Law: Constitution of Pakistan, 1973

Section: 185(3),199

(a)    Constitution of Pakistan--- ----Arts. 185(3) & 199---Establishment and operation of a 330 MW private thermal power project ---Premature invalidation of letter of support by Private Power and Infrastructure Board (PPIB)---Encashment of performance guarantee (PG), challenge to---High Court allowed the prayer for direction to reimburse the amount realized upon encashment of PG---Legality---Whether such direction amounted to interference in a contractual dispute---Determination---Brief facts were that the federal government introduced the 1994 Power Policy under which the respondent was issued a letter of interest ( LOI ) and later a letter of support ( LOS ) for establishing a 330 MW power project, requiring achievement of financial close and submission of a performance guarantee ( PG )---The LOS was extended until 30.10.1996, while national policy decisions of the ECC altered the treatment of power projects exceeding the 3,000 MW cumulative financial-close threshold--Before expiry of the extended deadline, respondent was informed that its LOS stood invalid due to other projects reaching the cumulative limit and subsequently encashed the respondent s PG on 28.11.1996---The respondent filed a writ petition seeking refund of the encashed PG, which the High Court allowed, and the intracourt appeal against it was dismissed---The issue for determination before the Supreme Court was whether the High Court s direction to refund the encashed PG amounted to unlawful interference in a contractual matter or whether it correctly enforced binding public-law decisions of the ECC? ---Held: Private Power and Infrastructure Board (PPIB) prematurely declared the respondent s LOS invalid and refused to approve essential term sheets even though the LOS remained valid until 30.10.1996, thereby preventing the respondent from achieving financial close--Since the approval of the respondent s term sheets by PPIB was mandatory before financial close could be declared, and since PPIB, in its letter dated01.09.1996, had taken the position that the respondent s LOS was not valid, not because it had expired, but because other private power projects had achieved…