IN THE SUPREME COURT OF PAKISTAN 
 
 
(Appellate Jurisdiction) 
 
 
 
PRESENT: 
 
 
Mr. Justice Iftikhar Muhammad Chaudhry, CJ  
 
 
Mr. Justice Jawwad S. Khawaja 
Mr. Justice Sh. Azmat Saeed 
 
 
 
CIVIL APPEALS NO.149 AND 150 OF 2010. 
 
(On appeal from the judgments of the High Court of 
Sindh, Karachi, dated 07.05.2008 & 28.02.2008, 
passed in CPs No.D-442 & D-441 of 2007, 
respectively) 
 
 
 
Habibullah Energy Limited 
In CA.149/2010.  
 
 
 
Zonal Labour Union Lakhra 
and others. 
In CA.150/2010.  
… Appellants 
 
 
 
 
 
 
 
VERSUS 
 
 
 
WAPDA through its 
Chairman and others. 
In CA.149/2010.  
 
 
 
Federation of Pakistan 
through Secretary M/o W&P 
and others. 
In CA.150/2010.  
 
… Respondents 
  
 
---- 
 
For the Appellants (s) 
: Miangul Hassan Aurangzeb, ASC 
Mr. Arshad Ali Ch., AOR 
(in CA.149/2010) 
 
Mr. Tariq Mehmood, Sr. ASC  
(in CA.150/2010) 
 
  
On Court’s Notice 
: Mr. Shah Khawar, Addl. AGP 
 
CAs.149/2010, etc. 
2 
For Chairman, WAPDA & 
Lakhra Power Generation 
 
: Mr. Shahid Hamid, Sr. ASC 
 
For M/o W&P 
: Raja Abdul Ghafoor, ASC/AOR 
Mr. Saifullah Chatha, Secy., W&P 
Mr. Zargham Ishaq, MD, PEPCO 
Barrister Asghar Ali, Sr. Legal Consultant 
 
  
For the Privatization 
Commission 
: Mr. Abdul Haseeb Khan,  
Sr. Legal Consultant 
 
  
For NEPRA 
: Kh. Muhammad Naeem, Chairman 
 
For the Associated Lakhra 
Energy 
: Mr. Wasim Sajjad, Sr. ASC 
Mr. Mehr Khan Malik, AOR 
 
  
Date of Hearing 
: 19-21.08.2013. 
 
 
 
 
 
 
JUDGMENT  
 
 
 
 
SH. AZMAT SAEED, J.- The Water & Power 
Development Authority (WAPDA) granted 20-years lease to   
M/s. Associated Group (M/s. AG) in respect of GENCO-IV 
Lakhra Power Generation Company Limited on 11.09.2006. The 
said transaction was challenged by M/s. Habibullah Energy 
Limited (M/s. HEL) before the learned High Court of Sindh by 
filing Constitutional Petition No.D-442 of 2007, which was 
dismissed vide judgment dated 07.05.2008. Being aggrieved, 
M/s. HEL challenged the aforesaid judgment through Civil 
Petition for Leave to Appeal No.545 of 2008 before this Court. 
2. 
 
The grant of lease on 11.09.2006 by WAPDA to    
M/s. AG was also challenged by the Zonal Labour Union, Lakhra 
CAs.149/2010, etc. 
3 
(ZLU) and others before the learned High Court of Sindh through 
Constitutional Petition No.D-441 of 2007, which was also 
dismissed vide judgment dated 28.02.2008. Being aggrieved, the 
said ZLU invoked jurisdiction of this Court through Civil Petition 
for Leave to Appeal No.351 of 2008. 
3. 
 
In both the afore-mentioned Civil Petitions for Leave 
to Appeal, this Court vide Order dated 08.03.2010 granted leave 
to appeal and the said Petitions were converted into Appeals i.e. 
Civil Appeals No.149 and 150 of 2010. The relevant portion of 
the Leave Granting Order is reproduced herein below:  
 
 
“After having heard the learned counsel on behalf 
of the parties at length, we feel that there are 
certain legal, Constitutional and factual ticklish 
questions which need some discussion and 
accordingly leave to appeal is granted, inter alia, 
on the question as to whether the process has been 
completed in a fair and transparent manner. …”. 
 
4. 
 
Both the aforesaid Civil Appeals involving common 
questions of law and fact were heard together and were allowed 
by this Court vide short Order dated 21.08.2013 in the following 
terms: 
 
“We have heard the learned counsel for the 
parties 
at 
length 
and 
have 
examined 
the 
pleadings/documents 
placed 
before 
us 
for 
ascertaining as to whether transaction between the 
parties i.e. the Lease for 20-years in respect of 
Lakhra 
Power 
Station 
GENCO-IV, 
dated 
11.09.2006, 
followed 
by 
Power 
Purchase 
Agreement dated 15.12.2007 had been entered into 
in a transparent manner following the PEPRA 
CAs.149/2010, etc. 
4 
Rules and allowing open opportunity to interested 
parties to participate in the competition for 
acquiring the said Leasehold Rights.  
 
2. 
The conclusion is that the transaction noted 
herein above between M/s. Associated Group 
(AG) and the Water and Power Development 
Authority (WAPDA) is not sustainable being non-
transparent and also suffers from irregularities, 
illegalities, omissions and commissions as well as 
violates the relevant Rules as well as precedents 
set-forth by the superior Courts. 
 
3. 
Therefore, while setting aside the transaction 
noted herein above, we direct the Federal 
Government 
of 
Pakistan 
to 
conduct 
an 
inquiry/probe to fix the civil and criminal liability 
upon the persons/beneficiaries, etc in accordance 
with the law as a result of above conclusion.  
 
4. 
For the reasons to be recorded later, both the 
appeals are allowed with costs throughout.” 
 
The detailed reasons of the above-said Order are as follows: 
5. 
 
The brief facts necessary for adjudication of the lis at 
hand as gleaned from the voluminous record made available by 
the parties are that apparently the Coal Fired Lakhra Power Plant 
consisting of three (03) Generating Units of 50 MW each (total 
150 MW) were set up by WAPDA in Kashmore, District 
Jamshoro, Province of Sindh. The said Plant i.e. Coal Fired 
Lakhra Power Plant apparently became operational in 1995. In 
February, 2002, the Lakhra Power Generation Company Limited 
(LPGC) was incorporated as a subsidiary of WAPDA in which 
the said Plant vested. 
CAs.149/2010, etc. 
5 
6. 
 
In the meeting held on 12.06.2001, the Task Force on 
Thar Coal decided that the Government of Sindh should take 
necessary action/steps to privatize the Lakhra Power Plant in 
consultation with WAPDA. Perhaps it was pursuant to the 
aforesaid decision that the LPGC was incorporated. On 
26.07.2003 an advertisement was issued on behalf of LPGC, inter 
alia, in the Daily Dawn, News and the Nation inviting 
applications for Pre-qualification/Expression of Interest for 
privatization of 150 MW Fluidized Bed Combustion Coal Fired 
Power Plant Lakhra near Khanote in District Jamshoro, Sindh. 
The salient features of the said advertisement were that a decision 
had been taken by the Federal Government to privatize the Lakhra 
Power Plant through the Sindh Privatization Commission 
(Commission). However, the said Power Plant required major 
rehabilitation for which an Internationally experienced Operator 
for Rehabilitation, Operation, Maintenance and Management 
(ROMM) was to be appointed. The offers were invited only for 
the Pre-qualification for appointment as a ROMM Operator. 
Pursuant to the aforesaid advertisement, 17 parties purchased the 
Information Package, 8 parties responded/submitted their 
Expression of Interest disclosing their experiences and financial 
standings. However, only two parties i.e. M/s. Muhammad Ismail 
CAs.149/2010, etc. 
6 
& Company (Pvt) Limited, Hyderabad and M/s. Habibullah 
Energy Limited, Karachi (the Appellant in Civil Appeal No.149 
of 2010) submitted the Pre-qualification documents before the 
due date. 
 
It may be pertinent to mention that M/s. AG neither 
submitted any Expression of Interest nor any Pre-qualification 
documents pursuant to the afore-said advertisement. 
7. 
 
The offers made pursuant to the advertisement dated 
26.07.2003 were not found satisfactory and in this behalf 
objections were also raised by the Commission. Consequently, on 
17.03.2004 the Water & Power Development Authority decided 
to terminate the process and to undertake an inhouse maintenance 
programme, so as to increase the capacity and feasibility of the 
said Power Plant. In pursuance of the aforesaid decision, the 
Purchase Orders, both local and international, were placed for the 
procurement of material for rehabilitation of the Lakhra Power 
Plant. 
8. 
 
M/s. Rupali Polyester Limited vide letter dated 
22.06.2004 expressed its interest in lease of the said Power Plant. 
The said request was turned down by WAPDA, thereafter, on 
20.08.2005 M/s. AG apparently wrote a letter to WAPDA 
expressing its interest to get a lease of the said Power Plant. 
CAs.149/2010, etc. 
7 
Pursuant to the said letter, as per the case of the Federation before 
us, a meeting was held in October, 2005 in the Presidency 
between M/s. AG and the Chief of Staff to the President, followed 
by a meeting with the then President on 29.11.2005. 
9. 
 
In the above backdrop M/s. AG wrote a letter on 
06.01.2006 to the Chairman, WAPDA which is reproduced 
hereunder for reference: 
 
 
“To 
 
 
Chairman WAPDA 
 
 
WAPDA House, 
 
 
Lahore 
 
Sub:  Lease of Lakhra Coal Fired Power Project - 
Presentation/Documents 
 
Dear Tariq Bhai, 
 
 
We appreciate your cooperation in giving us 
opportunity to present 3 x 50 MW Lakhra 
Fluidized Bed Coal Power Project assessment 
study executive summary by PIC Marubeni Energy 
Group tomorrow at 3 PM. However, due to the 
presentation 
scheduled 
tomorrow 
for 
Prime 
Minister in Islamabad on the same subject will 
request you to kindly reschedule the presentation 
for next week? 
 
 
Per the proper protocol we wanted to brief you 
about our work before meeting the Prime Minister 
tomorrow but you have been tied up in other 
meetings. Our presentation covers the detailed 
work that has been carried out and give you a good 
overview of the project. 
 
 
For your information and review please find the 
Plant Condition Assessment Report and a draft 
MOU. We look forward to meeting you. 
 
Thank you very much, 
 
Sincerely yours, 
CAs.149/2010, etc. 
8 
Sd/- 
Iqbal Z. Ahmed 
Chairman” 
 
10.  
A perusal of the Memorandum of Understanding 
(MOU) appended with the letter dated 06.01.2006 indicated that 
the lease would be for a period of 20-years and in case of 
privatization, M/s. AG would have the first right of refusal. In 
response, WAPDA vide letter dated 19.01.2006 asked M/s. AG to 
submit its technical and financial proposals. On 09.03.2006 the 
Representatives of M/s. AG met with the then Federal Minister 
for Water & Power and gave a presentation. 
11.  
A meeting was convened on 22.03.2006, the Minutes 
whereof are available on the record wherein the then President 
and the Prime Minister, inter alia, took the following decision: 
 
 
“WAPDA to finalize terms and conditions for 
leasing Lakhra Power Plant to Associated Group 
within one week.” 
 
12.  
WAPDA addressed a letter dated 25.03.2006 to six of 
the Companies which had shown interest pursuant to the 
advertisement dated 26.07.2003 for Pre-qualification for 
appointment as a ROMM Operator, to submit their proposals for 
lease of the Lakhra Power Plant within four weeks, which time 
was subsequently extended up to 22.05.2006. M/s. AG did not 
submit any fresh proposal purportedly in view of the decision 
CAs.149/2010, etc. 
9 
dated 22.03.2006 referred to above. In a subsequent meeting 
dated 12.05.2006 chaired by the then President of Pakistan, it was 
decided that M/s. AG should be given the first right of refusal in 
respect of lease of the Coal Fired Lakhra Power Plant. The said 
decision was communicated vide Prime Minister’s Secretariat 
letter dated 25.05.2006. M/s. HEL, Appellant in Civil Appeal 
No.149 of 2010, was the only Firm which submitted its proposal 
by due date i.e. 22.05.2006. Another meeting was held in the 
President House at Islamabad on 13.07.2006, in pursuance 
whereof vide letter dated 17.07.2006, both M/s. Habibullah 
Energy Limited and M/s. Associated Group were advised to 
submit their revised bids by 21.07.2006 to be opened on the same 
date. Such revised bids were submitted and opened. M/s. AG 
made two separate offers based on two separate proposals. One of 
the offers of M/s. AG after some adjustments through 
negotiations with WAPDA was approved by the Board of 
Directors of LPGC on 19.08.2006. The Government of Sindh 
vide letter dated 24.08.2006 conveyed its No Objection. The offer 
was approved by the WAPDA Board on 06.09.2006 whereupon a 
Lease Deed was executed in favour of M/s. AG on 11.09.2006. 
Pursuant thereto, we are informed that a Power Purchase 
Agreement dated 15.12.2007 has since been executed. 
CAs.149/2010, etc. 
10
13.  
The grant of lease to M/s. AG was challenged 
variously, both by the M/s. HEL and the ZLU through two 
separate Constitutional Petitions filed before the learned High 
Court of Sindh. Both the Constitutional Petitions were dismissed 
by two separate judgments dated 07.05.2008 and 28.02.2008. 
Feeling aggrieved, M/s. HEL and the ZLU invoked jurisdiction of 
this Court through two separate Civil Petitions for Leave to 
Appeal No.545 and 351 of 2008, which were converted into 
instant appeals i.e. Civil Appeals No.149 and 150 of 2010, 
respectively.  
14.  
We have heard the learned counsel for the parties as 
well as the learned Additional Attorney General for Pakistan. 
15.  
It is contended by the learned counsel for the 
Appellant-M/s. HEL that the advertisement dated 26.07.2003 was 
for inviting applications for Pre-qualification/Expression of 
Interest for appointment as a ROMM Operator only. The said 
Appellant was one of the two Companies which had submitted its 
Pre-qualification documents as is evident from the record. In the 
circumstances, the Respondents-WAPDA/LPGC were bound to 
pre-qualify the Appellant. M/s. AG did not even participate in the 
pre-qualification process and in the absence of such pre-
CAs.149/2010, etc. 
11
qualification it was a rank outsider whose bid could not even be 
considered by WAPDA/LPGC.  
16.  
The learned counsel further contended that no specific 
advertisement was issued inviting bids for lease of the said Power 
Plant and in absence of such an advertisement for information of 
public-at-large the entire process was liable to be set aside. Even 
otherwise, the offer submitted by M/s. AG was unsolicited, 
therefore, invalid. Furthermore, the bid submitted by M/s. AG 
contained two alternative proposals, which is not permitted in law 
and such bid should have been treated as non-responsive and 
rejected. It is added that the documents on record illustrate that 
M/s. AG had easy and exclusive access to the persons involved in 
the decision making process for grant of lease, as a consequence 
whereof the entire process was far from transparent. The learned 
counsel further added that a decision to award the Contract to 
M/s. AG was taken on 22.03.2006 at the highest level, whereafter 
with mala fide intention and by way of deception, notices were 
issued on 25.03.2006 to some of the Companies which had 
participated in the pre-qualification process for appointment of a 
ROMM Operator. Even then, the notices were not issued to all the 
parties who had shown their interest in response to the 
advertisement dated 26.07.2003 mentioned above. It is further 
CAs.149/2010, etc. 
12
added that M/s. AG was exclusively granted the first right of 
refusal which was not available to any other bidder.  
The learned counsel further contended that the transaction 
for the lease of the Lakhra Power Plant fell squarely within the 
purview of the Privatization Commission Ordinance, 2000 
(Ordinance, 2000) and could only be effected by the said 
Privatization Commission in accordance with the mode of 
privatization prescribed in the Ordinance, 2000 and the Rules 
framed thereunder as in view of Section 42 of the said Ordinance, 
2000, the provisions thereof would override any other law for the 
time being enforce. In short, it is contended that the transaction 
was carried out by an Institution which had no jurisdiction in a 
manner not provided by law. The learned counsel added that the 
provisions of the Public Procurement Rules, 2004 (Rules, 2004) 
were not adhered to especially with reference to Pre-qualification. 
In view of the above, it is contended that the award of the 
Contract to M/s. AG was not sustainable in law.  
17.  
In support of his contentions, the learned counsel 
placed reliance on the judgments, reported as Wattan Party 
through President v. Federation of Pakistan through Cabinet 
Committee of Privatization, Islamabad and others (PLD 2006 SC 
697), Petrosin Corporation (Pvt) Limited and others v. MOL 
CAs.149/2010, etc. 
13
Pakistan Oil and Gas Co. and others (PLD 2008 SC 472) and 
Messrs Subhan Deepwell Corporation, Bahawalpur v. Project 
Director, Punjab Rural Water Supply and Sanitation Project HUD 
and PHE Department, Lahore and another (2001 CLC 1762). He 
also referred to the various provisions of the Rules, 2004 as well 
as the PCO 2000 and the Privatisation (Modes and Procedure) 
Rules, 2001. 
18.  
The learned counsel for the Appellant-Zonal Labour 
Union, Larkana and others echoed the contentions raised on 
behalf of M/s. HEL and further added that the process for 
appointment of a ROMM Operator had been formally terminated 
and a specific decision in this behalf had been taken which is on 
the record. Therefore, grant of lease to M/s. AG was the outcome 
of a separate and independent procedure which had been initiated 
without the issuance of a public advertisement inviting offers and 
in the absence of such public advertisement, the entire process is 
illegal and invalid in view of the law laid down by this Court. He 
further contended that the offer of M/s. AG was unsolicited and 
non-responsive and the Contract had been obtained by it through 
unfair means and by exercise of influence on account of its 
connections with the decision making Authorities at the highest 
level which is self-evident from the record. The learned counsel 
CAs.149/2010, etc. 
14
further submitted that the award of the Contract was illegal and 
void, and should be declared as such. 
19.  
The learned counsel for M/s. AG controverted the 
contentions raised on behalf of the Appellants. He further 
contended that the mode, process and the procedure to be adopted 
was the prerogative of WAPDA/LPGC and M/s. AG participated 
in the same, hence, cannot be penalized for the irregularity, if any, 
in the process. He laid great stress that the offer made by M/s. AG 
was financially more beneficial to WAPDA/LPGC than any other 
offer received by them at any point of time. The offer made by 
M/s. AG is also in the public interest, as it would help in 
generating electricity at a very economical cost. 
20.  
The learned counsel for WAPDA at the very outset 
stated that perhaps it would have been more appropriate to issue 
an advertisement, inviting bids for grant of lease of the 
Generating 
Plant, 
however, 
in 
the 
peculiar 
facts 
and 
circumstances which existed the most efficient and fair procedure 
was adopted. He further contended that three (3) Generating Units 
at Lakhra desperately needed rehabilitation involving a large 
input of fresh capital. A decision to privatize the same was taken 
and as a precursor to such privatization, it was decided to appoint 
a ROMM Operator. The response to the advertisement in this 
CAs.149/2010, etc. 
15
behalf was very poor and impractical. Consequently, a decision to 
explore alternative possibilities was made and an offer was 
received from M/s. AG for lease of the said Plant which also 
included a large investment by the lessee. All the Firms and 
Companies which showed any interest in the Lakhra Power Plant 
were invited and the offers therefrom solicited. M/s. HEL 
participated in the said process but the offer made by M/s. AG 
admittedly was more economical, hence, it was accepted after 
some adjustments for the benefit of WAPDA and LPGC. It is 
further contended that the Contract as awarded is bona fide and in 
the public interest, therefore, minor inconsequential irregularities 
cannot be made basis for invalidating the Contract awarded. It 
was also the case of the learned counsel, that in view of the failure 
to find a ROMM Operator for the Coal Fired Lakhra Power Plant 
for the purpose of rehabilitating the same as a preclude to its 
eventual privatization an alternative way forward had to be found. 
The peculiar facts and circumstances necessitated the leasing of 
the Plant and in this behalf the offer of M/s. AG was accepted 
through a proper process. Such offer was not only economical for 
the WAPDA but also in the public interest, therefore, minor 
deviation, if any, neither adversely effect the integrity of the 
process nor furnished a legal basis for judicial review. It is 
CAs.149/2010, etc. 
16
emphasized that the offer made by M/s. AG was more attractive 
than any other offer received from any other party, including M/s. 
HEL (Appellant). 
21.  
The learned counsel was of the view that the 
transaction in question had been carried out in exercise of the 
powers conferred under Section 8(2)(vii) read with the 
explanation to Section 8(2)(v) of the WAPDA Act, 1958 and did 
not come within the purview of the Ordinance, 2000.   
22.  
In support of his contentions, the learned counsel 
relied upon the judgment, reported as Dr. Akhtar Hassan Khan 
and others v. Federation of Pakistan and others (2012 SCMR 
455). The learned counsel also disputed the locus standi and bona 
fide of the Appellants.  
23.  
The learned Additional Attorney General for Pakistan 
appearing on behalf of the Federation disowned the award of the 
Contract to M/s. AG. On instructions, he stated that the Federal 
Government is of the view that the entire leasing transaction is 
without lawful authority and in excess of jurisdiction. A number 
of irregularities and serious lapses were committed, impairing the 
transparency, with the sole purpose of benefiting a particular 
party/beneficiary at the cost of the State and the people.  
24.  
Heard. Available record perused.  
CAs.149/2010, etc. 
17
25.  
Adverting first to the legal objection raised by the 
learned counsel for WAPDA regarding the locus standi of the 
present Appellants to invoke the constitutional jurisdiction of the 
learned High Court, it may be noted that such objection is with 
reference to M/s. ZUL (Appellant in Civil Appeal No.150 of 
2010) and not with regards to M/s. HEL (Appellant in Civil 
Appeal No.149 of 2010). Since both the Constitution Petitions 
from which the instant two Appeals arose had been filed to 
challenge the same transaction of the contract/lease granted in 
favour of M/s. AG for which M/s. HEL had also submitted a bid, 
the said legal objection pales into insignificance and looses all 
relevance. Even otherwise, as has been repeatedly held the 
jurisdiction of the Superior Courts of Judicial Review for the 
enforcement of Fundamental Rights is not a “closed shop” 
particularly, in the context of Public Interest Litigation (PIL), 
therefore, the contentions of the learned counsel even on a stand 
alone basis with reference to Civil Appeal No.150 of 2010 are 
rather suspect, more so as the jurisdiction had been invoked by 
the workers employed in a public Asset to question the 
proprietary and integrity of the process of the transfer of rights in 
such Asset.  
CAs.149/2010, etc. 
18
26.  
The nature, scope and extent of the power of judicial 
review by the superior Courts of administrative actions and the 
grounds on the basis whereof such actions can be set aside has 
evolved with the passage of time and its contours stand clearly 
defined especially in the context of the award of the contracts by 
the State or its instrumentalities. In the case, reported as Messrs 
Airport Support Services v. The Airport Manager, Quaid-e-Azam 
International Airport, Karachi and others (1998 SCMR 2268), the 
following was held: 
"Further a contract, carrying elements of public 
interest, concluded by functionaries of the State, 
has to be just, fair transparent, reasonable and 
free of any taint of mala fides, all such aspects 
remaining open for judicial review. The rule is 
founded 
on 
the 
premises 
that 
public 
functionaries, deriving authority from or under 
law, are obligated to act justly, fairly equitably, 
reasonably, 
without 
any 
element 
of 
discrimination 
and 
squarely 
within 
the 
parameters of law, as applicable in a given 
situation. Deviations, if of substance, can be 
corrected through appropriate orders under 
Article 199 of the Constitution. In such behalf 
even where a contract, pure and simple, is 
involved, provided always that public element 
presents itself and the dispute does not entail 
evidentiary facts of a disputed nature, redress 
may be provided. A number of precedents have 
contextually come to occupy the field and, inter 
alia, may be noted (1) Anjuman-e-Ahmadiya, 
Sargodha v. Deputy Commissioner, Sargodha, 
PLD 1966 SC 639, (2) The D. F.O. South Khari 
v. Ram Sanehi Singh, 1971 (3) Supreme Court 
Cases 864-AIR 1973 SC 205; (4) Rashid A. 
Khan v. West Pakistan Railway Board PLD 1973 
Lahore 733; (5) The Majilisi-lntizamia, Jamia 
Masiid, Ghulam Muhammad Abad Colony v. 
Secretary to Government of West Pakistan, 
CAs.149/2010, etc. 
19
Communication and Works Department, PLD 
1975 SC 355, (6) Muhammad Ashraf Ali v. 
Muhammad Naseer and 2 others 1986 SCMR 
1096 (7) M/s. Dwarkadas Marfatia & Sons v. 
Board of Trustees, Bombay Port, AIR 1989 
Supreme-Court 1642; (8) M.H. Abidi v. State 
Life Insurance Corporation, 1990 MLD 563; (9) 
Mahabir Auto Stores v. Indian Oil Corporation, 
AIR 1990 Supreme Court 1031; (10) Shrilekha 
Vidyarthi v. State of U.P. AIR 1991 Supreme 
Court 537; (11) M/s Pacific Multinational (Pvt.) 
Ltd v. Inspector-General of Police Sindh PLD 
1992 
Karachi 
283; 
(12) 
Messrs 
Presson 
Manufacturing Ltd. v. Secretary Ministry of 
Petroleum & Natural Resources and 2 others 
1995 MLD 15 (Lahore) and (16) Shoaib Bilal 
Corporation v. Government of Pakistan KLR 
1997 Rev. Cas. 27 Lahore." 
 
The aforesaid judgment was noted and followed by this Court in 
the case, reported as Messrs Ramna Pipe and General Mills (Pvt) 
Limited v. Messrs Sui Northern Gas Pipe Lines (Pvt) and others 
(2004 SCMR 1274). 
27.  
This Court, in the case, reported as Raja Mujahid 
Muzaffar and others v. Federation of Pakistan and others (2012 
SCMR 1651), has held as under: 
“31. Public funds, public property, licenses, 
jobs or any other government largesse is to be 
dealt with by public functionaries on behalf of 
and for the benefit of the people. Public authority 
must necessarily be examined in accordance with 
law keeping in view the Constitutional Rights of 
the citizens. Thus, this Court has not hesitated   
in the exercise of its jurisdiction of judicial 
review …”.  
 
In Suo Motu Case No.13 of 2009 (PLD 2011 SC 619), this Court 
held as follows: 
CAs.149/2010, etc. 
20
 
“24. It is well-settled that in matters in which the 
Government bodies exercise their contractual 
powers, the principle of judicial review cannot be 
denied. However, in such matters, judicial review 
is intended to prevent arbitrariness or favouritism 
and it must be exercised in larger public interest. It 
has also been held by the Courts that in matters of 
judicial review the basic test is to see whether 
there is any infirmity in the decision making 
process. It is also a well-settled principle of law 
that since the power of judicial review is not an 
appeal from the decision, the Court cannot 
substitute its decision for that of the decision 
maker. The interference with the decision making 
process is warranted where it is vitiated on account 
of 
arbitrariness, 
illegality, 
irrationality 
and 
procedural impropriety or where it is actuated by 
mala fides. …” 
 
It was further held as follows: 
“32… The Governmental bodies are invested with 
powers to dispense and regulate special services by 
means of leases, licences, contracts, quotas, etc., 
where they are expected to act fairly, justly and in 
a transparent manner and such powers cannot be 
exercised in an arbitrary or irrational manner. 
Transparency lies at the heart of every transaction 
entered into by, or on behalf of, a public body. To 
ensure transparency and fairness in contracts, 
inviting of open bids is a prerequisite. The 
reservations or restrictions, if any, in that behalf 
should not be arbitrary and must be justifiable on 
the basis of some policy or valid principles, which 
by 
themselves 
are 
reasonable 
and 
not 
discriminatory.” 
 
In the case, reported as Maulana Abdul Haque Baloch and others 
v.  Government of Balochistan through Secretary, Industries and 
Mineral Development and others (PLD 2013 SC 641), the 
following was held: 
117. As regards the power and jurisdiction of the 
municipal courts to nullify any action of the 
CAs.149/2010, etc. 
21
Government where it is established that the 
decision-making authority has exceeded its powers; 
committed an error of law or breach of the rules of 
natural justice; reached a decision which no 
reasonable forum would have reached; or abused its 
powers, …”.  
 
In the case of Corruption in Hajj Arrangements (PLD 2011 SC 
963), this Court has held as under: 
 
“29.  The jurisdiction of this Court is always 
exercised judiciously and with judicial restraint. 
All those cases which are quoted hereinabove 
clearly indicate that in the matter of exercise of 
power of judicial review in Pakistan we have not 
travelled so far as is the position in the 
neighboring country. By now, the parameters of 
the Court's power of judicial review of 
administrative or executive action or decision 
and the grounds on which the Court can interfere 
with the same are well settled. Indisputably, if 
the action or decision is perverse or is such that 
no 
reasonable body of persons, properly 
informed; could come to or has been arrived at 
by the authority misdirecting itself by adopting a 
wrong approach or has been influenced by 
irrelevant or extraneous matters the Court would 
be justified in interfering with the same. 
[Commissioner of Income Tax v. Mahindra 
(AIR 1984 SC 1182)]. The exercise of 
constitutional powers by the High Court and the 
Supreme Court is categorised as power of 
judicial 
review. 
Every 
executive 
or 
administrative action of the State or other 
statutory or public bodies is open to judicial 
scrutiny and the High Court or the Supreme 
Court can, in exercise of the power of judicial 
review under the Constitution, quash the 
executive action or decision which is contrary to 
law or is violative of Fundamental Rights 
guaranteed by the Constitution. With the 
expanding horizon of Articles dealing with 
Fundamental Rights, every executive action of 
the Government or other public bodies, if 
arbitrary, unreasonable or contrary to law, is now 
amenable to the writ jurisdiction of the Superior 
Courts and can be validly scrutinised on the 
touchstone of the Constitutional mandates. 
CAs.149/2010, etc. 
22
[Common Cause, A Regd. Society v. Union of 
India (AIR 1999 SC 2979)]. In the case of Union 
Carbide Corporation v. Union of India [AIR 
1992 SC 248 = 1991 SCR (1) Supl. 251].  
 
 
In the case of Stretching Computers Ltd v. Messers M. and N. 
Publications Ltd (AIR 1996 SC 51), it was also held as under: 
 
“… It has also been pointed out that for securing 
the public interest one of the methods recognized 
is to invite tenders affording opportunity to 
submit offers for consideration in an objective 
manner. However, there may be cases where in 
the special facts and circumstances and due to 
compelling reasons which must stand the test of 
Article 14 of the Constitution, departure of the 
aforesaid rule can be made. …” 
 
28.  
An overview of the judgments reproduced or referred 
to herein above leaves little room for doubt that it is now a well-
settled principle of law that all public functionaries must exercise 
public authority, especially while dealing with the public 
property, public funds or Assets in a fair, just, transparent and 
reasonable manner, untainted by mala fide without discrimination 
and in accordance with law, keeping in view the Constitutional 
Rights of the Citizens. This would hold true even in the absence 
of any specific statutory provisions setting forth the process in 
this behalf. Therefore, it is not really relevant whether the 
transaction in question was governed by the Ordinance, 2000 or 
the Rules, 2004 or neither. It is an equally well settled principle of 
law that such actions of public functionaries are always subject to 
CAs.149/2010, etc. 
23
Judicial Review. No doubt, while exercising its jurisdiction, the 
Superior Courts neither sit in appeal over the administrative 
actions nor interfere on account of inconsequential deviations, as 
has been observed in Dr. Akhtar Hassan Khan’s case (supra). 
However, where the administrative authority acts in a 
discriminatory manner and action fails the test of reasonableness, 
transparency and/or is otherwise unjust and unfair or suffer from 
mala fide, the Courts not only are vested with the jurisdiction to 
set aside such action but any failure in such an eventuality to 
exercise the power of Judicial Review, when invoked, would 
make the Court a party to such unreasonable, unfair, mala fide 
and illegal action.  
29.  
Examining the transaction, the subject matter of the 
instant case in the light of the principles of Judicial Review 
enumerated hereinabove, it appears that the original process 
initiated through the advertisement dated 26.07.2003 was for the 
appointment of a ROMM Operator and was commenced through 
the Government of Sindh in consultation with WAPDA. The said 
process was formally terminated on 17.03.2004. The disputed 
contract of lease was a result of independent process undertaken 
by WAPDA unrelated to the procedure initiated pursuant to the 
advertisement dated 26.07.2003. No fresh public advertisement 
CAs.149/2010, etc. 
24
was issued. Such an advertisement is universally accepted as a 
condition precedent for ensuring a free, fair, open, competitive 
and transparent process for transfer of public assets or rights 
therein. In fact no compelling reasons have been pleaded at the 
bar by WAPDA for not issuing such an advertisement. The 
absence of such an advertisement, alone in fact and under the 
circumstances of the case, is fatal to the transaction in question.  
30.  
M/s. Rupali Polyester Limited vide letter dated 
22.06.2004 expressed its interest to lease the said Power Plant, 
which was turned down and rightly so by WAPDA. However, 
when M/s. AG approached WAPDA in this behalf, it was 
welcomed with open arms.  
31.  
The admitted record also reveals that M/s. AG was 
unilaterally given prior access to the Power Plant evidencing the 
availability of an unfair advantage and access to the decision 
making authorities at the highest level not only in WAPDA but 
also in the Presidency.  
32.  
The documents and facts, as made available by 
WAPDA, revealed that no formal decision was taken by WAPDA 
on its own to lease out the Power Plant that too for a period of 20 
years. In fact, such decision was taken for WAPDA by M/s. AG, 
CAs.149/2010, etc. 
25
as it is apparent from the MOU appended with the letter dated 
06.01.2006. 
33.  
The decision in principle to award the contract to M/s. 
AG was taken on 22.03.2006 at the highest level by the President 
of Pakistan, Prime Minister of Pakistan and the Chairman, 
WAPDA. Thereafter, without issuing any advertisement for the 
information of the public at large, some of such firms, which had 
originally shown their Expression of Interest for being 
appointment as a ROMM Operator, pursuant to the advertisement 
dated 26.07.2003 were contacted. Such procedure was not only 
illegal but in fact a farcical and mala fide attempt to clothe the 
transaction with some semblance of legality. The said process and 
the subsequent approval by the Board of WAPDA to M/s. AG 
appears to be an infertile attempt to paper over the illegalities. 
34.   
The aforesaid deviations are not trifle but go to the 
very heart of the matter. The omissions and commissions make it 
clear and obvious that by no stretch of the imagination, the 
transaction in question is legal, transparent, fair, open or the result 
of a competitive and fair process. The Power Plant is a public 
asset and those entrusted therewith were sadly found wanting. 
The transaction has not only been disowned by the Federal 
Government of which the WAPDA is an instrumentality but it has 
CAs.149/2010, etc. 
26
also categorically taken the stand that the transaction was beset 
with irregularities, and serious lapses were committed impairing 
its transparency with the sole purpose of benefiting the 
beneficiary i.e. M/s. AG. The learned counsel appearing for M/s. 
AG found himself, unable to defend the process culminating in 
the transaction in question, leaving WAPDA floundering alone in 
the sea of its own irregularities and illegalities.  
35.  
Thus, for the foregoing reasons, these appeals are 
allowed with costs through out, the impugned judgments are set 
aside and the transaction of lease with M/s. AG and the Power 
Purchase Agreement executed in pursuance thereof held to be not 
sustainable and the direction was issued to the Federal 
Government to fix the civil and criminal liability.  
 
 
 
 
Chief Justice 
 
 
 
I agree and have also added a separate concurring note. 
 
 
Islamabad 
Judge 
 
 
 
 21.08.2013. 
‘APPROVED FOR REPORTING’ 
Mahtab/* 
Judge 
 
 
CAs 149-150/2010 
1
 
Jawwad S. Khawaja, J. I have had the benefit of going through the reasoning of 
my learned brother Azmat Saeed, J., in support of the short order dated 21.8.2013. While 
in agreement with his conclusions, I am writing this concurring opinion to provide 
additional reasons in support of the said order. 
2. 
At the outset, it is important to clarify a fundamental principle regarding the 
nature of public sector enterprises which seems to have eluded learned counsel for the 
respondents. Public sector enterprises, such as the power plant at Lakhra, are public 
assets which belong beneficially to the people of Pakistan. While the state is entrusted 
with the management of such enterprises, the state agencies responsible for management 
do not thereby become owners of the enterprise and its assets. While public sector 
enterprises do not have shareholders like private corporations, this does not mean that the 
agency responsible for the management of the enterprise can exercise unbridled discretion 
in managing the enterprise.  
3.  
In order to ascertain the proper role of state agencies in the management of public 
sector enterprises, it is of critical importance to understand the nature of government as 
defined by our constitutional system. Constitutional democracy is premised on a 
contractual theory of government, whereby power is delegated by the people to the 
government in accordance with the terms of the Constitution. The preamble to the 
Constitution stipulates, inter alia, “that it is the will of the people of Pakistan to establish an 
order.” State agencies responsible for the management of publicly owned companies are 
part of the order established by the will of the people, and thereby possess merely 
delegated authority. 
4. 
Rather than being owners of public sector enterprises, state agencies stand in a 
fiduciary relationship to the people who are the beneficial owners of the publicly owned 
assets. The idea that rulers owe a fiduciary obligation to the ruled is at least two millennia 
old. The Roman philosopher and politician Cicero defined the nature of government as 
follows in De Officiis, “The guardianship of the state is a kind of trusteeship which should always 
be managed to the advantage of the person [or body which has] entrusted rather than of those to 
whom it is entrusted.” We have on numerous occasions emphasized the fiduciary nature of 
the interaction between the state and the citizen. In Muhammad Yasin v. Federation of 
Pakistan (PLD 2012 SC 132), we held that “holders of public office…are first and foremost 
CAs 149-150/2010 
2
fiduciaries and trustees for the people of Pakistan. And when performing the functions of their 
Office, they can have no interest other than the interests of the honourable People of Pakistan.” The 
basis of fiduciary relations is the exclusive benefit principle, according to which the 
fiduciary has a duty to act solely in the interests of the beneficiary. Fiduciary obligations 
depend on the complete commitment of the fiduciary to act in the best interest of the 
principal.  
5. 
It is important to note that a fiduciary obligation is not merely an ethical precept. 
As a legal imperative, fiduciaries must act in the best interests of the principal, performing 
their functions with care and complete fidelity. In the private law context, where fiduciary 
duties are routinely enforced by the courts, elections alone are not considered sufficient to 
hold company directors responsible to shareholders and align their interests. Instead, in 
the area of corporate law, there is a recognition that the interests of elected directors and 
shareholders may diverge. Given that shareholders are numerous and diffuse, it may be 
difficult for them to effectively monitor the decisions taken by the board. Further, because 
of collective action problems, the shareholders may find it difficult to coordinate and 
respond to abuse of discretionary authority by the directors. Hence, corporate law 
employs a judicial mechanism, the enforcement of fiduciary duties, to align the interests 
of the shareholders and their agent, the board of directors. The structure of the principal-
agent problem is the same in the case of state agencies, such that public officials may have 
an incentive to advance their own interests at the expense of the citizens’ interests. In fact, 
the need for a judicial mechanism is even more acute in the case of state agencies, since 
the principal, the people, is even more numerous and diffuse than the shareholders of a 
company.  
6. 
At this point, it is important to note that not all decisions by state functionaries are 
to be subjected to an exacting judicial oversight. This is because the principal, (the people), 
has in fact vested state agencies with discretionary power of an administrative nature. 
Such delegation of authority by the principal is essential to the efficient functioning of the 
government. However, given the possibility of the agent’s deliberate or negligent 
deviation from the best interests of the beneficiary, the court will enforce fiduciary 
obligations under certain circumstances. A breach of the duty of loyalty, such as in the 
case of a self-dealing transaction or one involving conflict of interest, will trigger 
CAs 149-150/2010 
3
heightened scrutiny by the court. Further, if public officials fail to exercise the duty of care 
that is expected of a prudent manager, the court will assess the underlying action or 
transaction to ascertain whether the state functionaries have breached their fiduciary 
obligations to the people of Pakistan. 
7. 
The respondent state agency that conducted the leasing process of the Lakhra 
Power Generation Company failed to meet the high standard of loyalty and care that is 
expected of a fiduciary. Rather than privileging the interests of a particular company 
interested in utilizing publicly owned assets for its own benefit, the respondent state 
functionaries ought to have acted solely in the interests of their principal, the people of 
Pakistan. As elaborated in the lead judgment by my learned brother, the interests of the 
principal would have been best served if the requirement of pre-qualification for the 
bidding process would have been uniformly applied to all interested companies, and if a 
proper advertisement that specially mentioned the intent to ‘lease’ the publicly owned 
assets had been published by the respondent authorities. These requirements could have 
been met without any administrative burden to such authorities and would have greatly 
enhanced the fairness of the bidding process. The failure to uniformly apply rules to all 
participants in the bidding process or to publish proper advertisement to give notice to 
potential bidders, suggests that the responsible state authority exercised improper 
oversight during the leasing process. State agencies have not been entrusted with publicly 
owned assets so that its functionaries can at their will rubber-stamp a decision without 
proper review and consideration of its merits. Moreover, favouring one participant in the 
process over the others suggests that the process has not been conducted in good faith by 
the public officials responsible for the leasing of the power plant at Lakhra.  
8. 
While the defects in the bidding process are evident, as has been discussed in the 
lead judgment in this case, we have been urged by counsel for the respondents to condone 
the tainted transaction in the name of ‘public interest’. Of particular concern is the 
following submission by Mr. Shahid Hamid, Sr. ASC on behalf of respondents Nos. 1 and 
5 (C.M. No. 646 of 2011 in C.A. No. 149 of 2010, emphasis added): 
 “It is highly unlikely that any re-bidding will lead to a rate better than the 
rate… approved on 12.8.2006… Consequently even if there has been any 
procedural lapse, the same merits to be condoned in the public interest, as, despite 
CAs 149-150/2010 
4
all hurdles and difficulties, there was no unfairness/inequity/impropriety in 
the final stage of the bidding and its evaluation.” 
9. 
In the above cited excerpt, the learned counsel has urged this Court to accomplish 
the impossible: to condone a breach of the rule of law in public interest. If this Court takes 
upon itself to selectively condone infractions of obligations owed by the state to the 
people, any semblance of the rule of law in this country will evaporate. Further, learned 
counsel has erred in submitting that certain circumstances make it impossible to get a rate 
comparable to the one approved in August 2006. If state authorities such as WAPDA were 
perfectly adept at knowing ex ante what the highest bidding rate will be, there would be 
no need for conducting the bidding process. Finally, learned counsel has argued that since 
the final stage of the bidding process was free of procedural defects, we should condone 
the lapses in the earlier phases of the process. This is at best a questionable assertion, and 
at worst deeply inimical to the idea of the rule of law. To begin with, who shall decide 
what the ‘final’ stage of the bidding process will be? A protracted series of defective 
decisions followed by a final procedurally adequate decision will not lead to a lawful 
outcome. If the courts focus only on the final stage of the process, it will give carte blanche 
to the state agencies to abuse the discretion that has been delegated to them by the 
principals i.e. the honourable people of Pakistan. 
10. 
 In asking this Court to ‘condone’ a violation of the fiduciary duties owed by the 
state agency to the people, the counsel for respondents is implicitly resorting to the now 
defunct ‘doctrine of necessity.’ In Mobashir Hassan v. Federation of Pakistan (PLD 2010 SC 
265) we stated emphatically that “the path of expediency and subjective notions of ‘State 
necessity’ are dead and buried.”  The idea that this Court ought to base its decisions on the 
consequences of government action alone without consideration of the decision-making 
process is a frontal assault on the very concept of the rule of law. The idea of a 
“beneficial” deviation from core fiduciary duties of undivided loyalty, prudence, and 
reasonableness, which the state functionaries owe to the people of Pakistan must be 
rejected in the strongest terms.   
11. 
This brings me to another misconception in the arguments of Mr. Wasim Sajjad Sr. 
ASC for the Associated Group. In the name of expediency, the Court has been urged to 
exercise judicial restraint by condoning the defective aspects of the leasing process and 
CAs 149-150/2010 
5
the lease agreement in this case. Judicial restraint and activism are value-laden concepts 
often employed in the media and in public discourse, to understand the impact of Court 
decisions. The Court itself, however, does not operate in the framework of these concepts. 
For the Court, as guardian and interpreter of the Constitution, the only concept that 
matters is that of the rule of law. The Court will not condone an illegal action by the state 
just because it will be perceived as an activist institution. The Constitution defines the role 
of the judiciary as upholding the rule of law, and that is the only consideration the Court 
will have while adjudicating the matters before it. Further, in the present case, the concept 
of judicial restraint is wholly inapplicable, as the case has reached this Court in its 
appellate jurisdiction. As an aggrieved party, the petitioner has challenged the judgment 
of the High Court of Sindh and we have granted leave to appeal. Exercising restraint in 
such a case would be tantamount to denying the opportunity to an aggrieved party to 
have an unfavorable judgment reversed by a higher court and would also amount to 
denial of due process to such aggrieved party. 
12. 
In conclusion, I would reiterate that the basis of discretionary power of state 
functionaries is the delegation of authority by the principal, the people of this country. 
The state’s legal authority is derived from this fiduciary relationship. If the state or its 
instrumentalities deviate from their fiduciary obligations, the underlying authority of the 
state to administer and enforce the law is thereby eroded. If this happens, the citizens, as 
legal subjects of the state, can no longer be expected to obey the law since the state itself 
has reneged on its public fiduciary duties. We, therefore, cannot condone violations of 
public fiduciary duties, because doing so will lead to an erosion of the basis of the state’s 
legal authority and the rule of law. 
 
 
(Jawwad S. Khawaja) 
Judge 
 

 




  
21.08.2013





  

    
  
  
 

  
 
  

 
 




  

2 
 
     




    
  
 




  
 

  













  


  

 
  








  
 


3 

 

  

  




 
   

 
    
     


 
  

  

 

 


            




   
  
   


 




   
4




(beneficial owner)
 
 




1
 


 




 

   


 
  
De Officiis(Cicero)
  






 



   


 
 
    
 
 

  
 
 

   
  
  
 
 




  
     


 

  

 


 



    

  
    

  


  


  

 
   

 






 

( PLD 2012 SC 132) 







  




   


 


 


   



(beneficiary)

      
   


   




  
 




  
  

 
 
5 
 
     
 


 



 
   



 

 

 

 
 


 

 









 


 
 

  
 



 
 

 

2

    
 



  


 
 
  

 





  

 

 


  
 

 

 

 
 





 


 
 

   


   
 
 
    



 



 


 



  





 
 
  




6 


   

 
  





 

 
 


 



(beneficiary)
  
 





 

 

 
  
 



     
 
  


   
  
   




 






   
     


  



  
 
7 


  
 


   
     
 


3


    
   


  


 

  

  

 
     

 

 
  



(lease)

   
 




   
  




 



  

   
 



  
   
 
 

 

 
 
 
  
 
 

   
 


  


   





    



  



    
 









  

8 


  
  


1


  


 


 
  
5  C.M. No. 646/10)
     
 


  

 2006

 12 
 
  

 

 
  
 





  




 

 




 
  
  




4

 
 


  
9 
 

    
 
  

 


   

  
  


  

2006
 


  

 

     
  



   
    
 




  
 




 




  



  

 
   
 



 

  
 





 




 




 


 


 




     




  
 



  
  

 
  
 

   
  
10 
 
   
 

 
    


 

   


  
 





(PLD 2010 SC 265) 
  









 

  

  

  
  






      





  


5
 

 
  

   

 
 

  
  




 



 
     
11 
 




 
 




  


(restraint)
 


(activism)
 
(restraint)
  
  


 
 

   


  
 

 
  






  







 
(activism)
 







  
  

 





  


  






   
  

  
 


 


  

  
 
  
 

  
  

    
  
 




 
  
 

  
 
12 
 


    
  



 
     
(fiduciry relationship)
 


 
  
  
 



 
    
 
 

    

6

 
 
     










  


7