CITY SCHOOLS (PVT.) LTD.
,
LAHORE CANTT VS
PRIVATIZATION
COMMISSION,
GOVERNMENT OF
PAKISTAN
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2002 S C M R 1150
[Supreme Court of Pakistan]
Present: Nazim Hussain Siddiqui and Javed Iqbal, JJ
CITY SCHOOLS (PVT.) LTD., LAHORE CANTT.■■■■Petitioner
versus
PRIVATIZATION COMMISSION, GOVERNMENT OF PAKISTAN and others■■■■Respondents
Civil Petition No.240 of 2002, decided on 27/03/2002.
(On appeal from the judgment dated 2■1■2002 of Lahore High Court chore passed in Writ Petition No. 1453 of 1999).
(a) Contract Act (IX of 1872)■■-
■■■■Ss.2(h) & 10■■■Contract■■■Tender notice■■■Legal status■■■Tender notice, whether a valid contract enforceable
at law■■■Validity■■■Tender notice was merely an invitation for making an offer and not by itself an offer or
proposal■■■Advertisement of the notice did not constitute a proposal; it would become promise or agreement only by
acceptance of offer or proposal by the person calling for tender■■■When offer of tender was not accepted by the relevant
authority, no legal rights accrued to the tenderer ■■■Agreement enforceable by law became a contract■■■Test for deciding
whether a valid contract was made between the parties or not was to ascertain if the parties were of one mind on all the
material terms at the time it had been finalized and whether they intended that the matter was closed and concluded between
them■■■Correspondence between the parties must be looked into for the purpose.
(b) Contract Act (IX of 1872)■■■
■■■■Ss.2(h) & 10■■■Constitution of Pakistan (1973), Art.185(3)■■■Contract■■ Auction proceedings■■■Petitioner
participated in auction proceedings conducted by the Privatization Commission■■■Although the petitioner was the highest
bidder yet the auction was not confirmed by the Commission and the property was decided to be
re■auctioned■■■Commission did not re■auction the property rather en■cashed the Bank draft tendered by the petitioner as,
earnest money■■■Contention of the petitioner was that the tender notice was a valid contract enforceable under law and that
property once placed before commission' for auction could not be delisted ■■■Validity■■■True test for deciding the question
if in a particular circumstance a contract was made or not was to ascertain whether the parties were of one mind on all material
terms and conditions or not■■■Property could be delisted from auction Pool of commission before finalisation of sale
process■■■Commission had never agreed to accept the bid offered by the petitioner and the re■auction proceedings were
never held, as such the same was enough to hold that the Commission was not inclined to sell the property■■■Leave to
appeal was refused.
Meraj Din v. Noor Muhammad and 3 others 1970 SCMR 542; Munshi Muhammad and another v. Faizanul Haq and another
1971 SCMR 533; Muhammad Sharif v. Sharifuddin and 3 others 1972 SCMR 63; Babu Pervez Qureshi v. Settlement
Commissioner, Multan and Bahawalpur Divisions, Multan and 2 others 1974 SCMR 337; Moirnud■Din v. Negotiating
Committee for Disinvestment of AKMIDC Unit, Muzaffarabad and 8 others PLD 1987 (AJ&K) 99; Messrs Javed (Pvt.) Ltd. v.
Government. of Pakistan' and another 1991 CLC Note 313 at p. 237; Muhammad Ali v. District Council, Gujrat and another
1993 MLD 1500; Muhammad Din & Sons, Shahdara Mills, Lahore v. The Province of West Pakistan and 5 others PLD 1969
Lah. 823; Ch. Muhammad Yunus v. The Islamic Republic of Pakistan and 3 others PLD 1972 Lah. 847; Calicon (Pvt.) Ltd. v.
Federal Government of Pakistan and others 1996 MLD 705; Premier Paper Mills Ltd. v. N.■W.F.P. Text Book Board 1997 CLC
1288; K.N. Guruswamy v. The State of Mysore and others AIR 1954 SC 592; Haridwar Singh v. Begum Sumbrui and others
AIR 1972 SC 1242 and Haji T.M. Hassan Rawther v. Kerala Financial Corporation AIR 1988 SC 157 ref.
Syed Shariffudin Pirzada, Senior Advocate Supreme Court for Petitioner.
Raja Muhammad Akram, Advocate Supreme Court and Ejaz Muhammad Khan, Advocate■on■Record for Respondents.
Date of hearing: 27th March, 2002.
JUDGMENT
NAZIM HUSSAIN SIDDIQUI, J.■■■Petitioner, the City Schools (Private) Limited, has impugned the judgment, dated
2■1■2002 of a learned Judge in Chamber, Lahore High Court, Lahore whereby Writ Petition No. 1453 of 1999 was disposed of
in terms of the direction contained therein, which is as follows:■■
" ..The writ petition accordingly is disposed of with a direction to respondent No. l to' summon the petitioner, to provide it the
details of the decision and reasons, therefore, to hear the petitioner and to decide the matter keeping in view the principles of
fairness and justice as also the larger public interest. No order as to cost."
2. The facts relevant for decision of this petition are that the petitioner is a private limited company established in 1978 and was
registered under the Companies Ordinance, 1984. It owns, manages and runs a chain of "City Schools" all over the country and
is one of the largest groups of Education Institutions in the country.
3. In December, 1998, the respondent No.1 advertised the sale of "Federal Lodge Chamba House, Lahore", hereinafter
referred to as "said Property", on "As is where is" basis. The auction initially was fixed on 9■1■1999, but later on it was
postponed to 11■1■1999 and then to 9■4■1999. The petitioner was amongst three highest bidders and was allowed to
participate in the open bidding process, which was held at Islamabad and was televised. The auction was finalized by fall of
hammer with petitioner's bid being highest of Rs.33,50,000 per Kanal. According to the petitioner, although its bid was highest
and, as per rule, it ought to have been accepted, yet, the petitioner received a Letter No. 12(3)Bkg/PC/98, dated 21■5■1999
from the respondents stating therein that the Committee of the Privatisation Board took the bid unacceptable, as the price in the
auction process was not satisfactory and that it directed that the bidding be held again.
4. The petitioner approached the respondents and offered renegotiation of price and sought settlement of the matter, but with
no effect. The petitioner impugned above letter before Lahore High Court, through Writ Petition No. 1543 of 1999, on various
grounds, including that the highest bid offered could not be termed as unacceptable by the officials sitting in the Secretariat of
Privatisation Commission. It was admitted for regular hearing and the proposed re■auction, fixed for 24■6■1999, was stayed
by order, dated 25■6■1999. Subsequently, above order was confirmed by High Court, as per order dated 25■6■1999.
5. The order passed by Lahore High Court, Rawalpindi Bench was challenged by respondents (Government) before this Court
by filing Civil Petition for Leave to Appeal No. 1104 of 1999. This Court stayed operation of the order of High Court and
permitted the respondents to re■auction said property, vide order, dated 15■7■1999. The relevant portion of it reads as under:
■■
"The operation of the impugned interim order, dated 23■6■1999 of the High Court shall remain suspended till the disposal of
the main petition. The petitioners are allowed to re■auction the property, but the said auction neither be confirmed nor any
further action taken and the bid shall be placed before the Bench. If the highest bid offered in this auction happens to be for an
amount in excess of the amount already offered by the respondents/writ petitioner, he may be allowed at the time of hearing of
the petition to match the same. The main petition shall be fixed within two weeks after the placement of the bid on the record by
the petitioners."
6. It is alleged that the respondents announced re■auction of said property on 3■9■1999. Three bidders approached the
Privatisation Commission for participation in the auction scheduled for 3■9■1999, but on said date neither the auction
proceedings were held nor drafts of earnest money were accepted by the respondent No. 1.
7. On 3■6■2000, Askari Commercial Bank Limited, informed the petitioner that the respondent No. l had en■cashed the
demand draft furnished by it of Rs.2.5 million.
8, According to the petitioner, since demand draft has been en■cashed a lawful contract of sale has come into existence and,
as per condition No.6.4 laid down by respondent No. 1, the earnest money of successful bidder is to be adjusted towards the
sale price, vide clauses 13 and 14 of the instructions to bidders.
9. It is contended on behalf of petitioner that in pursuance of the order of this Court, dated 15■7■1999 quoted earlier, the
re■auction was not held by the respondents, therefore, bid offered by the petitioner was to be accepted, more particularly for
the reasons that the demand draft submitted by it was en■cashed. Learned counsel also contended that by acceptance of
demand draft a lawful contract of sale has come into existence and the respondents now cannot back out from it.
10. As against above, learned counsel for the respondents stenuously, argued that the lawful contract never came into
existence and the mere fact that petitioner offered highest bid, it would not, ipso ,facto, create any contractual right of sale in
respect of said property to the petitioner, unless the bid is approved by the Government. In support of above contention, he
cited (1) Meraj Din v. Noor Muhammad and 3 others (1970 SCMR 542)., (2) Munshi Muhammad and another v. Faizanul
Haq.and another (1971 SCMR 533), (3) Muhammad Sharif v. Sharifuudin and 3 others (1972 SCMR 63), (4) Babu Pervez
Qureshi v. Settlement Commissioner, Multan and Bahawalpur Divisions, Multan and 2 others (1974 SCMR 337), (5)
Moin■ud■Din v. Negotiating. Committee for Dis■investment of AKMIDC Unit, Muzaffarabad and 8 others (PLD 1987 Azad J&K
99), (6) Messrs Javed (Pvt.) Ltd. v. Government of Pakistan and another (1991 CLC Note 313, page 237), (7) Muhammad Ali v.
District Council, Gujrat and another (1993 MLD 1500), (8) Muhammad Din & Sons Shahdara Mills, Lahore v. The Province of
West Pakistan and 5 others (PLD 1969 Lah. 823), (9) Ch. Muhammad Yunus v. The Islamic Republic of Pakistan and 3 others
(PLD 1972 Lah. 847), (10) Calicon (Pvt.) Ltd. v. Federal Government of Pakistan and others (1996 MLD 705), (11) Premier
Paper Mills Ltd. v. N.■W.F.P. Text Book Board (1997 CLC 1288), (12) K.N. Guruswamy v. The State of Mysore and others
(AIR 1954 SC 592), (13) Haridwar Singh v. Begum Sumbrui and others (AIR 1972 SC 1242 and (14) Haji T.M. Hassan Rawther
v. Kerala Financial Corporation (AIR 1988 SC 157).
11. Perusal of different provisions of the Contract Act reveals that a E tender notice is merely an invitation for making an offer
and not by itself an offer or proposal. The advertisement does not constitute a proposal. Only by acceptance of offer or proposal
by the person calling for tender it becomes a promise or agreement. When offer of tenderer is not accepted by the relevant
authority, no legal right accrues to such tenderer. An agreement enforceable by law becomes a contract. The true test for
deciding whether a valid contract is spade between the parties or not is to ascertain if the parties were of one mind on all the
material terms at the time it is said to have been finalized and whether they intended that the matter was closed and concluded
between them., For this purpose, the correspondence. exchanged between the parties is also to be looked into.
12. In this particular ease, the respondents had never agreed to sale said property to the petitioner. The ratio of the cases cited
by learned counsel for the respondent is that, the Government has power to reject the highest bid and the Government even
can change its policy of auction, but before its confirmation. Learned counsel for the respondents categorically stated that the
Government has decided to us said property for .its own officers and the same would not be auctioned for another 10 to 20
years. The statement trade by him is absolutely clear and in unambiguous terms demonstrate the real intention of the
Government. According to learned counsel, he had made above statement after seeking necessary instructions in that regard.
13. Syed Sharifuddin Pirzada, learned Senior Advocate Supreme Court for the petitioner laid much stress on the fact that after
demand draft was en■cashed for all practical purposes it became a lawful contract between the parties. He also submitted that
once said property was placed before the Privatisation Commission for its auction it could not be delisted.
14. Learned High Court in the impugned judgment specifically dealt with this aspect of encashment of demand draft and held
that it was a matter of record that vide Annexure "D" the petitioner was informed of rejection of its bid and was called upon to
collect the earnest money. High Court reached the conclusion that mere encashment of batik draft would not by itself amount to
acceptance as part of price, as under the terms of the 'bid instructions', the earnest money was adjustable towards last
instalment payable in case of acceptance of bid and that it was nobody's case that any of the earlier instalment was paid or
tendered by the petitioner or it was called upon to pay or tender the price. As observed earlier, the true test for deciding the
question if in a particular circumstance a contract is made or not g is to ascertain whether the parties were of one mind on all
material terms and conditions or not. Commutative effect of all the circumstances is that the respondents had never agreed to
accept the bid offered by the petitioner. Even after the order of this Court dated 15■7■1999, the auction proceedings were
never held. Manifestly, it is enough to hold that the respondents are not at all inclined to sell said property. Therefore, before the
finalisation of sale process, the property could be delisted from auction pool of the Privatisation commission.
15. In consequence, leave to appeal is refused, the direction of High Court quoted above is set aside and. the petition is
dismissed.
Q.M.H./M.A.K./C■55/S
Petition dismissed.
