P L D 2011 Quetta 67
Before Qazi Faez Isa, C.J. and Muhammad Hashim Khan Kakar, J
ATLAS CABLES (PVT.) LTD. ---Petitioner
Vers us
QUETTA ELECTRIC SUPPLY COMPANY LTD. through Chief Executive Officer -
--Respondent
C.P. No.27 of 2011; heard on 7th June, 2011.
(a) Constitution of Pakistan ---
----Art. 199---Constitutional petition ---Maintainability ---Civil suit, filing of ---Petitioner, a
contractor was blacklisted by authorities and the order was assailed before High Court
whereas a civil suit for recovery of damages was also filed ---Plea raised by authorities
was that petition was not maintainable as petitioner had filed a civ il suit ---Validity ---
Petition before High Court was filed earlier in time, disclosure of petition was made in
the plaint and no declaration with regard to blacklisting had been sought in the suit ---
Filing of suit did not disentitle petitioner from approach ing High Court in its
constitutional jurisdiction for enforcement of fundamental rights ---Petition was
maintainable in circumstances.
Budhu Shah v. Chief Administrator Auqaf 1991 CLC 1445 distinguished.
(b) Constitution of Pakistan ---
----Arts. 18 & 199 ---Constitutional petition ---Right of business ---Blacklisting of a
contractor ---Petitioner was a manufacturer of electric cables and conductor etc. and
authorities 'blacklisted the petitioner on account of breach of contract and failure to
supply mate rial on time ---Plea raised by petitioner was that such reasons were not a
sufficient cause to necessitate blacklisting and circulation of letter of blacklisting had
infringed Fundamental Right of carrying on lawful business guaranteed by Art.18 of the
Cons titution ---Validity ---Registration procedures that had been relied upon by both sides,
which permitted different actions to be taken against delinquent firms, including
blacklisting, removal and placing of embargo ---Blacklisting could only be resorted to
after obtaining approval of Registration Committee ---Authorities did not file any
document to show that Registration Committee was constituted to consider blacklisting
the petitioner and had granted an opportunity of hearing to petitioner before passing ord er
approving blacklisting ---Reasons stated by authorities in the letter for blacklisting the
petitioner did not come within any of the categories listed in Registration Procedures ---
Petitioner manufactured cables and conductors which were mostly used by po wer
generating and distribution companies and National Transmission Distribution Company
and an extreme action of blacklisting petitioner effectively prevented it from carrying on
with its lawful business and consequently would drive petitioner out of busi ness---Such
action of authorities had violated Fundamental Rights of carrying on a lawful business
guaranteed by Art.18 of the Constitution ---Authorities had also violated their own
Registration Procedures ---High Court, in exercise of constitutional jurisd iction, declared
the letter issued by authorities as unlawful and of no legal effect and petitioner would not
be considered as blacklisted or treated as such ---High Court directed the authorities to
circulate letter of recall of blacklisting to all those t o whom letter of blacklisting of
petitioner was circulated ---Petition was allowed accordingly.
New Jubilee Insurance Co. LW. v. National Bank of Pakistan PLD 1992 SC 1126 ref.
Munir A. Malik and Aamir Raza Naqvi for Petitioner.
Ghulam Mustafa Buzdar and Khan Muhammad for Respondent.
Date of hearing: 7th June, 2011.
ORDER
QAZI FAEZ ISA, C.J. ---1. Learned counsel for the respondent stated that the interim
order suspending the blacklisting of the petitioner is adversely affecting the interest o f the
respondent, and requested that the petition may be heard and disposed of at Katcha Peshi
stage. Mr. Munir A. Malik, advocate on behalf of the petitioner did not oppose the
suggestion, accordingly we proceeded to hear the matter.
2. It is the case o f the petitioner that the respondent vide letter dated 22nd October, 2Q10
blacklisted the petitioner in controversion of the 'Registration Procedures' of the Pakistan
Electric Power Company (Pvt.) Ltd., which are applicable to the respondent, and such
applicability is admitted by the respondents. To better understand the controversy it
would be useful to reproduced the impugned letter of the respondent dated 22nd October,
2010.
"Messrs Atlas Cables (Pvt.) Ltd.
9th Floor, Textile Plaza, Mumtaz Hassan Roa d, PO Box No.5195, Karachi.
Subject: BLACK LISTING OF M/S ATLAS CABLES (PVT) LTD. KARACHI
IN CASE OF NON -SUPPLY OF MATERIAL TO QESCO UNDER
VARIOUS CONTRACT AGREEMENT/PURCHASE ORDERS .
Ref: (i). This office Show Cause No.CEO/QESCO/,G.M (Tech)/ 2852 dated 6-9-2010.
(i) No.CEO/OESCO/MMM/3881 -82 dated 11 -10-2010.
(ii) No. MMM/KFP/QESCO/3901 dated 12 -10-2010.
(iii) No.MMM/KFP/QESCO/4060 -61 dated 19 -10-2010.
(1) Your firm was issued KFP Contract Agreement No.28 dated 12 -2-2009, for supply of
ACSR Rabbi t Conductor and A.A. Ant Conductor. Moreover the following Purchase
Orders were also placed on your firm for supply of following material: --
(a) PO No.643 dated 29-11-2007 For supply of ACSR Dog Conductor.
(b) PO No.721 18 -3-2008.
(c) and No.762 dated 6-10-2008. For supply of ACSR Rabbit Conductor.
(2) Your firm has breached each Clause of Contract Agreement/ Supply Orders and failed
to supply the material in time. Your firm was continuously, pursued through series of
letters and telephonically by the undersigned as well as G.M. (Tech) to supply the ordered
material, but no positive response received from your end.
(3) Foregoing Para -2, the Competent Authority has decided to impose the following
penalty upon your firm: --
"BLACK LISTING OF YOUR COMPANY". '
(4) This being issued with the approval of Competent Authority.
(Sd.)
(Khurshid Ahmed Sheikh)
Manager MM (KFP)
QESCO Quetta
C.C. To: --
(1) The All Chief Executives (DiSCOs, GENCOs, NTDC).
(2) The All General Managers.
(3) The A ll Chief Engineers.
(4) The Project Directors.
(5) The All Resident Engineers of Hydel Power Stations.
(6) The All Regional Directors of Inventory Controls.
(7) The All Store Managers."
3. Learned counsel for the petitioner has relied upon the pr ovisions contained in Chapter -
II of the Registration Procedures and in particular the following clauses thereof as under: -
-
"(3) Approval. --Firm/individuals will be "Blacklisted" Removed and placed on Embargo
with the approval of Registration Committee. Blacklisting of firms will be published in
Wapda Weekly and the information will be conveyed by circular to other Government
Departments also.
(5) Causes of Blacklisting.
The following are the causes of Blacklisting: -
(a) Making false statements and allegations to gain undue advantage.
(b) Commission of fraud.
(c) Commission of embezzlement, criminal breach of trust, theft, cheating, forgery,
bribery, falsification or destruction of records, receiving stolen property, false use
of a trademark, se curing fraudulent registration, giving false evidence, furnishing
of false information of serious nature. "
It is urged that the reason given in the impugned letter, whereby the petitioner was
blacklisted, was on account of alleged breach of contract inc luding the failure to supply
material on time, and such reason was not sufficient cause to necessitate blacklisting and
did not fall within any of the aforesaid sub -clauses (a), (b) and (c) of clause 5. It is next
contended that the blacklisting can only b e resorted to with the prior "approval of
Registration Committee" but nothing has been produced by the respondent to show that
the approval of the Registration Committee had been sought. The Registration Committee
in respect of an electricity distribution company, which we are informed the respondent
is, comprises of the following, as mentioned in clause 2.6 of the Registration Procedures:
1) Chief Executive Convener.
2) Technical Director or any other Engineer of Grade 20
nominated by CEO. Member.
3) Finance Director Member.
4) Chief Engineer (MI) Member.
5) Chief Engineer (D&S)/Chief Engineer (Design) NTDC. Member.
6) Chief Engineer' (P&D) (For Energy Meter, Distribution
Transformers, Conductors and Cable). Member.
7) Sr. Manager/Manager ( MMM) Secretary.
Learned counsel for the petitioner states that the impugned letter was copied to all the
electricity generating and distribution companies as well as to the National Transmission
Distribution Compan y (NTDC), all of whom are the customers or potential customers of
the petitioner, and as such the impugned letter would effectively cripple the business of
the petitioner. It is contended that the petitioner's blacklisting and circulation of the
impugned letter infringes the Fundamental Right o f carrying on lawful business
guaranteed by Article 18 of the Constitution of the Islamic Republic of Pakistan, 1973. In
this regard reliance has also been placed upon the case of New Jubilee Insurance Co. Ltd.
v. National Bank of Pakistan PLD 1992 SC 1126 , and in particular paragraphs 15 and 16,
thereof reproduced hereunder:
"(15) It may be stated that the respondent is a Bank owned by the State and
therefore, under the Constitutional mandate, it should act fairly, justly, without any
discrimination, and without adopting unfair procedure. If an Insurance Company
fulfils the required conditions and becomes eligible to be enlisted in the list of
approved Insurance Companies the respondent cannot arbitrarily refuse enlistment
for a reason which may have no n exus with, the eligibility to be enlisted. However,
a company (including the appellant), listed in the list of the approved Insurance
Companies has no right to force the respondent to enter into a contract of Insurance.
It can at the most claim that it may be treated alike with the other Insurance'
Companies, placed in the same/similar position/situation. In other words, it is
entitled that its offer to insure may be considered along with particular offer. So
long the respondent acts ' in good faith, accept ance of a particular offer or non -
acceptance of the same will not ensue any justifiable cause of action.
(16) It may be pointed out thus the fall -out of the blacklisting of the appellant is to
prevent it from the privilege and advantage of entering into lawful relationship with
the respondent for the purpose of gains which is violative of Article 18 of the
Constitution, which lays down that subject to such qualifications, if any, as may be
prescribed by law, every citizen shall have the right to enter upo n any lawful
profession or occupation, and to conduct any lawful trade or business. The
blacklisting of a company/firm/person, also tarnishes the reputation of it/his, as to
its/his credibility to honour its/his commitments which may dissuade other parties
from entering into contracts with the former. Thus the consequences of blacklisting
a company/firm/person are of great magnitude, which warrant that before taking
such an action, there should be material on record prima facie to indicate that the
delinque nt Insurance Company's refusal to pay claim was not warranted in the
circumstances of the case. "
5. Mr. Ghulam Mustafa Buzdar, learned counsel for the respondent, stated that the
petition was not maintainable since the respondent has filed a suit for da mages bearing
No.5/2011 before the Court of Senior Civil Judge -V Quetta and the petitioner too has
filed a civil suit for recovery of damages bearing No.44/2011 before the Court of Civil
Judge -IX, Quetta, wherein inter alia damages on account of blacklisti ng have been sought
and as such the instant constitutional petition is not maintainable. Learned counsel has placed
reliance upon Budhu Shah v. Chief Adm. Auqaf 1991 CLC 1445. On merits the learned
counsel for the respondent contended that the blacklisting was in accordance with law and
has referred to clauses 18 and 19 (f), (g) and (h) under the heading 'Removal of Firms', of the
Registration Procedures. It would be appropriate to reproduce the said clause 18 and sub -
clauses (f), (g) and (h) of clause 19 a s under: --
"Assessment of Factors.
(18) The removal of a registered firm from the list of approved firms is a drastic
action which must be based upon adequate evidence, consideration should be given to
how much credible information is available, its re asonableness in view of surrounding
circumstances, and inference which may be drawn from the existence or absence of
affirmative facts. The assessment should include an examination of basic documents,
such as contracts."
"Cause of Removal.
(19) With t he approval of the relevant Registration Committees, a firm/individual
may be removed from the list of registered firms as an administrative action for
following reasons: --
(f) Misconduct: i.e. failure to proceed with the signed contract, withdrawal of t he
commitment, quoting, ridiculously low and then withdrawing the offer and not
responding to written communication etc.
(g) Repeated failure to observe the instructions given in tender forms including
schedule thereto.
(h) Failure to perform a contrac t(s) satisfactorily in accordance with the contractual
obligations which in the opinion of competent authority was due to exclusive fault
of the supplier ".
Learned counsel further stated that the petitioner's blacklisting was a follow up action of the
'removal' of the petitioner as an approved firm.
6. We have heard learned counsel and have gone through the record and the cases relied
upon. The question of maintainability of the petition on account of the fact that the petitioner
had filed a suit for da mages needs examination first. In paragraph 6 of the plaint of such suit
the petitioner claims, "a sum of Rs.200,000,000 by way of loss of profits on account of the
blacklisting and the resultant disqualification of the plaintiff to participate in such ten ders".
And the following prayer has been made in the plaint: -
"(a) A sum of Rs. 269, 495, 644.32 together with interest at the bank rate from the
date of suit .until realization of the adjudged amount;
(b) For costs of the suit, and '
(c) For such oth er relief as may be appropriate in the circumstances of the case."
The fact that this petition was filed earlier in time, disclosure of the petition was made in
paragraph 6 of the plaint and no declaration with regard to the blacklisting has been sought in
the suit would not disentitle the petitioner from approaching this Court in its constitutional
jurisdiction for enforcement of the petitioner's Fundamental Rights. The facts of Budhu
Shah's case cited by the learned counsel for the respondent were diffe rent as demonstrable
from the following portion from the said judgment:
"Further more, an alternative remedy by way of filing petition under section -7 of the
West Pakistan Waqf Properties Ordinance (XVIII of 1961) was available to the
petitioners and the y actually availed of it by filing the same on 13 -11-1974 before
the learned, District Judge, Rahimyar Khan, for declaration to the effect that the
impugned notification was illegal and without lawful authority. Para -6 of the writ
petition shows that in th eir petition under section 7 of the West Pakistan Waqf
Properties Ordinance XVIII of 1961, the petitioners have taken all the grounds
which they have taken in this petition. Strangely enough, without awaiting the
decision in the said petition, the petition ers hurriedly filed this writ petition. The
learned counsel for the petitioner, is not in a position to tell the fate of the aforesaid
petition. "
The prayer in this petition with regard to declaring the action of the respondent in blacklisting
the petit ioner as "unlawful and of no legal -effect" has not been made in the suit filed by the
petitioner. Moreover, this Court in its constitutional jurisdiction cannot award damages as
sought in the subject suit. However, the sooner the blacklisting order comes t o an end will
help mitigate the damages, if any, suffered by the petitioner. Accordingly, the legal objection
on the maintainability on the petition is overruled.
7. It now remains to be considered whether the action of the respondent in blacklisting the
petitioner was in accordance with the Registration Procedures and in accordance with the
freedom to carry on lawful business, which has been enshrined in the Constitution of Pakistan
as a Fundamental Right. The Registration Procedures that have been relie d upon by both
sides permit different actions to be taken against delinquent firms, including blacklisting,
removal and placing of embargo. Blacklisting can only be resorted to after obtaining, "the
approval of Registration Committee" (clause 3 of Chapter -II). In its counter affidavit the
respondent has not filed any document to show that the Registration Committee was
constituted to consider blacklisting the petitioner and had granted an opportunity of a hearing
to the petitioner before passing an order ap proving the blacklisting. Moreover, the reasons
stated by the respondent in the impugned letter for blacklisting the petitioner do not come
within any of the categories listed in clause 5 of (a), (b) or (c) of the Registration Procedures.
The contention of learned counsel for the respondent that blacklisting of the petitioner was a
consequence of its 'removal' is contrary to the respondent's own case besides being illogical.
Even if it be presumed that the petitioner was being 'removed' pursuant to clause 1 9 then too,
"the approval of the relevant Registration Committee," was required, however, approval of
the Registration Committee was not sought either for 'removal' or blacklisting of the
petitioner, let alone providing a hearing to the petitioner. The pet itioner manufactures cables
and conductors which are mostly used by power generating and distribution companies and
NTDC and the extreme action of blacklisting the petitioner effectively prevents it from
carrying on with its lawful business and consequentl y would drive the petitioner out of
business. Such action thus violates the Fundamental Right of carrying on a lawful business
guaranteed by Article 18 of the Constitution of Pakistan. The respondent also violated its own
Registration Procedures.
8. Ther efore, for the reasons stated above, the impugned letter dated 22nd October, 2010 is
declared to have been issued without lawful authority and further declared to be unlawful and
of no legal effect and the petitioner will no longer be considered to be blac klisted or treated
as such. Consequently the respondent is directed to circulate a letter to all those to whom it
had circulated the impugned letter dated 22nd October, 2010 and recall the order of
blacklisting.
The petition is allowed in the aforesaid t erms, but with no order as to costs.
M.H./46/Q Petition alloweThis judgment is reproduced from a publicly available source for informational purposes and does not constitute legal advice. If you believe this listing contains an error,
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