Builder told to deposit Rs450 million, along with markup, in PIDC property purchase case

The Sindh High Court (SHC) has directed a private builder to deposit the entire sum of Rs450 million in cash along with the accrued markup at the tentative rate of 18 per cent per annum on sum of Rs417 million from the date of institution of a lawsuit before the Nazir of the court in a case pertaining to the purchase of Pakistan Industrial Development Corporation’s (PIDC) 7,250 square yards plots in the Bath Island area within three weeks.

The direction came on an application of a private builder who had sought injunction to restrain the PIDC from selling or creating a third party interest in the immoveable properties owned by the PIDC.

The plaintiff’s counsel submitted that the PIDC had advertised sale of properties in 2011 and the plaintiff being the highest bidder had agreed to increase the bid but the PIDC conveyed its non-acceptance of the offer citing unspecified defects. He said the PIDC's refusal to finalise the sale, despite the accepted bid, constituted unfair and illegal behaviour.

He said that once the plaintiff accepted the PIDC's latest offer, the transaction was complete, and signing a formal agreement was a mere formality that the PIDC could not unilaterally change. The counsel said the PIDC’s inclusion of the Sindh government as a competitor was mala fide as it did not participate in the bid proceedings and was never a bidder.

A counsel for the PIDC submitted that inviting bids was in fact an invitation to offer, and unless accepted and confirmed by the competent authority, no enforceable contract came into being nor did it create any right in favour of the highest bidder.

He said the PIDC’s decision to approach the Sindh government for the disposal of the properties was a calculated step to secure the best market price and as a state-owned enterprise, the PIDC retained the right to accept or reject offers based on commercial considerations to benefit the public exchequer. He said that the disposal of government-owned assets must maximise public benefit, and the PIDC was under a statutory obligation to make policy decisions based on these commercial considerations.

A single bench of the SHC comprising Justice Sana Akram Minhas after hearing the arguments observed that the PIDC’s startling and disturbing move to involve the Sindh government in pitching the properties for sale to both the plaintiff and to the Sindh government coupled with the latter’s quick willingness to jump in and help the PIDC undercut the plaintiff’s previous bid amount, undermined confidence and cast doubt on the integrity of the PIDC’s process for disposing of the properties.

The high court observed that the PIDC’s flimsy justification for including the Sindh government, amongst others, to maximise the price for the properties is implausible, not credible and hard to swallow.

The SHC observed that if the alleged pious intent was indeed for achieving the highest possible price, it would be logical to have invited multiple bidders rather than just one.

The high court observed that the PIDC would have provided a public and even-handed opportunity for all interested parties to submit their bids openly, rather than only inviting one additional, favoured party that is the Sindh government in a clandestine manner.

The SHC observed that in a suit for specific performance a plaintiff must demonstrate both the ability and readiness to fulfil its contractual obligations. The bench observed that the court had the authority to impose conditions at any stage to verify the buyer's good faith.

The SHC observed that the plaintiff accepted the PIDC’s offer in April 2012 and initiated lawsuit in December 2013. The court however observed that plaintiff had only issued a pay order for Rs33 million while retaining the balance of R417 million of the total Rs450 million.

The high court observed that the value of land in Pakistan had surged significantly over time, and the rupee had continuously depreciated. The SHC observed that even a pay order of Rs33 million had not been presented for encashment by the PIDC till date.

The high court directed the private builder to deposit the entire sum of Rs450 million in cash with the Nazir of the court along with accrued mark-up at the tentative rate of 18% per annum on the sum of Rs417 million from the date of the suit to the present date, within twenty-one (21) days.

The court observed that failing to direct the deposit of the accrued mark-up could lead to a miscarriage of justice and unfairly benefit the plaintiff, who, with only a minimal payment (of an un-encashed pay order of Rs33 million) which constitutes a meagre 7.33 per cent of the enhanced sale price accepted by it (of Rs450 million), had effectively tied up the suit properties for over a decade.

The SHC partially granted the plaintiff application subject to condition imposed by the court and observed that if the plaintiff failed to deposit the specified amount with the Nazir within the allotted time, the application shall stand dismissed.

The high court also ordered that the PIDC shall hand over the expired pay order to the Nazir within 10 days and the Nazir shall then return it to the plaintiff.