 
IN THE SUPREME COURT OF PAKISTAN 
       (Original Jurisdiction) 
 
Present: 
 
  Mr. Justice Iftikhar Muhammad Chaudhry, CJ 
  Mr. Justice Jawwad S. Khawaja 
  
  Mr. Justice Gulzar Ahmed 
 
Constitution Petition No.5 of 2011  
Khawaja Muhammad Asif.   
 
 
… 
Petitioner(s) 
 
 
 
 
 
 
Versus 
Federation of Pakistan, etc. 
 
 
 
… 
Respondent(s) 
AND 
Human Rights Case No.15744-P of 2009 
(Application by Mr. Imran Mughal for taking action on high-
prices of LPG) 
 
 
For the Petitioner(s):  
Mr. Rashdeen Nawaz Kasuri, ASC with  
 
 
 
 
Khawaja Muhammad Asif, petitioner  
 
For Respondent No.1:  
Mr. Shah Khawar, Addl. AGP 
 
 
 
 
Mr. M. Nazir Malik, Director (Law) 
 
For Respondent No.2:  
Mr. Abid Hassan Minto, Sr. ASC 
 
 
 
 
Mr. Asim Hafeez, ASC 
 
 
 
 
Mr. Arshad Ali Chaudhry, AOR 
 
For Respondent No.3:  
Khawaja Ahmed Tariq Rahim, Sr. ASC 
 
 
 
 
Mr. Uzair Karamat Bhindari, ASC 
 
 
 
 
Mr. M. S. Khattak, AOR 
 
For Respondent No.4:  
Nemo. 
 
For Respondent No.5:  
Mr. Shahid Hamid, Sr. ASC 
 
For Respondent No.6:  
Mr. Muhammad Munir Paracha, ASC 
 
 
 
 
Mr. Mehmood A. Sheikh, AOR 
 
For Respondent No.7:  
Mr. M. Farooq, Dy. Director 
 
For the Applicant(s):  
Mr. Irfan Qadir, ASC (in CMAs-622023/13) 
 
 
 
 
Mr. Salman Akram Raja, ASC (in CMA-6235/13) 
 
 
 
 
Mr. Azhar Siddique, ASC (in CMAs-6247/13) 
 
 
 
 
Nemo. (In CMA-6327/13) 
 
Dates of hearing: 
 
8.10.2013, 10.10.2013, 21.10.2013 &  
22.10.2013. 
 
Const. P. 05/2011 
 
 
2
J U D G E M E N T 
 
Jawwad S. Khawaja, J. Although the record of this case is voluminous, the 
relevant facts necessary for its disposal are fairly simple. Pakistan has been blessed with 
a vast array of natural resources including mineral oil and natural gas. The people of 
Pakistan are the ultimate owners of such resources through their Governments and State 
enterprises such as Sui Southern Gas Co. Ltd. This petition filed under Article 184(3) of 
the Constitution raises issues of public importance relating to such natural resources 
with reference to the enforcement of the fundamental rights guaranteed by the 
Constitution.   
Parties and Background.  
2. 
The matter relates to the award of a project through competitive bidding, by 
respondent No. 2 namely, Sui Southern Gas Company Limited (SSGCL) to the 
respondent No. 3 namely, Jamshoro Joint Venture Limited (JJVL). SSGCL is a State 
enterprise incorporated under the Companies Ordinance, 1984. SSGCL has an 
authorized capital of Rs. 10 billion of which Rs. 6.7 billion is issued and fully paid up. 
The Government alongwith State owned entities owns more than 67% of the shares of 
SSGCL. In 2003 when the aforesaid contract was awarded all 14 Directors on the Board 
of SSGCL were Government appointees. Today, 11 out of the 14 Directors are nominees 
of the Government. SSGCL is a public limited Company listed on the Karachi Stock 
Exchange.  
3. 
JJVL is an unlisted limited Company incorporated under the Companies 
Ordinance, 1984. It was incorporated for the purpose of making a bid for the aforesaid 
project which was aimed at extraction of Liquified Petroleum Gas (LPG) from natural 
gas mined in Badin and supplied to SSGCL under a Gas Sales Agreement (GSA) dated 
12.08.2003. The contract was awarded to JJVL in circumstances which are considered 
below and provide the subject-matter of the petition.  
4. 
To facilitate understanding of the issues arising in this petition it is appropriate 
to summarize briefly and in simple terms, some technical aspects of LPG. The natural 
gas which is received by SSGCL under the GSA is made up of a mix of gases. These 
include propane, butane and methane. Butane and propane, when extracted from the 
Const. P. 05/2011 
 
 
3
mix, are liquefied and sold as LPG. As a result of extraction of LPG from natural gas, 
there is a reduction in the remaining volume and calorific value of natural gas which 
reduction is known in technical terms, as “gas shrinkage”. The volume of gas shrinkage 
is a factor to be considered in deciding the terms for awarding the project for extraction 
of LPG. LPG is presently being used in Pakistan amongst others, by persons who for 
various reasons are not receiving or using natural gas. 
5. 
We can now state some relevant facts which, in the main, are not disputed. 
SSGCL invited Expressions of Interest (EoI) through public advertisements inter alia, in 
the Daily “Dawn” dated 13.3.2000. Bids for pre-qualification of prospective bidders were 
invited through public advertisements through the press, including the Daily “Express” 
dated 11.11.2000. The invitation to bid was for an LPG extraction Plant on a “Build 
Operate Own” (BOO) basis. Although bidding documents were obtained by nine parties 
only six of these were pre-qualified and from these only JJVL submitted a bid. It may be 
noted that this bid was made without a bid bond although this was an essential pre-
requisite for a valid bid as per requirements of clause 5.0 of the Instructions to Bidders. 
6. 
Notwithstanding the aforesaid defect in the bid made by JJVL, SSGCL decided to 
accept the defective bid and to enter into negotiations with JJVL whereafter the two 
parties executed an Implementation Agreement (IA) on 12.8.2003. Under the IA, JJVL 
was to establish a Plant for extraction of LPG from natural gas supplied to it by SSGCL. 
JJVL was, inter alia, to pay a compensation price to SSGCL for gas shrinkage and also 
royalty payments on the LPG extracted by it. The rate of royalty and the differences 
between SSGCL and JJVL in respect of the same is an important aspect of this case as 
will be examined shortly. 
7. 
The petitioner before us is Khawaja Muhammad Asif, who was a member of the 
opposition in the National Assembly in 2011 when this petition was filed. Currently he 
is a part of the Government being the Minister for Water and Power in the Federal 
Cabinet. Learned counsel for some of the respondents contended that the proceedings 
could not continue subsequent to the Petitioner being appointed a Federal Minister. We, 
however, are of the opinion, for reasons appearing below, that this petition raises issues 
of vital public importance impacting the fundamental rights of the people, and 
Const. P. 05/2011 
 
 
4
therefore, must be heard. It is by now well-settled that the Court’s jurisdiction under 
Article 184(3) can be exercised even without a petitioner when information is laid before 
the Court which justifies the exercise of such jurisdiction. Therefore, the proceedings can 
continue in the same manner as before.  
8. 
The petitioner has approached this Court under Article 184(3) of the 
Constitution. It is his case that the extraction agreement awarded to JJVL was neither 
lawful or fair nor was it transparent. According to him, it was meant to extend illegal 
and undue favours to JJVL at the cost of the State and the People of Pakistan. He 
referred firstly; to the acceptance of the bid submitted without a bid bond; secondly, to 
the calculation of royalty payments by JJVL at rates different from those agreed, thus 
causing a very substantial loss to SSGCL and; thirdly, to the changes made in the draft 
Implementation Agreement (forming part of the bid documents) to extend undue 
benefits to JJVL. 
9. 
We can now consider these aspects and the respective contentions of learned 
counsel representing the parties. 
Lack of Bid Bond. 
10. 
At the outset it may be stated that as per Instructions to Bidders the bid 
submitted by JJVL on 12.9.2001 could not have been treated as valid because it was not 
accompanied by a bid bond. Part C Clause 5.0  of the Instructions to Bidders expressly 
stipulated that the “bidder at its cost shall submit a Bid Bond as part of its Bid for an amount of 
US$ 100,000 (United States one hundred thousand) or in equivalent Pakistani Rupees based on 
prevailing inter bank exchange rate”. The bid bond was to be submitted as part of the 
Technical Proposal. The absence of a Bid Bond constituted a major defect in JJVL’s bid 
because the Bid Bond constituted an integral aspect of the Bid. The envelope containing 
the Financial Proposal could not have even been opened when the Technical Proposal 
was not accompanied by the mandatory Bid Bond. This is apparent from Part C, Clause 
5.4 of the Instructions to Bidders, which reads, “Any Bid not accompanied with Bid Bond of 
required amount will be considered as non-responsive, rejected by SSGC and returned to the 
Bidder.” It will thus be seen that rejection of the bid made by JJVL was obligatory. The 
unjustified acceptance of such bid also constituted unfairness and illegality in the 
Const. P. 05/2011 
 
 
5
bidding process inasmuch as other potential pre-qualified bidders were never informed 
that they could submit bids without bid bonds. It appears from the record that a bid 
bond was subsequently furnished when JJVL became sure that the other prequalified 
bidders had not submitted bids. Neither SSGCL nor JJVL were able to proffer any 
explanation to justify such a material departure from the requirements of a valid bid. 
Learned counsel on behalf of JJVL argued that the lack of a bid bond was a mere 
technical irregularity which could not be a ground for striking down the whole 
transaction. This contention cannot be accepted. As stated above, furnishing the Bid 
Bond was clearly an essential condition of the bid and therefore, could not be deviated 
from. It is apparent from this circumstance that the bidding process leading to the award 
of the LPG extraction project to JJVL was tainted from its very inception and was geared 
towards advancing benefits and unfair advantage to JJVL by eliminating potential pre-
qualified bidders who were not afforded the same favourable treatment as had been 
given to JJVL. 
11. 
There is another significant aspect of the case, arising from the failure of JJVL to 
submit a bid bond as required by clause 5.0 (Bid Bond) of the Instructions to Bidders. We 
have noted that in the 311th meeting of the Board of Directors of SSGCL held on 
15.11.2001, one of the Directors had suggested re-bidding for the extraction project. This 
suggestion was not accepted and it was decided “to let the management proceed with 
evaluation and take the decision when the matter would [come to the Board] with management’s 
recommendations”. It is important to note that the decision of the Board of Directors of 
SSGCL was based on a note prepared by the management of SSGCL. This note dated 
13.11.2001, quite strangely, did not inform the Directors that the bid submitted by JJVL 
could not have been treated as valid because it was not accompanied by the mandatory 
bid bond. It does appear that the aforesaid material defect was deliberately concealed 
from the Board of Directors with the object of eliminating competition and giving undue 
benefit to JJVL. The Board itself was kept in the dark and if informed, would surely have 
taken note of the defective bid submitted by JJVL. There was no explanation 
forthcoming during the arguments advanced on behalf of JJVL as to why an essential 
condition of the bid had not been met by JJVL. Nor is there any justification given by 
Const. P. 05/2011 
 
 
6
SSGCL as to why such bid had not been rejected for this reason. It is pertinent to observe 
that the Note to the Board of Directors dated 13.11.2001 detailing the acceptance of 
JJVL’s bid does not mention the fact that JJVL did not submit a bid bond. Thus, it 
appears that an attempt was made from the start, to conceal the fact that JJVL did not 
submit a valid bid. It is quite clear that such concealment could not have occurred in a 
transparent and fair transaction. 
Royalty Payments. 
12. 
We can now take up the matter of royalty payments. According to the petitioner 
the royalty payments under the IA were to be calculated with reference to the Saudi 
Aramco reference price.  The essential feature of the tender documents, inter alia, was 
that the bidder offering the highest amount of royalty and compensation for gas 
shrinkage etc., for the gas processed would be the successful bidder. Our attention was 
drawn to a letter dated 28.4.2003 written to SSGCL by Iqbal Z. Ahmad, Chairman/CEO 
of JJVL. In this letter it had been agreed that the Saudi Aramco ex-refinery price would 
be used as the basis for calculating royalties payable to SSGCL. It was also specifically 
stated in the said letter that “[f]or an apple-to-apple comparison, it is required that the Local 
Ex-Plant prices be compared with Saudi Aramco’s Ex-Plant prices and not with C&F Karachi 
price that includes various third party costs and government fees & levies etc.” 
13. 
It is relevant in this context to note the letter from JJVL to SSGCL dated 
05.09.2002, wherein JJVL had expressly agreed to the following: “Reference price of LPG 
should be Saudi Aramco’s prices of Propane and Butane in the ratio of 60:40 published in 
international Butane-Propane Newsletter plus LPG freight cost or local refineries cost other than 
PARCO, whichever is higher shall be taken for calculation of royalty.” (emphasis added). Most 
importantly, as per Instructions to Bidders in relation to royalty payments, it was 
stipulated that "the bidders will be required to propose the maximum amount of such royalty on 
a per-MCF basis". A Letter of Intent (LOI) was to be issued to the successful bidder. As 
noted elsewhere in this opinion, the LOI in terms of the Instructions to Bidders was 
issued to JJVL by SSGCL on 28.06.2002. The LOI was duly accepted by JJVL and as per 
accepted and agreed terms, the royalty payments were to be made on the basis of Saudi 
Aramco reference price plus freight if such price was higher than the price of locally 
Const. P. 05/2011 
 
 
7
produced LPG. It is thus abundantly clear that JJVL had been willing and had agreed 
not only to pay the Saudi Aramco price, but also to pay the freight cost if the same was 
higher than the local price. However, this entire scheme of royalty payments suddenly 
and inexplicably was altered in favour of JJVL in the final Implementation Agreement, 
clause 9.2 of which reads: “9.2. Royalty shall be calculated with reference to a “Reference 
Price”. The highest ex-plant/ex-refinery price in Pakistan for LPG during a Month of one of the 
producers identified in Schedule 9 hereto will be used as the reference price for calculation of 
Royalty for such Month subject to a minimum price of US $250 per metric tonne.” (emphasis 
added). There is no correspondence on record nor was any explanation offered on behalf 
of JJVL as to why this change occurred in the final Implementation Agreement despite 
the fact that JJVL had clearly agreed on multiple occasions to reference the royalty 
payments to the Saudi Aramco price with freight cost or local price, whichever is higher. 
This material change has, according to SSGCL, caused loss to it, of an amount in excess 
of Rs. 22 billion to date. Thus, it is clear that the Implementation Agreement was entered 
into in a non-transparent and highly questionable manner resulting in undue benefit to 
JJVL and very heavy losses to the State enterprise SSGCL and consequently to the 
People of Pakistan.  
14. 
It is not disputed that since the date of the Implementation Agreement, JJVL is 
paying royalty at a rate which is well below the reference price based on the Saudi 
Aramco price plus freight cost as had been specifically agreed. This has caused billions 
of rupees worth of loss to the State enterprise SSGCL and this, in turn, has adversely 
impacted, inter alia, its ability to invest in the improvement of its facilities and services to 
its consumers. Instead of the pricing formula agreed as above, the ex-refinery price of 
LPG produced in Pakistan has been used even though it is substantially lower than the 
Saudi Aramco price plus LPG freight cost. When confronted with this material deviation 
from the agreed basis for royalty payments, learned counsel for JJVL could not dispute 
the deviation but stated that even in respect of the Saudi Aramco reference price, the 
same had to be on FOB basis and according to him, if so calculated, no loss had been 
caused to SSGCL. This submission is wholly contrary to the agreed basis which 
Const. P. 05/2011 
 
 
8
provided for royalties to be calculated on higher of the two i.e. FOB Saudi Aramco plus 
freight and the ex-refinery price of LPG produced in Pakistan. 
15. 
SSGCL has calculated the difference in royalty payments on the agreed basis and 
those  made  so  far.  If  this figure is taken as an approximation, JJVL owes more than 
Rs. 22 billion by way of royalty payments if freight is calculated at US $50 or over Rs. 23 
billion if freight is calculated at US $60. For reasons appearing in the concluding 
paragraphs of this opinion, it is not necessary for us to determine in this opinion, the 
exact amount of short payment. We do, however, note that the royalty payments have 
not been made by JJVL to SSGCL in accordance with the agreed basis referencing such 
payments to Saudi Aramco prices FOB plus freight. Clause 9.2 of the Implementation 
Agreement constitutes a gratuitous and unlawful favour bestowed on JJVL. 
Furthermore, it must be noted that the first draft of the Implementation Agreement 
dated 06.11.2002 contained the wording of the letters dated 28.4.2003 and 05.09.2002 
mentioned above; i.e. that JJVL would use the Saudi Aramco rate as reference price and 
also pay freight cost. However, with no justification or explanation, the “corrected draft” 
of the Implementation Agreement dated 19.5.2003 (less than a month subsequent to the 
letter dated 28.4.2003) removed this stipulation of royalty that JJVL had expressly agreed 
to. There is no correspondence or minutes on record to indicate why this material 
change occurred which allowed JJVL to pay a much lower amount of royalty. The 
Implementation Agreement executed between SSGCL and JJVL thus represents a 
significant loss to the State owned utility and thus ultimately to the People of Pakistan.  
Material Changes to the Implementation Agreement. 
16. 
The next issue arising in the case relates to changes which were made in the 
Form of the Implementation Agreement. Such Form had been made part of the bid 
documents provided to the pre-qualified bidders. According to the petitioner, these 
changes were of a material nature and were meant to alter the terms of the 
Implementation Agreement to the advantage of JJVL. Learned counsel for JJVL did not 
dispute the fact that these changes constituted deviations from the Form of the 
Implementation Agreement which had been given to interested bidders. He, however, 
contended that such deviations were not of a material nature and further that the 
Const. P. 05/2011 
 
 
9
changes did not bestow any advantage on JJVL. For reasons considered below, we have 
found these submissions to be untenable being without merit.  
17. 
In order to examine the importance of the Implementation Agreement and the 
relevance of the changes made therein after the conclusion of the bidding process, it is 
necessary to set out the significant aspects of the bid documents, the bidding process 
and the form of the Implementation Agreement which was the most important element 
in the bidding documents. In the case of a fair and transparent process of competitive 
bidding, the bid documents constitute the basis on which assessments, calculations and 
the bid itself are prepared by the bidders. This is meant to ensure that the bidding is 
even-handed and provides for a fair, transparent and objective evaluation of bids 
received. 
18. 
As noted above, the bid documents in the present case included a draft format of 
the Implementation Agreement which was to be the main instrument setting out the 
respective rights and obligations of SSGCL and the successful bidder. It is 
understandable that some parts of the Implementation Agreement have to be filled in on 
the basis of bids received, for example the royalty payment formula, compensation for 
gas shrinkage, compensation for acquisition of the plant etc. or to accommodate 
language etc. which does not materially alter the terms of the Implementation 
Agreement. If material changes are brought about in the Implementation Agreement 
subsequent to the bidding, this will in fact negate the notion of a fair and open 
competitive bidding process. In the present case, it has all along been urged by JJVL that 
the bidding for the LPG extraction plant was competitive i.e. that bids were to be 
submitted on the basis of the bidding documents (including the draft Implementation 
Agreement) which were given to all pre-qualified bidders. The fact, however, is that the 
Implementation Agreement which was executed by SSGCL in favour of JJVL was very 
substantially and materially different from the draft Implementation Agreement. As will 
be apparent from the changes made in the draft Implementation Agreement, all such 
changes as have been discussed below were material in nature and had been made to 
benefit JJVL. These changes were never available to other pre-qualified parties.  
Const. P. 05/2011 
 
 
10 
19. 
It is necessary to examine what these changes were to appreciate the submissions 
of the petitioner and JJVL. The Form of the Implementation Agreement which was part 
of the bidding documents defined GSA to mean “the Gas Sales Agreement between BP 
Pakistan Exploration & Production Inc., Oil and Gas Development Company Limited, 
Occidental Petroleum (Pakistan) Inc. and Government Holdings (GOP) dated 28.11.1988, as 
amended from time to time.” This clause was altered in the Implementation Agreement 
which was executed between SSGCL and JJVL so that the last few words of the 
definition of GSA would read “as amended and extended from time to time”(emphasis 
added). The record before us, which is considered below, provides the context within 
which the significance and materiality of this change can be very easily seen. Likewise, 
Article 2 of the draft Implementation Agreement was changed. In the Form issued with 
the bidding documents given to all bidders, Article 2 stipulated that the Implementation 
Agreement “shall commence and be effective on the date hereof, and shall, unless terminated 
earlier in accordance with its terms, continue in full force and effect until the validity of the GSA, 
which is currently valid up to the 3rd of February, 2011” (emphasis added). To this 
stipulation of the Implementation Agreement, the words “It is agreed that the Agreement 
shall continue on the same terms and conditions for any extension of the GSA beyond 3rd 
February, 2011” were added.  
20. 
According to the petitioner, the above noted two changes made in the 
Implementation Agreement were meant to bestow undue favour and advantage to JJVL 
because these modified terms were materially in favour of JJVL but the same 
advantageous terms had not been provided to other potential bidders. It is thus clear 
that the Implementation Agreement which was finally executed between SSGCL and 
JJVL was significantly different from the Form of the Implementation Agreement which 
was handed out to at least six pre-qualified bidders who had received the bidding 
documents. 
21. 
We can now examine the submissions made on behalf of the parties in the 
context of circumstances which emerge from the record. No reason whatsoever has been 
given as to why SSGCL would give up its potential and possibilities beyond 3rd 
February, 2011 on which date the Implementation Agreement was to expire. It was not 
Const. P. 05/2011 
 
 
11 
argued on behalf of JJVL that it was at a disadvantage by continuing with the 
Implementation Agreement on the same terms and conditions, after 3rd February, 2011. 
In fact, to the contrary, JJVL filed a suit in the Sindh High Court (Suit No. 151/2011) 
seeking inter alia, an injunction to restrain SSGCL from terminating the Implementation 
Agreement. The plaint in the suit as well as the order dated 1.2.2011 passed by the Sindh 
High Court granting a temporary injunction make it abundantly clear that JJVL placed 
reliance on the wording which had been added to Article 2 whereby it had been agreed 
that the Implementation Agreement “shall continue on the same terms and conditions for any 
extension of the GSA beyond 3rd February, 2011”. In this regard, it is useful to reproduce an 
extract from paragraph 14 of JJVL's plaint which avers “that by virtue of Article 2 thereof, 
the term of the Implementation Agreement is linked to the validity of the GSA. In plain words, 
Article 2 states that the Implementation Agreement will continue beyond 3 February 2011 on the 
same terms and conditions if the GSA is extended beyond the said date…”(emphasis added). 
There can be no clearer proof of the fact firstly; that JJVL considered the aforesaid 
changes in the Implementation Agreement to be material and secondly; that these 
changes were favourable to JJVL and thirdly; that even today JJVL is receiving undue 
benefit (i.e. extension of the Implementation Agreement) after 3.2.2011 which would not 
be available to it but for the unwarranted and unlawful additions made in the 
Implementation Agreement noted above.  
22. 
The learned Bench of the Sindh High Court, in its order dated 1.2.2011, has 
granted the interim injunction sought by JJVL, as a result of the changes introduced in 
the Form of the Implementation Agreement. This is evident from the fact that the said 
Order has prominently reproduced and relied on the aforesaid changes in the 
Implementation Agreement. JJVL is still continuing to operate the LPG extraction plant 
because of the changes made, inter alia, in Article 2 of the Implementation Agreement 
after the competitive bidding process had been concluded and even though the other 
pre qualified bidders had been given no opportunity of basing their bid on the 
Implementation Agreement as modified for JJVL. These circumstances substantiate the 
point that JJVL itself considers the aforesaid deviations to be material and also to its 
advantage. We, therefore, are unable to accept the contention of learned counsel for JJVL 
Const. P. 05/2011 
 
 
12 
that the deviations were insignificant or that the same did not make any material change 
in the Implementation Agreement to favour JJVL. Considering that these changes were 
made gratuitously, and in a non-transparent manner, the same were not lawfully made 
and cannot be allowed to stand. 
23. 
In addition to the above, we may also refer to the correspondence between JJVL 
and SSGCL which shows clearly that the changes, referred to above, made in the 
Implementation Agreement were actively sought by JJVL.  This is evident inter alia, from 
the minutes of the meeting between JJVL and SSGCL dated 24.01.2003. JJVL reiterated its 
desire for the said changes vide letter dated 19.02.2003; and SSGCL finally acquiesced to 
the same vide fax dated 04.03.2003. If indeed, the changes sought by JJVL had no 
advantage for it or had no material bearing on the Implementation Agreement (as 
claimed by JJVL), there would have been no reason for JJVL’s insistence and avid desire 
for the above referred changes.           
24. 
The most significant deviation from the Implementation Agreement, however, 
was in relation to clause 18 and the accompanying schedule (Schedule 5) to the 
Implementation Agreement. Clause 18 of the draft Implementation Agreement provided 
SSGCL the option of acquiring the extraction plant in the event of JJVL’s default as 
defined in Article 17 of the Implementation Agreement. This stipulation ties in directly 
with the short payments of royalty as discussed above. Schedule 5 set out the agreed 
basis on which such acquisition could be affected. The relevant fact is that clause 18 was 
a significant part of the Implementation Agreement and ensured that on the termination 
of the Implementation Agreement on account of JJVL’s default, including its failure to 
make the agreed royalty payments, the extraction plant could be acquired by it on the 
basis of an agreed formula for working out the acquisition price. It is also important to 
bear in mind that the basis of the bid made by JJVL was the bid documents and the most 
significant bid document undoubtedly was the Form of the Implementation Agreement. 
It is in this context important to note that the changes made therein by redefining the 
GSA and the significant change made in Article 2 ibid as to the term of the 
Implementation Agreement, had a direct nexus with the deletion of clause 18 of the 
Implementation Agreement as these changes were meant to skew the said agreement in 
Const. P. 05/2011 
 
 
13 
favour of JJVL. Correspondence between SSGCL and JJVL (discussed below) also shows 
that the financial bid submitted by JJVL was conditional inasmuch as the lenders of JJVL 
had strong reservations in respect of clause 18 of the Implementation Agreement and 
were not prepared to finance the Project because of clause 18 ibid.    
25. 
We have gone through the documents and correspondence placed on record by 
SSGCL and JJVL. On 21.6.2002, a meeting between JJVL and SSGCL was held in Karachi. 
Consistent with the terms of the draft Implementation Agreement, SSGCL pointed out 
“that in the light of clauses 17 and 18 of the draft Implementation Agreement, SSGC would need 
extensive details and verification of the proposed plant …” The details required were to be 
furnished by JJVL and the verification thereof was to be made by SSGCL. The scheme of 
the bidding process as incorporated in the Instructions to Bidders followed the accepted 
best practices for award of such contracts and the same were meant for the purpose of 
ensuring fairness. From the Instructions to Bidders it is evident that the Implementation 
Agreement was the most crucial element of the tender documents because it was this 
agreement which was to govern the contractual relationship between SSGCL and JJVL. 
The Instructions to Bidders also specifically stated that "failure to furnish all information 
required or submission of a bid not substantially responsive to the tender documents shall be at 
the bidder's risk and may result in the rejection of such bid". To ensure openness and equal 
treatment for all bidders they were instructed to seek any clarifications or to seek a pre-
bid meeting with SSGCL for additional information for the preparation of their bids. 
26 
Bidders were required to prepare their bids "under two separate covers, Technical 
Proposal and Financial Proposal". The outlines of the requirements of the Technical and 
Financial Proposals were included in the Instructions to Bidders. The financial proposal 
was specifically required to include the proposed financing plan. Such financing plan, in 
order to be responsive to the invitation to bid, was to be put in place by the bidders on 
the basis of the tender documents at their own responsibility. There was no question of 
any concessions being sought by a bidder after the conclusion of the bidding process for 
the purpose of accommodating its lenders/financiers. It was a clear violation of the 
Instructions to Bidders that the financing plan submitted by JJVL was not in place on the 
basis of the tender documents and it is for this reason that correspondence (considered 
Const. P. 05/2011 
 
 
14 
below) relating to clause 18 of the Implementation Agreement was initiated by JJVL to 
accommodate the requirement and security for financing, sought by JJVL's lenders. The 
Bid (even though invalid) had been made on 12.9.2001 evidently without a firmed up 
financing plan or commitment from lenders. As late as 10.6.2003 JJVL wrote to SSGCL 
that it “is undertaking [the] Project being fully aware of the risks but is only requesting SSGC to 
provide the minimum level of comfort which will make the Project financeable”. (emphasis 
added). We find it quite inexplicable that even 21 months after the Bid, JJVL was still 
unable to raise or firm up its financing and was seeking further indulgence from SSGCL 
for the comfort of JJVL’s lenders. 
27. 
In this context, we now consider the Letter of Intent (LOI) dated 28.6.2002 issued by 
SSGCL in favour of JJVL. The two important aspects of this letter which relate directly to 
clause 18 of the Implementation Agreement need to be spelled out. In para 7 of the LOI, it 
has been stipulated that “the total cost of the Project shall not exceed US $ 32 million (the 
‘Ceiling’) and a term will be included in the Implementation Agreement to reflect the fact that 
notwithstanding the actual Project cost, for the purpose of Schedule 5 of the Implementation 
Agreement the maximum liability of SSGC will be restricted to the Ceiling”. Clause 9 of the LOI 
requires JJVL to provide half yearly and annual audited accounts to SSGCL. It was also 
submitted therein that “to the extent that the auditor determines that any expense of the Project 
Company is excessive or has not been incurred on the basis of an arms length transaction or is an 
expense which is unrelated to or not entirely related to the execution and implementation of the 
Project, the said expense will be deducted from any calculation of the Acquisition Cost payable by 
SSGC as set forth in Schedule 5 of the Implementation Agreement”. Another important 
stipulation in the LOI is that “in the event of any conflict between the Bid and the terms of the 
Tender Documents or the terms of [the] LOI, the terms of the Tender Document and the LOI will 
prevail. Any conflicting terms contained in the Bid are deemed to have been withdrawn and 
cancelled”. 
28. 
We, therefore, find it surprising and quite extraordinary that almost 8 months 
after the LOI, vide letter dated 24.2.2003, JJVL proposed (contrary to the LOI) that a new 
clause 18 be substituted for the one included in the original form of the Implementation 
Agreement. The suggested clause was a major deviation from the draft Implementation 
Const. P. 05/2011 
 
 
15 
Agreement as it sought deletion of clause 18 in its entirety. A wholly different clause 18 
was proposed by JJVL as under: 
A separate Agreement between the lenders, SSGC and the Company [JJVL] will 
be signed simultaneously with the signing of the Implementation Agreement to 
reach a correct understanding between the lenders, SSGC and the Company 
[JJVL] on all aspects related to the Implementation Agreement.”  
29. 
This major change in the Implementation Agreement was sought for the purpose 
of accommodating JJVL’s lenders who, as noted above, had reservations about clause 18 
ibid. After going through the correspondence placed on record by the parties including 
the letter dated 24.2.2003, it is not possible to accept the submissions made by learned 
counsel for JJVL that the deletion was sought by SSGCL. It is also clear from the record 
that as late as February 2003, JJVL had not been able to arrange financing for the Project 
and was desperately trying to secure favourable terms from SSGCL which would be 
acceptable to JJVL’s lenders. Thus, on 24.2.2003, JJVL wrote to SSGCL that “we have had 
the benefit of discussing the issues with the lenders … [and] in view of the discussions held with 
them and their guidance, we would like to submit … important issues for your urgent 
consideration and review.” (emphasis added). That the financing for the Project had not 
been arranged by JJVL is also apparent from JJVL’s aforesaid letter whereby a meeting 
was sought for agreeing on the text of a proposed tripartite agreement involving the 
lenders of JJVL. Importantly, however, from the same letter it is clear that there was no 
question of deleting clause 18 of the Implementation Agreement because the said clause 
and Schedule 5 were unquestionably and undisputedly part of the agreed terms.    
30. 
The mysterious and baffling way in which Clause 18 and Schedule 5 suddenly 
disappeared from the Implementation Agreement is evident from the drafts of the 
Implementation Agreement that were exchanged between JJVL and SSGCL prior to its 
final signing. Clause 18 and Schedule 5 were present in the same language as the form of 
the Implementation Agreement in the first draft of the Implementation Agreement dated 
06.11.2002 as well as the “corrected draft” dated 19.05.2003. It is particularly pertinent to 
note that in both these drafts, Schedule 5 contained the ceiling of US $32 million for 
acquisition of the plant that was stipulated in the LOI. It must also be borne in mind that 
Const. P. 05/2011 
 
 
16 
there was a six-month gap between the first draft of 06.11.2002 and the “corrected draft” 
of 19.05.2003; a gap wherein Clause 18 and Schedule 5 remained unchanged. 
Inexplicably, after a gap of only 4 days, there appeared a “final Implementation 
Agreement” dated 23.05.2003 which has been placed on record by JJVL. This contains 
the meaningless and ineffective substitution to Clause 18 that JJVL had proposed, as 
detailed above. There is no indication at all of what transpired in these four days to 
suddenly make Clause 18 and Schedule 5 disappear into thin air. Despite opportunity 
given by the Court, no documentation has been placed on record by JJVL to throw light 
on this murky issue. In the circumstances, it is clear that Clause 18 and Schedule 5 have 
been invalidly removed from the Implementation Agreement to prevent SSGCL from 
acquiring the plant in the event of JJVL’s default at the option of SSGCL. From the 
foregoing discussion on royalty, it is already established that JJVL has defaulted in 
payment of the mandated and agreed basis for calculating royalty.    
31. 
In addition to the changes in the draft Implementation Agreement, noted above, 
other substantial changes were also made to accommodate JJVL and its lenders. It is not 
necessary to advert to all such changes because the specific deviations from the draft 
Implementation Agreement and Instructions to Bidders, noted above, are sufficient for 
the purpose of demonstrating that the award of the LPG extraction Project to JJVL and 
the execution of the Implementation Agreement executed on 12.8.2003 were not lawful 
and were based on considerations meant to benefit JJVL at the expense of the State 
enterprise SSGCL. We also are left in no doubt inter alia, that: 
(a) JJVL’s bid was invalid having been submitted without the mandatory 
Bid Bond and, therefore, could not lawfully have been accepted and 
was in fact liable to rejection in terms of the Instructions to Bidders; 
(b) The royalty payments which were pegged to the higher of Saudi 
Aramco or domestic price of LPG and such basis had been expressly 
agreed between SSGCL and JJVL was  unlawfully and without 
justification, altered to favour JJVL and as a result JJVL was granted 
an unearned and wrongful gain; 
Const. P. 05/2011 
 
 
17 
(c) The terms of the draft Implementation Agreement which were the 
basis for making bids and for evaluating the same were materially 
and substantially modified after the bidding process to give undue 
and illegal favours to JJVL. 
32. 
The foregoing discussion and the circumstances brought on record show gross 
criminal negligence on the part of functionaries of SSGCL, JJVL and possibly others, or 
the existence of corruption and/or corrupt practices in the bidding process, award of the 
LPG extraction project, overruns and delays in implementation of the Project etc. 
33. 
Before parting with this section of our opinion, it may be noted that the 
Petitioner also made reference to the order of the Competition Commission of Pakistan 
(Respondent No. 6) dated 15.12.2009 wherein it was held inter alia, that JJVL had abused 
its dominant position in the market and thus violated section 10 of the Competition Act, 
2010. We, however, refrain from dilating on this point as the said order has been 
challenged by JJVL and the matter is sub-judice before the Lahore High Court. 
Maintainability.      
34. 
Learned counsel on behalf of JJVL urged and supported his contentions against 
the maintainability of the Petition by referring to a number of precedents from this 
Court. He contended inter alia, that since Suit No. 151/2011 and CP No. 270/2007 are 
pending before the Sindh High Court and CCA No. 2/2010 is pending before the Lahore 
High Court, the Supreme Court should not entertain a petition under Article 184(3) of 
the Constitution. According to him, the matters arising in this Constitution Petition are 
the same as are being agitated in the said pending litigation. This submission is not 
correct because, firstly; suit No. 151/2011 has been filed by JJVL itself and no questions 
of public importance in respect of enforcement of fundamental rights arise therein. 
Moreover, the issues which have been raised by the petitioner and are discussed above 
are incapable of being made subject matter of the aforesaid civil suit. Secondly, CP 
270/2007 has been filed by two shareholders of SSGCL who have an alleged grievance 
against SSGCL and its management. The present status of CP 270/2007 is that though it 
has been pending since 2007 no progress has been made therein. Furthermore, important 
questions which have been raised by the petitioner relating to the enforcement of the 
Const. P. 05/2011 
 
 
18 
fundamental rights of the People and issues involving the illegalities in the bidding 
process are not the subject matter of CP 270/2007, and, thirdly; the pending CCA 2/2010 
impugns an Order of the Competition Commission of Pakistan imposing a fine on JJVL. 
It has no nexus with the issues arising before us in this case.  
35. 
It was also urged on behalf of JJVL that the matter involves contractual rights 
that are not capable of adjudication without the formal recording of evidence; and 
evidence is generally not recorded in proceedings under Article 184(3). This submission 
is quite easily addressed by noting that the authenticity of the documents and record on 
which our opinion is based is not disputed; only the legal effect of the same has been 
examined by us. Thus no evidence is required to be recorded in these proceedings. Here 
we may also refer to the order dated 1.6.2009 passed in CP 270/2007 by a learned 
Division Bench of the Sindh High Court. It has been noted therein that the Supreme 
Court had asked the Sindh High Court to decide CP 270/2007 and connected cases 
preferably within a period of one month. Although more than four years have passed 
since the order of this Court, CP 270/2007 and connected matters, including suit No. 151 
of 2011 have still not been decided. It would be quite pointless and a waste of time not to 
exercise jurisdiction under Article 184(3) which otherwise is clearly attracted. We have 
discussed below a number of recent judgments wherein the scope of the jurisdiction 
under Article 184(3) of the Constitution has been elaborately spelt out. The facts and 
circumstances of the present case clearly fall within such jurisdiction considering that 
the use and management of valuable natural resources by the State and its 
instrumentalities such as SSGCL, is involved.  
36. 
Natural gas and LPG extracted therefrom are precious mineral resources vesting 
in the State and ultimately in the People. SSGCL is a State enterprise in which the 
majority shareholding is held by the Government. SSGCL is therefore, not free to deal 
with such assets whimsically or in utter disregard of the fiduciary duty owed to the 
nation. Nor, we may add, does SSGCL have unfettered discretion to deal with national 
assets in a manner that does not protect and advance the best interests of SSGCL as a 
fiduciary and repository of the interest of the people of Pakistan who are, through the 
Government, beneficial owners, not only of the mineral resources of the country but also 
Const. P. 05/2011 
 
 
19 
of a majority interest in SSGCL. It is also particularly important to note that LPG is being 
used in Pakistan by people who, for a variety of reasons either do not have access to, or 
are unable to obtain natural gas. In our recent judgment in Habibullah Energy v. WAPDA 
(Civil Appeals 149 and 150 of 2010), it has been explained that “public sector enterprises… 
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”. We had also emphasised that 
“[r]ather than being owners of public sector enterprises, state agencies stand in a fiduciary 
relationship to the people” and also that 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”. In another recent judgement in the case titled Khawaja Muhammad Asif v. 
Federation of Pakistan (2013 SCMR 1205) we held that “it is a fundamental right of the 
citizens of Pakistan under Article 9 of the Constitution that the national wealth/resources must 
remain fully protected whether they are under the control of the banks or the autonomous or 
semi-autonomous bodies.” We may also have recourse to the decision in Raja Mujahid 
Muzaffar v. Federation of Pakistan (2012 SCMR 1651); and the judgment reported as Suo 
Motu Case No. 13 of 2009 (PLD 2011 Supreme Court 619) wherein it was held that “in 
matters in which the Government bodies exercise their contractual powers, the principle of 
judicial review cannot be denied… In such matters, judicial review is intended to prevent 
arbitrariness or favouritism and it must be exercised in [the] larger public interest”. These 
precedents leave us in no manner of doubt that in the present case we must exercise our 
jurisdiction under Article 184(3) of the Constitution.  
37. 
Recently we have also dealt with cases and adjudicated issues of corruption, 
corrupt practices and non-transparency in the award of public contracts. In this regard 
reference may be made to Raja Muhajid Muzaffar vs. Federation of Pakistan (2012 SCMR 
1651), Suo motu action regarding violation of Public Procurement Rules, 2004 in procurement of 
billions of rupees of exchequer case by National Insurance Co. Ltd. (S.M.C. No. 18 of 2010), Asif 
Fasihuddin Khan Vardag v. Government of Pakistan (C.P. 33 of 2013) and Habibullah Energy 
Ltd. Vs. WAPDA etc. (Civil Appeals Nos. 149 & 150 of 2010). The cardinal principle 
which has been kept in mind by this Court is that waste, plunder or wanton and 
Const. P. 05/2011 
 
 
20 
heedless use of public resources and funds must be prevented and public wealth 
wherever squandered must be recovered. The importance of fair, even handed and open 
competitive bidding has also been repeatedly emphasized by us while exercising our 
jurisdiction under Article 184(3) of the Constitution. In the matter of Suo Motu Case No.13 
of 2009: Joint Venture Agreement between CDA and Multi-Professional Cooperative Housing 
Society (MPCHS) for development of land in Sector E-11 Islamabad (PLD 2011 Supreme 
Court 619), we have emphasized that the Government and its instrumentalities are 
expected to act fairly, justly and in a transparent manner. Transparency lies at the heart 
of every transaction entered into by or on behalf of a public entity such as SSGCL. It was 
also observed by us that “any transaction which is not transparent and goes against the 
interests of the general public constitutes violation of Article 9 of the Constitution”. This Article 
guarantees the right to life as defined by this Court starting from the case of Ms. Shehla 
Zia vs. WAPDA (PLD 1994 SC 693). The jurisdiction under Article 184(3) ibid is meant 
precisely for the purpose of ensuring that the assets belonging to the People (such as 
mineral resources) are managed and exploited for the benefit of the People of Pakistan 
and also for ensuring that waste or abuse of such assets is not allowed to take place or to 
continue.    
38. 
As noted above, people all over the country who cannot obtain natural gas rely 
on supply of LPG for many of their needs. The supply of LPG to a very large number of 
users, including those living in far-flung areas is a matter of public importance 
impacting their ‘life’ as defined by this Court. Such supply, therefore, needs to continue 
unabated. This much has been accepted by the parties before us. In fact it was the 
contention of counsel on behalf of JJVL that the Implementation Agreement should not 
be terminated because LPG is so important to the people of Pakistan; and that 
termination of the said agreement would result in a highly detrimental disruption in the 
supply of LPG to a large body of consumers. Six LPG marketing companies who receive 
LPG from JJVL were also heard. Their counsel also emphatically stressed the importance 
of the continued supply of LPG to such consumers. These marketing companies do not 
have any privity of contract with SSGCL nor can they lawfully insist on supply of LPG 
to them in the event the Implementation Agreement comes to an end, but their 
Const. P. 05/2011 
 
 
21 
submissions as to continued delivery of LPG to the end consumer have been taken into 
account by us. 
39. 
It was also emphasized before us that if LPG extraction is discontinued, the 
components of LPG i.e. butane and propane will be wasted as these will have to be 
flared and will no longer remain available for supply to consumers. Although this does 
not explain the loss (through flaring) on account of the inordinate delays in 
implementing the Project in 2001-2003 by SSGCL and JJVL, avoidance of wastage 
through flaring is an important consideration for the purposes of passing an order to 
ensure that precious and scarce mineral resources of the nation are not frittered away 
and nor is the majority interest of the Government in SSGCL used for mismanaging and 
wasting national assets or for exploitatively bestowing undue favours on some at the 
expense of the People. In this respect, we are guided by the exhortation that “the State 
shall ensure the elimination of all forms of exploitation …” (Article 3 of the Constitution) and 
Article 38 of the Constitution which commands that “the State shall … secure the well being 
of the people … by preventing the concentration of wealth and means of production and 
distribution in the hands of a few to the detriment of general interest …”.    
40. 
We, therefore, for the reasons recorded above hold, declare and direct as under:-  
(1) 
The Implementation Agreement dated 12.08.2003 was awarded to 
JJVL in gross violation of the bidding process as advertised and as 
set out in the tender documents, including Instructions to Bidders.  
(2) 
The project was awarded by SSGCL in a highly non-transparent 
manner with the object of giving undue benefit to JJVL. 
(3) 
The changes made in the Implementation Agreement which have 
been noted in paras 16 to 32 above, were made with the object of 
giving unfair and unlawful benefit to JJVL at the cost of the State, 
State enterprise SSGCL and ultimately, the People of Pakistan. 
(4) 
The deletion of clause 18 of the Implementation Agreement and its 
substitution by a vague and meaningless clause was at the behest of 
JJVL and for the benefit of JJVL and its lenders at the expense of the 
general public interest. 
(5) 
The basis for calculating royalty payments which had specifically 
been agreed was unlawfully altered to provide benefit to JJVL and 
heavy loss to SSGCL, the State and ultimately to the People of 
Pakistan. 
Const. P. 05/2011 
 
 
22 
(6) 
For the aforesaid reasons, the Implementation Agreement as 
executed between SSGCL and JJVL cannot be allowed to continue 
being based on illegalities from its very inception and is accordingly 
set-aside with all consequential liabilities as are provided in the 
“corrected draft” Implementation Agreement dated 19.5.2003. All 
losses caused to and incurred by the State, State enterprise SSGCL 
and the People arising out of and as a result of the bidding process 
and during the tenure of Implementation Agreement are to be made 
good and recovered from JJVL and all persons who had actively 
participated and had made substantial decisions in the bidding 
process and making of the Implementation Agreement.  
(7) 
A Committee comprising of (i) Mr. M. H. Asif, former Member, 
OGRA and, (ii) Mr. Shabbar Raza Zaidi, Partner of M/s A.F. 
Ferguson and Co., Chartered Accountants, is constituted for the 
following purposes:- 
(a) to calculate royalty payments (on the LPG extracted to date) on 
the basis of the Saudi Aramco reference price plus freight, for 
the full period during which the Implementation Agreement 
has been operational; this shall be done within 15 days from the 
date of this Order; an opportunity of hearing shall be afforded 
to SSGCL and JJVL while making the calculation; 
(b) to determine an acquisition price for the LPG extraction Plant, 
as nearly as possible in accordance with the LOI dated 28.6.2002 
and clause 18 read with Schedule 5 of the draft Implementation 
Agreement dated 19.5.2003 relating to a JJVL Event of Default; 
this shall be done within 15 days from the date of this Order; 
(c) to suggest a management mechanism to the Court for 
appropriate orders including, if necessary, for the appointment 
of an independent manager/receiver; this may be done within 
15 days of this Order and until then the Plant shall be managed 
by two senior persons, one each to be nominated by SSGCL and 
JJVL respectively; any deadlock between them shall be resolved 
by a decision of the Committee; 
(d) to obtain from SSGCL and JJVL such information and data as 
may be necessary for the Committee to fulfil its responsibilities; 
(e) to suggest ways in which the supply of LPG to end consumers 
continues unabated and without disruption; 
(f) to seek such clarifications or further orders from the Court as 
may be considered necessary by the Committee.  
 
Const. P. 05/2011 
 
 
23 
(8) 
The Office shall make available copies of the record to the 
Committee. 
(9) 
The fee of the Committee shall be determined on the basis of the 
extent and nature of the work. 
(10) 
The amount already deposited in Court by virtue of our order dated 
23.05.2013 shall be paid to the party entitled, after determination of 
the amount of royalty payments on the basis indicated above. 
(11) 
The FIA shall inquire into the matters which have been noted and 
highlighted in this judgment and submit a report which shall 
identify all those who are responsible for the failings, including acts 
of criminal negligence, corruption, corrupt practices or other 
offences. FIA shall also inquire into and investigate such other 
matters which may come to light from examination of any 
documents and records during the course of inquiry/investigation. 
The report shall be submitted by FIA in Court within 30 days from 
today.    
 
Chief Justice 
 
     Judge 
 
     Judge 
Islamabad 
A. Rehman 
 
Announced on:  04.12.2013. 
 
 
APPROVED FOR REPORTING.  
 
