Payment of dues to PR by Business Express's operator: Stay order granted to M/s Four Brothers International vacated by SC

The Supreme Court on Wednesday granted leave to appeal to Pakistan Railways filed against a stay order issued by Lahore High Court to M/s Four Brothers International (Pvt) Limited, which is running Business Express train from Lahore-Karachi-Lahore. The acceptance of leave to appeal in the matter would make bond the company to pay outstanding amount or Rs 2.2 billion to Pakistan Railways.
Appearing before a three-judge bench led by the Chief Justice Anwar Zaheer Jamali, comprising Justice Amir Hani Muslim and Justice Umer Ata Bandial, the counsel for Pakistan Railways Sardar M. Aslam contended that the respondent company failed to fulfill its contractual obligation form the day one. Sardar M. Aslam apprised the court that his client had awarded contract to M/s Four Brothers International (pvt) Limited for handing over a train plying between Lahore-Karachi-Lahore on public private partnership basis.
Aslam further told the court that his client had awarded contract to M/s Four Brothers International (pvt) Limited through an agreement on August 18, 2011 which was amended on December 26, 2011 for a term of 5 years. He told that the respondent inaugurated this train service titled Business Express on February 03, 2012 and started its commercial operation on the very next day.
He said that under the terms of agreement the respondent Company had to invest Rs 225.736 million towards the Value-Added Service (VAS) as performance guarantee and to pay through a pay order of Rs 3.19 million per round trip before the commencement of business. However, the respondent company failed to honour its commitment without any justifiable reason.
Aslam further said that the respondent company defaulted in making payments from day one as Pakistan Railways asked the company for payment but the company on February 10, 2012 (exactly after six days) of the commencement of business approached Ministry of Railway with request to suspend operation of Section 6.1 of the agreement and undertook to pay the outstanding amount within a period of 6 months.
The counsel said that the Ministry of Railway approached Economic Co-ordination Committee (ECC) to which the Committee decided to get evaluation by third party to determine the basis of the award of contract and also to determine the validity of the personal agreement for sharing of revenue. He said that a private firm M/s Deloitte was appointed as a consultant to do the needful whose recommendations supported by ECC were to the effect: - "minimum occupancy to be achieved at 65 percent - share ratio of gross revenue can be set as 80:20 between Pakistan Railways and Joint Venture Partners up to occupancy of 75 percent and for occupancy achieved above 75 percent the sharing ratio between PR and JV Partner can be set at 75:25".
He said that the Ministry of Railway in second summary of December 17, 2012 proposed that JV partners are presently in default to the extent of Rs 289.8 million and any dispensation to be granted must be accompanied by a caveat that the outstanding amount must be cleared within a year and that the arrangement proposed by the committee constituted by the ECC after a period of one year.
He further said that the proposal was approved by the ECC, saying the decision was not acceptable to his client but it was endorsed by Federal Cabinet as conveyed on March 15, 2013. Pakistan Railways counsel said that on November 29, 2013, his client required the respondent company to convene a meeting to resolve the issue which was replied but before expiry of the stipulated period approached the Civil Court under Section 20 of the Arbitration Act for reference to Arbitration.
"An application for injunction under Section 41 (b) of Arbitrator Act was also filed which was contested by my client, however, by a composite order the injunction was allowed and the matter was refused to Arbitration by the Learned Civil Court vide its order of April 24, 2014," Aslam said.
He informed the bench that the outstanding amount against the respondent company comes to Rs 2.22billion so far, saying that in addition to the amount due to the stay order granted in the current matter the respondent company was not paying rent of Rs 3.2 million per trip in a day to the Pakistan Railways. Later, granting leave to appeal in the matter the court turned down the LHC verdict by vacating the stay order in the case.