ISLAMABAD, Feb 17 (APP):The Federal Constitutional Court of Pakistan has ruled that in public procurement, only those conditions that are explicitly stated in the tender advertisement are enforceable, and any subsequent financial liability imposed on the basis of an undisclosed estimate or criterion cannot be sustained in law.
According to the detailed written judgment approved for reporting, a three-member bench headed by Chief Justice FCCP Justice Amin-ud-Din Khan, and comprising Justice Ali Baqar Najafi and Justice Arshad Hussain Shah, dismissed Civil Petition for Leave to Appeal after hearing the matter and upheld the March 30, 2022 judgment of the D.I. Khan Bench of the Peshawar High Court.
The case arose after the Frontier Highway Authority invited tenders on May 16, 2011 from pre-qualified contractors for five packages. M/s Brothers Construction and Builders (BCB) submitted a bid for D.I. Khan–Chashma Road Phase-I (Package-I), offering 7 percent below the estimated cost of Rs138.65 million and deposited bid security of Rs2.773 million at the rate of 2 percent.
Subsequently, the authority contended that the bid was 22.5 percent below the engineer’s estimate of Rs143.563 million and demanded an additional 8 percent security.
Upon failure to furnish the additional security, the bid was rejected, the bid security was forfeited, and the company was blacklisted for six months.
The company challenged the action before the Peshawar High Court, which held that since the engineer’s estimate had not been disclosed in the Notice Inviting Tender (NIT), demanding additional security on that basis was unlawful.
The detailed judgment, authored by Justice Arshad Hussain Shah, observed that when the engineer’s estimate was not included in the advertisement, imposing a financial burden later on that basis was contrary to the principles of transparency, equality and fair process.
The Court held that it was legally impermissible to receive bid security on the basis of the estimated cost stated in the advertisement and then subsequently apply an undisclosed standard within the same process.
In its ruling, the Court referred to judgments of the Supreme Court of Pakistan in Habibullah Energy Limited v. WAPDA (PLD 2014 SC 47) and Ishaq Khan Khakwani v. Railway Board (PLD 2019 SC 602), reiterating that transparency, fairness and competitiveness in public contracts require that the advertisement clearly set out the essential terms, and such fundamental conditions cannot be altered without issuing a fresh advertisement.
The Court also cited the judgment of the Supreme Court of India in Monarch Infrastructure (P) Ltd. v. Commissioner, Ulhasnagar Municipal Corporation (AIR 2000 SC 2272), observing that altering tender rules after the process has commenced is akin to “changing the rules of the game after it has begun.”
Finding no legal infirmity in the High Court’s decision, the Federal Constitutional Court dismissed the petition for leave to appeal and rejected the appeal.