Summary: -----Quote: Order XXI Rule 84 of the Code of Civil Procedure, 1908 ("the CPC")? Scope -- Were the Auctioneers justified, in terms of Rule 84 of Order XXI of the CPC, to offer option to purchase the property to second highest bidder, and upon his failure to extend option to purchase to the third highest bidder [decree holder bank] ? the only bidder standing. Learned counsel for the decree-holder bank submitted that where successful bidder is the decree holder bank requirements under Sub-Rule 1 of Rule 84 of Order XXI of the CPC can be dispensed with and there was no need for re-sale. Held: The argument is flawed inasmuch as concession available under Sub-rule 2 of Rule 84 of Order XXI of the CPC is confined to the extent of requirement of deposit of 20% of the purchase money and does not spill to statutory direction regarding forthwith re-sale if payment of purchase money was not deposited by the successful bidder. Expression of re-sale of the property has to be examined in the context of Rule 84 ibid, which does not imply sale of property to the next bidder. In the present case, offering of option to the second highest bidder and then to the third highest bidder (decree holder bank) was contrary to Rule 84 of Order XXI of the CPC. -----Background: The appellants challenged the confirmation of an auction sale conducted by a decree-holder bank, following a default in loan repayment. The auction was conducted multiple times, and ultimately, the decree-holder bank (respondent) was confirmed as the successful bidder. The appellants contended that the auction process violated the statutory mandates under Rule (84) of Order XXI of the Code of Civil Procedure, 1908, as the property was not re-sold immediately after the default by the highest bidder to deposit 25% of the purchase money. -----Issues: 1- Compliance with Rule (84), Order XXI, Code of Civil Procedure, 1908: Whether the auctioneer violated the requirement to immediately re-sell the property upon the highest bidder’s failure to deposit 25% of the purchase money. -----2- Validity of Sale Without Re-Sale: Whether the auction sale could be confirmed without re-selling to new bidders after the default. -----3- Effect of Non-Compliance with Rule (90) Order XXI: Whether the failure of appellants to deposit 20% of the auction proceeds affected their right to contest the sale’s validity. -----Holding/Reasoning/Outcome: The court held that the auction sale was invalid, null, and void due to substantial procedural violations. The court's reasoning included: --Violation of Rule (84) of Order XXI: When the highest bidder failed to deposit 25%, the auctioneer should have re-sold the property instead of offering it to the subsequent bidders. Continuing with the aborted sale contravened the mandate of Rule (84), which requires an immediate re-sale in such cases. Single-Bidder Concern: The auction ultimately had only one valid participant, the decree-holder bank, which failed to meet the requirements of a competitive public auction, thus undermining the transparency and fairness essential to public auctions. --Non-Applicability of Rule (90): The court determined that the requirement for the appellants to deposit 20% under Rule (90) was not applicable because the auction sale was legally invalid due to the significant statutory violations. The court allowed the appeal, declaring the auction sale void and setting aside the confirmation order of 13.10.2022. -----Citations/Precedents: Rule (84) & Rule (90) of Order XXI, Code of Civil Procedure, 1908 – Pertinent legal guidelines for deposit and re-sale requirements. Mst. Nadia Malik v. Messrs Makki Chemical Industries Pvt. Ltd. (2011 SCMR 1675) Afzal Maqsood Butt v. Banking Court No.2, Lahore (PLD 2005 Supreme Court 470) Muhammad Ashraf v. U.B.L (2019 SCMR 1004) Al-Hadi Rice Mills (Pvt.) Ltd. v. MCB Bank Limited (2023 CLD 85) Summit Bank Limited v. Messrs M. M. Brothers (2023 CLD 297) - Highlighted the requirement for competitive bidding in auctions.

Summary: (a) Public Procurement Rules, 2004: ----Bidding Process---Right of Bidder---Technical Disqualification---Fresh Tender Process---Vested Right in Procurement Process. The plaintiff, a bidder in a two-envelope tender process initiated by the Civil Aviation Authority (CAA) for car parking fee collection at Islamabad International Airport, challenged his disqualification on technical grounds and subsequent initiation of a fresh tender process. The plaintiff alleged mala fide intent, procedural irregularities, and suppression of his higher bid by the procurement authority. ----Key Principles Established: A bid is merely an offer and does not create any vested rights in favor of a bidder, even if it is the highest or lowest bid. A contractual right only arises once a bid is accepted and a formal contract is concluded. Allegations of mala fide intent must be substantiated with clear evidence, and procedural irregularities must demonstrate substantial prejudice to the bidder. In case of grievances in public procurement processes, the aggrieved party has an alternate remedy under Rule 48 of the Public Procurement Rules, 2004, which must be pursued before approaching the courts. If a bidder is disqualified for non-compliance with mandatory technical criteria, the procuring agency has the right to proceed with a fresh tender process. ----Cited Cases: Guinault SA PA Orleans Sologne v. Federation of Pakistan and others (2021 YLR 692) Muhammad Khalil v. Faisal M.B. Corporation and others (2019 SCMR 321) Babu Parvez Qureshi v. Settlement Commissioner Multan and Bahawalpur Divisions and others (1997 SCMR 337) Mandokhail Brothers Commercial Trading and Government Contractor v. Chairman Civil Aviation and others (2017 CLC 221) ----Disposition: Interlocutory applications (C.M.A. No. 21126/23 and 561/24) seeking to restrain further auction proceedings and challenge the disqualification were dismissed. The Court held that the plaintiff had no vested right to the award of the contract, and the procurement process conducted by the CAA was in line with applicable rules and regulations.

Summary: Background:Muhammad Adil and other petitioners contested the auction process of certain properties following a suit for possession through partition initiated by the predecessor in interest of respondents No.1 to 3. The trial court's decisions to appoint a local commission and later a court auctioneer to handle the sale of properties were disputed by the petitioners, leading to objections against the auction proceedings and the eventual sale of a property to plaintiff No.3. Both the objection petitions and subsequent appeal by the petitioners were dismissed, prompting the filing of a civil revision petition.-----Issues:The validity of the petitioners' objection petition based on the non-deposition of 50% of the successful bid amount as required under Rule 90, Order XXI of the Code of Civil Procedure, 1908.The legal standing of plaintiff No.3 (a decree-holder) to participate in the auction under the amended Rule 72 of Order XXI, Code of Civil Procedure, as per Lahore High Court Amendment Notification No.237/Legis/XI-Y-26 dated 22.08.2018.The procedural regularity of the auction proceedings conducted by the court auctioneer.-----Holding/Reasoning/Outcome:The Lahore High Court dismissed the civil revision petition. The Court found that the petitioners failed to deposit 50% of the successful bid amount with their objection petition, rendering it not entertainable. Additionally, the amended Rule 72 of Order XXI, Code of Civil Procedure, explicitly allows decree-holders to participate in auction proceedings, validating plaintiff No.3's bid. The Court also noted that the auction process followed legal procedures, including proper publication and notice service, with no procedural irregularities or illegalities identified in the auctioneer's report or the petitioners' objections. Thus, the Court upheld the decisions of the lower courts and dismissed the revision petition for lack of substance.----Citations/Precedents:Rule 90, Order XXI, Code of Civil Procedure, 1908: Governs the application to set aside a sale on the grounds of irregularity or fraud, requiring the depositor to deposit a significant portion of the sale sum or furnish security.Rule 72, Order XXI, Code of Civil Procedure, 1908 (as amended by Lahore High Court Amendment Notification No.237/Legis/XI-Y-26 dated 22.08.2018): Allows decree-holders to participate in the auction of properties involved in their decree executions, with provisions for the set-off of purchase money against the decree amount.

Summary: ''Quality Assurance security and performance guarantee are mutually exclusive obligations'' ---- BackgroundM/s Bilawal Gull Builders and other petitioners, identified as bidders, invoked the constitutional jurisdiction of the Lahore High Court, Multan Bench, challenging the actions and directions of procuring agencies in the tendering process for civil works in various districts of Southern Punjab. The primary issue was the demand by procuring agencies for the petitioners to furnish "Quality Assurance Security" (QAS) or "Quality Control Guarantee" (QCG). Some petitioners also contested the directive that security from insurance companies was unacceptable, asserting that only bank-issued securities were deemed valid, which they argued contravened the Punjab Procurement Regulatory Authority Act, 2009, and the Punjab Procurement Rules, 2014.----Issues:Legality of Demanding QAS/QCG: Whether the demand for QAS or QCG by procuring agencies, in addition to the performance guarantee required under the Punjab Procurement Rules, 2014, is lawful.Restriction on Type of Security: The validity of the procuring agency's restriction on accepting only bank-issued securities and rejecting those from insurance companies.----Holding/Reasoning:The Lahore High Court held that the demand for QAS or QCG does not conflict with the Punjab Procurement Rules, 2014, particularly Rule 56, which mandates a performance guarantee. The court clarified that QAS or QCG serves as an additional security for bids quoting prices lower than the estimated cost, aiming to cover the differential and ensure serious bidding. This additional security is considered distinct from the performance guarantee required upon contract award.Regarding the type of security accepted, the court endorsed a policy decision to exclude securities from insurance companies, deeming it within the purview of the procuring agency's discretion. The exclusion was found not to violate the provincial procurement regime, as the Punjab Procurement Regulatory Authority has the authority to set standard bidding documents specifying acceptable forms of security.---Citations/Precedents:A.M. Construction Company (Private) Limited v. Province of Punjab (2023 CLC 616): This case addressed similar issues regarding additional performance security and was referenced for its principles but distinguished based on factual differences.------M/s Jalal Construction Company v. The Secretary C&W Department, Government of Punjab (2024 LHC 329): This judgment, addressing the acceptability of insurance bonds as securities, supported the policy decision to limit acceptable securities to those issued by banks.

Summary: Issue: The main issue in this case is whether the petitioner is entitled to the release of its bid security after its bid was rejected and the bid security forfeited by the respondent.----Facts: The petitioner, in a joint venture, participated in a tender issued by the National Transmission & Dispatch Co. Ltd. (NTDC) for the design, manufacture, supply, installation, testing, and commissioning of a plant for a grid station. After the technical evaluation, the financial bids of two technically qualified bidders, including the petitioner, were opened. The petitioner submitted the lowest bid. During the process, the NTDC raised queries regarding the bid, which the petitioner duly responded to, accepting corrections as desired by NTDC. However, the NTDC later rejected the petitioner's bid and forfeited its bid security, citing the petitioner's refusal to accept arithmetical corrections. The petitioner challenged this decision through a constitutional petition.----Holding: The court held that the petitioner's refusal to accept arithmetical corrections, as stated by NTDC, was erroneous. The petitioner had, in fact, accepted and responded to the corrections sought by NTDC. Additionally, the court found that the bidding documents did not provide for forfeiture of bid security in the circumstances described by NTDC. Therefore, the decision to reject the bid and forfeit the bid security was unlawful. The court overruled the objections raised by the respondents regarding the maintainability of the petition and directed the respondents to release the petitioner's bid security.----Legal Principle Applied: The court applied the principle of Contra Proferentem, which states that ambiguities in contracts or documents are construed against the drafter. Since the bidding documents did not explicitly allow for the forfeiture of bid security in the circumstances described by NTDC, the court interpreted the documents unfavorably against the respondent.----Decision: The court ruled in favor of the petitioner, declaring the rejection of its bid and the forfeiture of its bid security unlawful. The respondents were directed to release the petitioner's bid security.---Quote: ''The act of confiscation of bid security while rejecting the bid and scraping procurement process was unlawful since the Petitioner did not refuse to accept arithmetic errors as desired by the procuring agency and the latter had itself opted for fresh procurement process.''

Summary: Background:Muhammad Iftikhar, the petitioner, challenged the legality of sub-rule (3) of Rule 13 of the Punjab Local Government (Auctioning of Collection Rights) Rules, 2003, concerning the cancellation of a contract award due to non-deposit of the requisite amount by the contractor within the specified timeframe. This challenge was based on the contention that this sub-rule contradicts Section 142 of the Punjab Local Government Ordinance, 2001, and violates constitutional due process rights. The case involved the auction of collection rights for Rickshaw Fee, where the petitioner, as the successful bidder, failed to deposit the stipulated amount within three days of receiving notice, leading to the forfeiture of his earnest/security deposit of Rs.100,000.----Issues:Legality of Sub-Rule (3) of Rule 13: Whether the sub-rule that presumes cancellation of a contract award and entails forfeiture of deposits due to non-compliance by the contractor is legal and constitutional.Forfeiture of Deposits: Whether the forfeiture of the earnest/security deposit and any additional amounts deposited by the contractor as part of the auction process is justified and equitable.----Holding/Reasoning:The Lahore High Court held that sub-rule (3) of Rule 13 is legal and does not violate the parent statute or the constitutional rights of due process. The court reasoned that the forfeiture of the earnest/security money ensures the participation of serious contenders in the auction process, preventing frivolous bids and compensating for the administrative costs of re-auctioning. The court found no requirement for a separate notice before forfeiture, as the terms were clear and acknowledged by the petitioner at the auction's outset. However, in a connected case regarding the auction of Advertisement Fee rights, the court differentiated between the forfeiture of the initial earnest/security deposit, which is justified, and the forfeiture of additional amounts deposited post-contract, which was deemed arbitrary and beyond the scope of liquidated damages envisaged by the auction terms.----Citations/Precedents:Province of Sind v. Public at Large (PLD 1988 SC 138): Cited to support the petitioner's arguments against the impugned sub-rule.Meenakshinada Deikshtar v. Murugesa Nadar and another (AIR 1970 Madras 391): Used to argue against the penal nature of the impugned sub-rule.Space Telecom (Private) Limited, Lahore v. Pakistan Telecommunication Authority, Islamabad through Chairman (2019 SCMR 101): Referenced by the court to uphold the forfeiture of earnest/security money due to failure to meet auction terms.

Summary: Background: The petitioners sought a writ from the Islamabad High Court directing the National Highway Authority (NHA) to award them the contract for constructing the Bhong Interchange on the Sukkur-Multan Motorway (M-5). The petitioners were disqualified in the bid evaluation process for submitting an incorrect withholding tax rate in their bid. They contested the disqualification, arguing that the error was a bona fide mistake and should have been rectified. The NHA, however, awarded the contract to the respondent, IKAN Engineering Services (Private) Limited. ----Issues: 1- Whether the petitioners' disqualification for submitting a bid with an incorrect withholding tax rate was justified. 2- Whether the petitioners should be allowed to rectify the error in their bid during the clarification process. 3- Whether the reduction of respondent No.5's bid after the bids were opened violated public procurement rules. ----Holding/Reasoning/Outcome: The court held that the petitioners' bid was correctly disqualified because the misstatement of a 2% withholding tax (instead of the applicable 7%) was a material error. Allowing the petitioners to correct the bid would change the substance of the bid, which is prohibited under Rule 31(1) of the Public Procurement Rules, 2004 (PPR-2004). The court agreed with the NHA that the petitioners’ attempt to rectify the error after the bid evaluation process violated public procurement rules, which prohibit modifications to bids after submission. The court emphasized that the procurement process must remain transparent and free from manipulation. While the court acknowledged that the NHA improperly allowed respondent No.5 to reduce its bid after the bids were opened, it did not nullify the tender because respondent No.5's final bid was still higher than the petitioners’. However, the court cautioned the NHA against allowing such practices in the future. ----Citations/Precedents: Gamalto Middle East FZ-LLC vs. Federation of Pakistan, 2020 CLD 151 National Institutional Facilitation Technologies (Pvt.) Ltd. vs. The Federal Board of Revenue, PLD 2020 Islamabad 378 West Bengal State Electricity vs. Patel Engineering Co. Ltd., AIR 2001 SC 682 Nasir Ali vs. Muhammad Asghar, 2022 SCMR 1054

Summary: The core issue revolved around the demand for additional performance security from the contractors who had submitted bids for various construction works following public advertisements by the Communication & Works Department, Irrigation Department, and Punjab Local Government. The demand was based on a clause in the Bid Document that required the lowest bidder to deposit additional performance security if there was a significant difference between the total tendered amount and the approved estimated amount.-----Issues:The central issue before the Supreme Court of Pakistan was whether the procuring agency could require the bidder to pay additional performance security over and above the bid security and performance guarantee provided under the Punjab Procurement Rules, 2014. Specifically, the Court examined whether the bidding documents could include terms and conditions that were over and above or inconsistent with these Rules.----Holding/Reasoning/Outcome:The Supreme Court, after a thorough examination of the Punjab Procurement Regulatory Authority Act 2009, the Punjab Procurement Rules, 2014, and other relevant documents, held that the additional performance security demanded from the lowest bidders was unlawful and violative of the Rules. The Court reasoned that the regulatory framework under the Act and the Rules provided a stable and predictable environment for procurement, and deviation from this framework could create uncertainty and confusion. The Court emphasized the principles of transparency, level playing-field, and non-discrimination in public procurement, and found that the imposition of additional performance security was inconsistent with these principles. Therefore, the demand for additional performance security and the clauses related to it in the bidding document were set aside.---Citations/Precedents:Punjab Procurement Regulatory Authority Act 2009: Establishes the regulatory framework for public procurement in Punjab, emphasizing governance, transparency, and quality.Punjab Procurement Rules, 2014: Provides specific regulations for public procurement, including provisions on bid security and performance guarantee.OECD Principles for Integrity in Public Procurement: The Court referenced these principles, which advocate for transparency, good management, prevention of misconduct, and accountability in public procurement.Quotes from Justice Sandra Day O?Connor and Chief Justice Warren E. Burger: Emphasized the importance of alternative dispute resolution and mediation in the legal process.Roger Fisher and William Ury, "Getting to Yes": Highlighted the benefits of mediation over litigation.Hazel Genn, "Judging Civil Justice": Discussed the judicial encouragement of settlements to reduce caseloads and promote efficiency.Lord Woolf's "Access to Justice: Final Report": Predicted that traditional trials would become the exception in dispute resolution.

Summary: Issue:The primary legal issue centered on whether procuring agencies can exclude insurance bonds as a form of performance security and the legality of the PPRA's circular in light of existing procurement laws and Standard Bidding Documents (SBDs).---Holding:The Lahore High Court held that procuring agencies possess the discretion to determine the acceptable form of performance security, including the exclusion of insurance bonds, within the parameters of the procurement framework established by the relevant laws and regulations. The court found that such discretion does not contravene the Standard Bidding Documents (SBDs) developed by the Pakistan Engineering Council (PEC) or the advisory decisions made by the Executive Committee of National Economic Council (ECNEC).---Reasoning:The court's reasoning was grounded in an analysis of the Public Procurement Regulatory Authority (PPRA) Ordinance 2002, the PPRA Act 2009, and the respective rules and regulations under both the Federal and Punjab governments. It was determined that these legal frameworks grant procuring agencies the authority to establish their procurement procedures, including the specification of performance securities. The court also noted that while the SBDs prepared by PEC serve as a benchmark for engineering contracts, they are not mandatory for government procurement processes. Furthermore, the court held that the ECNEC's advisory decisions do not supersede the statutory provisions, allowing procuring agencies the flexibility to amend or adapt SBDs as necessary for their specific procurement needs.---Order:The court directed the procuring agencies to issue fresh notices to the petitioners, requiring them to furnish the specified form of security as per the applicable SBDs within 28 days from the issuance of the notice. Failure to comply could result in actions in accordance with the terms and conditions of the applicable contract.--- Discussed case law:However, the judgment did reference a decision by a Single Bench of the Lahore High Court in W.P. No. 72544 / 2021 titled "M/s RMS Pvt. Ltd. v. Govt. of the Punjab & others," where deviation from PEC's SBDs was considered unlawful with respect to the exclusion of insurance bond/guarantee by a procuring agency in Punjab. It is important to note that this decision was mentioned to have been suspended by a Division Bench of the Lahore High Court at the time of this judgment.Moreover, the judgment mentioned the decision in the case titled "Nisar Ahmed Khan v. National Highway Authority and others" decided by a Division Bench of the High Court of Sindh in C.P. No. D-2779 / 2023 on 03.08.2023, which recognized the right of a procuring agency (in this case, the National Highway Authority) to prescribe the form of performance guarantee under the SBDs of PEC.

Summary: Background: The petitioner, a contracting company, participated in a bid for toll plaza management on the Lahore-Abdul Hakeem Motorway. After winning the bid with a quoted amount of Rs.4,082,400,000/-, the company requested the National Highway Authority (NHA) to adjust this bid amount, claiming an error that included taxes. NHA refused the adjustment and, upon the petitioner's failure to provide performance security, forfeited the bid security of Rs.82 million. The petitioner sought judicial review, which was dismissed by the Islamabad High Court, leading to this appeal. -----Issues: 1- Whether NHA's refusal to adjust the bid amount after its acceptance was unlawful. -----2- Whether NHA's forfeiture of the bid security was justifiable under the terms of the bid agreement. -----Holding/Reasoning/Outcome: --Non-Adjustment of Bid: The court upheld NHA’s refusal to alter the bid, noting that the bidding terms explicitly required amounts exclusive of taxes. It emphasized that the bidding process did not allow for post-acceptance adjustments, as doing so would undermine the competitive bidding system. --Forfeiture of Bid Security: The court found the forfeiture of the bid security justified. As the petitioner did not comply with the requirement to provide performance security within the stipulated time, NHA acted within its rights under the bid’s terms to annul the award and forfeit the security. --Judicial Review Scope: The court reiterated that judicial intervention in contractual terms is limited unless arbitrary or discriminatory practices are evident, which was not the case here. ------Citations/Precedents: National Institutional Facilitation Technologies (Pvt.) Ltd. v. The Federal Board of Revenue (PLD 2020 Islamabad 378) West Bengal State Electricity v. Patel Engineering Co. Ltd. (AIR 2001 SC 682) Tez Gas (Private) Ltd. v. Oil and Gas Regulatory Authority (PLD 2017 Lahore 111) Tata Cellular v. Union of India (AIR 1996 SC 11) Conclusion The appeal was dismissed, affirming NHA’s actions as compliant with the terms of the bidding process and lawful. The court upheld the dismissal of the writ petition, emphasizing that NHA's actions were neither arbitrary nor unfai