ISLAMABAD: The Lahore High Court on Tuesday suspended the implementation of a Punjab government letter cancelling a multibillion-rupee contract for the supply of electric buses, observing that the impugned action appeared to have been taken without reference to any contractual provision or enabling legal authority and could cause irreparable loss to the supplier.

Justice Jawad Hassan of the LHC Rawalpindi bench passed the interim order while hearing a writ petition filed by Universal Motors (Pvt) Limited under Article 199 of the Constitution, challenging the vires of the letter dated December 26, 2025, cancelling the contract.

According to the petition, the respondent authority had engaged another government entity to implement an eco-friendly transport project involving the induction of 500 electric buses in different cities of Punjab. In pursuance of the project, a valid and binding contract dated May 5, 2025, was executed with the petitioner for the supply of 100 nine-metre electric buses for a total consideration of Rs4.588 billion.

Counsel for the petitioner submitted that the payment mechanism was clearly defined in the contract and that, in strict compliance with its terms, the petitioner procured an advance payment bond dated Sept 15, 2025, in favour of the respondent, guaranteeing Rs458.85 million, constituting 10 per cent of the total contract price.

Judge observes action appears without contractual clause or legal authority

He added that after execution of the agreement, the petitioner undertook substantial performance and completed a significant portion of the order to ensure timely delivery.

The petitioner maintained that despite the advanced stage of performance, reports were received indicating the respondents’ intention to cancel the contract, which ultimately culminated in the issuance of the impugned letter. It was argued that the cancellation was illegal, arbitrary and violative of settled principles of fairness and natural justice, particularly as it was effected without prior notice, reasons or an opportunity of hearing.

During the hearing, the court questioned the maintainability of the writ petition in a contractual matter. In response, the petitioner’s counsel contended that the impugned letter did not refer to any enabling clause of the contract and that while Clause 12.2 provided a mechanism for “termination” subject to specific conditions and safeguards, it did not contemplate outright “cancellation” in the manner adopted by the respondents.

The counsel pointed out that partial payment had already been released on Oct 1, 2025, following completion of a prototype nine-metre electric bus in accordance with contractual specifications on Sept 18.

On the other hand, the assistant attorney general objected to the maintainability of the petition, submitting that the impugned letter had been issued strictly in accordance with the law.

After hearing the parties, Justice Hassan noted that, prima facie, the petitioner had established an arguable case. The judge observed that the impugned letter appeared to have been issued without reference to any contractual provision or legal authority, particularly when the petitioner had furnished an advance payment bond and undertaken substantial performance after receiving payment.

The court directed that if the impugned letter had not been implemented so far, it shall not be acted upon till the next date of hearing. The court issued notices to the respondents for Jan 12, directing the law officer to seek instructions and ensure submission of para-wise comments. The respondent authority was directed to appear in person with the complete record.

Published in Dawn, January 7th, 2026