Income Tax Rules, 1982---

----Rr. 158, 159, 161 & 162---Constitution of Pakistan (1973) Art. 199-- Constitutional petition---Appointment of Receiver ---Notice to show cause-- Petitioner was appointed as Official Receiver within the meaning of Rr.158, 159 & 161 of the Income Tax Rules, 1982---Defaulter was arrested for non payment of utility bills---Receiver served the warrant under R.162(2) of the Income Tax Rules, 1982 upon the Superintendent Jail for continued detention of the defaulter till the recovery of income-tax/wealth tax---Defaulter was released by the Income-tax Authority after recovery of Rs.2 crores and further taking Bank guarantee in the sum of Rs.1 crore---Defaulter left the country---Income-tax Authorities refused to pay remuneration to Receiver on the ground that recovery was not effected on account of the efforts of the Receiver but that of the Department itself---Contention of the Department was that Revenue had only authority under 8.158 of the Income Tax Rules, 1982 to initiate proceedings for attachment or arrangement of the business of defaulter and had no authority to take coercive measures against the defaulter such as arrest of detention as per his terms and conditions of appointment-- Validity--Controversy between the parties was a factual controversy which could not be resolved under the Constitutional jurisdiction of the High Court---Matter was sent to Chairman, Central Board of Revenue, by the High Court with direction to constitute high powered committee to initiate proceedings against -the official /officer who provided the facility to the defaulter to leave the country---Such committee shall also complete the process of the subject-matter of remuneration of Revenue and in case the said Committee had come to the conclusion that Receiver's claim was genuine and correct, then the amount shall, be released forthwith.

Muhammad Younas's case 1993 SCMR 618 and Hafiz Muhammad Arif Dar's case PLD 1989 SC 109 rel.

Hamid Khan for Petitioner.

Subah Sadiq Klasoon with Wakil A. Khan, Regional Commissioner for Respondent.

Date of hearing: 14th January, 2000.

JUDGMENT

The brief facts giving rise to this writ petition are that respondents appointed the petitioner as official receiver within the meaning of Rules 158, 159 and 161 of the Income Tax Rules, 1982 to ensure recovery of under- mentioned amount from the following persons/establishment on 27-5-1998 as is evident from Annexure A/1 to A/41; B/1 to B/4; C/1 to C/4; D/1 to D/4; E/1 to E/4; F/1 to F/4 attached with W. P. No. 14884 of 1998:---

(i) Nadia Ghee Mills (Pvt.) Ltd. for recovery of arrears of income tax amounting to Rs.7,38,785.82

(ii) Seth Muhammad Yaqoob, Director, Nadia Ghee Mills (Pvt.) Ltd. for recovery of arrears of Income-tax amounting to Rs.53,52, 647.

(iii) Mrs. Razia Yaqoob, Director, Nadia Ghee Mills (Pvt.) Ltd. For recovery of arrears of income-tax amounting to Rs.1,38,09,355.

(iv) Saleem Yaqoob, Director, Nadia Ghee Mills (Pvt) Ltd. for recovery of wealth tax amounting to Rs.6,170.

(v) Mrs. Razia Yaqoob, Director, Nadia Ghee Mills (Pvt) Ltd. For recovery of wealth tax amounting to Rs.7,84,195.

(vi) Seth Muhammad Yaqoob, Director, Nadia Ghee Mills to Rs.58,72,148.

The total recoverable amount on the above Accounts added up to Rs.9,97,01,097.

The aforesaid appointment letters of petitioner as receiver contained the remuneration clause as under:---

"You will be entitled to remuneration at the rate of the amount recovered payable by the defaulter to the remuneration under the authority of this appointment."

The petitioner took necessary actions for the recovery of the arrears of income tax/wealth tax from the aforesaid persons---entitle. The petitioner sealed the premises of Nadia Ghee Mills (Pvt.) Ltd. on 6-6-1998. The petitioner found with hectic efforts that Seith Muhammad Yaqoob had already been detained in Central Jail Kot Lakhpat on account of his default in the payment of utility bills. The petitioner took the warrant of arrest of aforesaid Seth Muhammad Yaqoob from respondent No.2 addressed to the Superintendent Central Jail Kot Lakhpat Jail, Lahore. The contents of warrant of arrest dated 15-6-1998 reveal as under:---

"Seth Muhammad Yaqoob owed a sums of Rs.8,51,11,377 towards arrears of income tax and wealth tax; He be arrested/continued the detention under authority vested in respondent No.2 under Rule 162 (2) of the Income Tax Recovery Rules, 1982 under the warrant of arrest."

The Superintendent Central Jail Kot Lakhpat Jail, Lahore did not initially receive the warrant of arrest, the same was received by him on the hectic efforts of the petitioners as is evident from Annexure 'G' attached with W.P. No.14884 of 1998. The endorsement on the warrant of arrest reveals as under:---

"These orders are judicial orders and may kindly be considered Awais Sheikh, Advocate."

Seth Muhammad Yaqoob was produced before the Regional Commissioner of Income Tax Lahore on 17-8-1998, negotiations were initiated in presence of petitioner;' Seth Muhammad Yaqoob was agreed to pay Rs.2 crore immediately and furnish a Bank guarantee in the sum of Rs.1 crore provided if he shall be released from detention. Agreement was also executed between income-tax authorities including Deputy Commissioner of Income Tax in the aforesaid terms. Seith Muhammad Yaqoob deposited Rs.2 crore immediately on that very day through nay order. He also furnished a bank guarantee in the sum of Rs.1 crore would be payable by 28-6-1998 towards the arrears of income tax and wealth tax. The petitioner submitted an application before the Deputy Commissioner of Income-tax Recovery Officer for payment of remuneration of the terms of appointment as receiver. Respondent No.2 refused to pay the remuneration of the petitioner. The petitioner was constrained by the aforesaid circumstances, filed W.P. No. 14884 of 1998 which was disposed of by this Court vide order dated 15-3-1999, Regional Commissioner income tax was directed to decide the matter of the petitioner within a period of three weeks under intimation to the D.R. (J) of this Court. Regional Commissioner decided the cases against the petitioner vide order dated 31-5-1999; the petitioner being aggrieved by the aforesaid order, has filed this writ petition.

2. The learned counsel for the petitioner contended that respondents appointed the petitioner as receiver, petitioner acted and tried his level best to recover the income tax dues of the respondents from the aforesaid defaulters. The petitioner found the whereabouts of Seth Muhammad Yaqoob; that he was detained in Central Jail Kot Lakhpat on account of non payment of utility bills and informed the respondent, took the warrant of arrest from Deputy Commissioner of income tax/tax recovery officer for the service of Seth Muhammad Yaqoob to the Superintendent Central Jail Kot Lakhpat, Lahore who initially refused to receive the warrant of arrest but on account of the efforts of the petitioner, he received the warrant of arrest and Seth Muhammad Yaqoob was produced on the next day before the Regional Commissioner; negotiation was started by the respondents with the aforesaid defaulter but respondent No.3 failed to appreciate this fact that respondents recovered the aforesaid amount from Seth Muhammad Yaqoob on account of the efforts of the petitioner. The petitioner was not authorised by the respondents to initiate negotiations with Seth Muhammad Yaqoob; the petitioner remained present during the negotiation. He further stated that impugned, order itself is of contradictory in nature; on the one hand remuneration was refused by respondent No.3 and accepted the efforts of petitioner and letter of appreciation was sent to the petitioner on 5-6-1999 as recommended by respondent No.3 through the impugned order. Respondent No.3 misinterpreted, misread and misconstrued the' Rule/functions of the receiver and. purpose of his appointment. He further stated that he misconstrued Rule 158 of Income Tax Rules, 1982 and has given very narrow and restricted meaning. He urged that petitioner acted in accordance with terms of his appointment, the respondents recovered Rs.2 crore from Seth Muhammad Yaqoob and mala fide relied upon Rule 162 of the aforesaid Rules as the recovery was made by the department without efforts of the petitioner. He further stated that petitioner is penalized by the in-action -of the public functionaries; he urged that respondents failed to release statutory remuneration of the petitioner. The petitioner acted as Receiver and he is entitled to get his remuneration as the aforesaid amount was recovered by the respondents on account of the efforts of petitioner.

3. Learned counsel for respondents stated that respondents recovered the arrears of Income tax from Seth Muhammad Yaqoob through arrest and detention of the defaulter by resorting to the provisions of Rule 162; the petitioner did not play any role in any capacity as a receiver to recover the said arrears of the department from the aforesaid defaulter. He urged that petitioner claimed remuneration of recovery of Rs.30 millions which have been effected through his efforts from the defaulter but he did not know even about the actual figure/amount which recovered from the defaulter which is to the extent of twenty millions and not thirty millions. He further urged that factual controversy cannot be resolved through Constitutional jurisdiction; that appointment of the petitioner as receiver is not rescinded by the respondent but he failed to show any progress till date to recover any amount of remaining demand of respondents against the defaulters. He further stated that Rs.43.88 millions are still outstanding against the defaulter and Rs.10 millions due to the agreed amount as per negotiation which are also yet to be recovered. That negotiation proceedings Annexure R/1 does not reveal that any role was played by the petitioner in bringing the defaulter to the office of respondents Regional Commissioner and likewise he did not participate in the negotiations held with the defaulter as well as of Rs.20 millions only were recovered out of total Rs.74 millions approximately. The warrant of arrest was not received by Superintendent Central Jail Kot Lakhpat through the petitioner and was returned un-served which was received by the Superintendent Jail through the hectic efforts of respondent No.2 through his subordinate officers of the department in response thereto, the said defaulter appeared before respondent No.3; the respondents negotiated with the defaulter without any services or help of petitioner and recovered Rs.2 millions, the cheques issued by the defaulter in favour' of the respondents were dishonoured as is evident from Annexure R.2/R.4. He further stated that the petitioner has only authority under Rule 158 to initiate proceedings for attachment or arrangement of the business of defaulter and has no authority to take coercive measures against the defaulter such as arrest or detention as per his terms and conditions of appointment.

4. The Regional Commissioner appeared on Court's call; he stated that writ petition is not maintainable as the petitioner did not implead the defaulter as respondent. He further stated that there are two simultaneously methods of recovery of tax from defaulter on the basis of rules 158 -to 161 by appointing the receiver or by invoking powers under Rule 162 of 1982 Income Tax Rules; that both the methods can be involved simultaneously. The recovery was effected from Seth Muhammad Yaqoob by invoking second method i.e. under Rule 162; on Court query the petitioner l as well as respondent No.3 replied that Seth Muhammad Yaqoob has left the Country immediately after payment of Rs.2 crore to the respondents by executing agreement with .the respondent-department in the office of respondent No. 3.

5. I have given my anxious consideration to the contentions of learned counsel for the parties and perused the record. The nature of controversy between the parties to the petitioner particularly petitioner's stand that the arrears of income tax/wealth tax was recovered from Seth Muhammad Yaqoob on the efforts of petitioner as the petitioner informed the department after his appointment as received that Seith Muhammad Yaqoob has been detained in Central Jail Kot Lakhpat Jail on account of non-payment of utility bills; whereas the respondents denied this fact and asserted that respondents came to know about his detention from their independent resources. Similarly, petitioner alleged that aforesaid recovery was effected from the aforesaid defaulter on account of his efforts as the petitioner was able to serve the warrant of arrest issued in the name of Superintendent Central Jail Kot Lakhpat, Lahore who initially refused to receive the same; whereas the stand of the department is entirely different- that service of warrant of arrest was effected on the Superintendent Jail on account of the efforts of respondent No.2 and his subordinate, coupled with the facts that efforts of the petitioner was denied by the department and took the stand that recovery was effected by invoking powers under Rule 162 of Income Tax Rules, 1982. In case the contents of writ petition and written statement are put in juxtaposition,' then it is clear that the controversy between the parties comes in the area of factual controversy which cannot be resolved in the Constitutional jurisdiction of the High Court. I am fortified by the judgment of Hon'ble Supreme Court Muhammad in Younas's case 1993 SCMR 618. It is consistent view of the Hon'ble Supreme Court that in cases where factual controversy is involved Constitutional petition is not proper remedy. Even otherwise to determine the remuneration qua the service rendered by the petitioner requires evidence in the present case. The petitioner has alternative remedy to file suit for recovery of his remuneration before the competent Court or agitate the matter before the Wafaqi Mohtisib, Ala (Federal Ombudsman) as the principle laid down by the Hon'ble Supreme Court in Hafiz Muhammad Arif Dar`s case PLD 1989 SC 109.

It is pertinent to mention here that Seith Muhammad Yaqoob was able to leave the Country due to the in-action of respondents as the respondents did not inform the Interior Ministry to put the name of defaulter in E.C.L.

In view of these circumstances, let a copy of writ petition be sent to Chairman, C.B.R. Islamabad, who is directed to constitute a high powered Committee to initiate proceedings against the official/officer who provided the facility to defaulter to leave the country as the respondents failed to inform the Interior Division that name of Seith Muhammad Yaqoob be put in the E.C.L. The impugned order also does not reveal that the same was passed after recording the evidence of parties. Tote aforesaid high powered committee shall complete the process preferably within three months and in. case the said Committee has come to the conclusion that petitioner's claim is genuine and found it correct, then his amount shall be released forthwith. Chairman, C.B.R. is farther directed to submit report to This extent to the D.R. (J) of this Court accordingly.

With the aforesaid observation, this writ petition is disposed of.

C.M.A./M.A.K./A-23/LOrder accordingly,