and Rs.3,50,000 on 30-9-1991. He also deposited in account of the K.M.C. on
30-9-1991 Rs.16,500 as advance income-tax. Photo copies of the receipts evidencing said
payments having been made by the petitioner, have been filed in the case and their authenticity
has not been challenged. Cumulative effect of all these facts is that the petitioner acquired a legal
and a vested right for his bid being considered for approval by the K.M.C. Council and not to be
guillotined under verbal orders of the Mayor. The only duty of the Mayor was to report the
matter to the K.M.C. Council in terms of clause A (b) of subsection (2) of section 45 of the
Ordinance. This was to be done after execution of the contract. In other words the petitioner had
legal right to insist for execution of the agreement before his bid was approved by the K.M.C.
Council. Admittedly the bid was neither approved nor disapproved by the' K.M.C. Council. It
was not mentioned in the counter-affidavit filed on behalf of the respondents if the bid given by
the petitioner was at all reported to the K.M.C. Council in terms of clause (b) of subsection (2) of
section 45 of the Ordinance. Had the highest bid given by the petitioner been not accepted by the
K.M.C. Council, the matter would have been reported to the Government of Sindh within ten
days as per section 51(8) of the Ordinance and approval of the Sindh Government would have
been obtained as per the proviso below subsection (4) of section 45 of the Ordinance. Neither the
matter was reported to the Government of Sindh nor approval of that Government was obtained.
Even if the K.M.C. Council was delegated the powers exercisable by the Government of; Sindh
under section 45(4) of the Ordinance, the reasons for not accepting the highest bid, were required
to be given. It is open to question if the powers exercisable by the Government of Sindh under
section 45(4) of the Ordinance, can be exercised by the K.M.C. Council for the purposes of
compliance with the proviso below subsection (4) of section 45 of the Ordinance, because in
terms of said proviso K.M.C. Council and the Government are two different functionaries with
different powers. An anomalous position would be created if K.M.C. Council, which is not
competent to reject highest bid without approval of the Provincial Government, is expected to
give approval to its own act of refusing to accept the highest bid. Clause (b) of subsection (2) of
section 45 of the Ordinance created statutory obligation for the Mayor to report to the K.M.C.
Council the fact about the highest bid given by the petitioner after execution of the B contract.
As against this, the Mayor had no power to issue an order orally or in writing to the effect that
the contract in question cannot be handed over to the petitioner.
The authorities cited on behalf of the respondents do not cover a case of this nature where
Constitutional provisions have been invoked to challenge action of the Mayor to be illegal,
unlawful etc. In the case of Munshi Muhammad and another 1971 SCMR 533 it was held that
bidders at auction of plots were not clothed with any right in auctioned properties, when terms
and conditions of the auction recited that highest bids offered at auction were subject to approval
of Additional Settlement Commissioner concerned, who may or may not accept bids without
assigning any reasons. In said case highest bids offered at the auction, were not approved and the
entire plot of land was transferred to an allottee. In the case of Rahmat Ali and others 1973
SCMR 342 there was auction of State land and one of the conditions of auction was that it was
within the discretion of the revenue authorities to confirm or not to confirm the auction and the
revenue authorities did not confirm the auction of the land to the highest bidder. In the
circumstances it was held that the persons giving highest bid, did not acquire any valid title to the
property, so as to give them right to invoke writ jurisdiction. In the case of Moinuddin PLD 1987
SC (AJ&K) 99 the Government of the State of Azad Jammu and Kashmir appointed a
Negotiating Committee to finalise the sale of certain industrial units. Said Committee put those
industrial units to auction and invited bids for their sale. Such sale or transfer was subject to
approval of the said Government. In the circumstances it was held that if a bid for the sale of
property is subject to prior approval of the Government, the highest bid, per se, would not create
any contractual right for sale of the property to such a bidder, unless such a bid is approved by
the Government. In the case of Fawwad & Fareen Enterprises Limited, PLD 1983 Kar. 340 the
Director of Industries etc. Government of Sindh invited quotations for supply of certain drugs
but reserved right of accepting the full or part quantity offered and did not pledge to accept the
lowest or any tender. In the context of the facts it was held by a D.B. of this Court that by giving
the lowest bid which was not accepted, the bidders acquired no legal or vested right to the grant
of the contract, in view of reservation of right by the authorities not to accept the lowest or any
other tender. In the case of Karachi Municipal Corporation PLD 1972 Kar. 571, it was held that
the trend of authority is clear, consistent and uniform that the formalities prescribed in Municipal
Legislation with regard to the execution of contracts by Municipalities are mandatory and there
can be no estoppel against them. In the same case it was further held that in order to protect the
public interest, to check corruption and to ensure the purity of the democratic process, the
Legislature has always imposed drastic controls on the powers of the employees of
Municipalities. In the case of Dr. Fazal Din PLD 1956 Lah. 916 the view taken was that a lease
of property reserving a yearly rent or for more than one year can be effected only by means of a
registered instrument and bearing seal of the Municipal Committee. In the case of Dr. Azeem
Shad PLD 1968 Lah. 1419 the Chairman of a Municipal Committee invited tenders for leasing
out certain premises and then accepted the highest offer and ordered delivery of possession to the
bidder of the highest offer.
Before communication of such order to the bidder, the Chairman revoked the acceptance. In the
circumstances it was held that there was no legal basis for the proposition that communication of
acceptance is to be deemed in a case where acceptance is not communicated due to the
negligence of promisee or his employees or agents. .
In none of the cases cited on behalf of the respondents the bidder was asked to make certain
payment in pursuance of acceptance of his bid. In the cited cases the bidders had not yet become
vested with any legal or vested right. It is to be conceded that the statutory and executive
authorities have locus poenitentiae to recall an order, only if no effective step has been taken in C
implementation thereof.
Learned counsel for the respondents could not cite any provision of law by which the Mayor can
pass order of the nature passed by him in the instant case.
In the circumstances this petition requires to be accepted and the impugned order is declared to
be illegal and of no legal effect. The Mayor K.M.C. is required to perform his statutory duty as
cast upon him by the provisions contained in section 45 of the Ordinance. There would be no
order as to cost.
A.A./Q-315/K
Petition accepted.